According to Bain and Boston Consulting Group, due to Covid-19 luxury brands’ sales could fall up to 35% this year. However, by facing these new challenges, companies will be able to reinvent their strategies by becoming more innovative and even closer to their customers. In this article, let’s discover the impact of the pandemic on the luxury market and how are they planning to reboot their activity.
Impact of Covid-19 on the Luxury Market
Covid-19 did not spare the luxury market. When the virus started emerging all around the globe, brands had to deal with the inability to produce and sell their goods, especially after Italy and France shut down their factories with the lockdown.
Moreover, they could not carry out the same strategy in all the countries as each one of them had their own restrictions and some stores had to close before others, especially the non-essential ones.
The rising sanitary crisis was not the only fear that luxury brands had to deal with.
They had to already plan for a way to maintain their activities despite the factories closing and the threats of unemployment. Indeed, the risk of a potential economic crisis should not be put aside.
After the lockdown, brands thought that the virus would disappear slowly and people will be back to their consumption habits. That is why brands had to come up with new strategies and tools to adapt to the new consumer trends.
Reinventing the Luxury Market to cope with Covid-19
In June 3rd, McKinsey, Pitti Immagine and CNMI have surveyed over 80 CEOs of luxury companies from the United States and EMEA region regarding the evolution of the sector. Here are their opinion on the situation:
Source : McKinsey, Pitti & CNMI
This chart clearly shows that almost all the CEOs agree that, in any case, there will be new aspects to take into account in their future strategies to reboot the luxury sector.
To cope with the new consumption habits, marketers from luxury brands had to optimize their strategies in a more consumer-oriented way. To do that, they had to review their online strategy.
Firstly, people spent much more time using technology tools at home during quarantine. According to Nielsen, the global digital ad impressions on mobile rose by +32% in March 2020 compared to 2019. Some brands had already seized the opportunity to advertize more and reach larger audiences.
If Bain & Company claim that after the pandemic, people will go back instantly to physical stores, they will still keep adopting their digital tools. That is why luxury brands have to adopt a whole Omnichannel strategy with a seamless customer experience. "Luxury consumers are accustomed to a high standard of service in stores; the emphasis, then, should be on creating a personalized digital experience of the same quality” reported McKinsey.
With all these elements and previous analysis, luxury brands are eager to invest in technological tools and digital marketing to provide a unique experience to their customers and bring them back to their stores. Digital transformation is key for them to survive and boost their sales in the following months.