Luxury Society is pleased to announce the first instalment of The Deep Dive, a new series that takes an in-depth look at the big issues and topics affecting the luxury market, and how the industry has responded to them. Through a series of interviews, exclusive data, and market analysis, we hope to provide a comprehensive view of each topic explored, adding to the wider discussions with our own expertise and that of others in the industry.
The Deep Dive: The Luxury Market Is Rebounding. Will It Last?
In the first part of our special report, we take a look at why the luxury market is rebounding, who the winners are, the reasons behind their success and how brands can learn from their example drawing upon insights from our own executive team at our parent company DLG as well as leading industry experts.
In the second part, we speak to leading figures in key luxury categories about what they are seeing in the market: from luxury watches and jewellery, to private banking and retail, we aim to give our readers a deeper understanding and insight into the trends happening in the market through their eyes. And in the third part, we analyse and discuss our findings from our data, surveys, and interviews to try to predict what may lie ahead in the coming months.
Part One: The Bounce Back: How Luxury’s Leading Brands Won Over The Market
Luxury brands are seeing a return to growth, a stark contrast from a year earlier when the impact of the global COVID-19 pandemic began to take its toll on the industry. But what goes up, must come down. In the first instalment of our special report, we take a look at the reasons why the market is booming and what lies ahead in the coming months.
It first began with LVMH. Then Kering. Then Prada, Hermès and also Lamborghini. One by one, nearly all the major luxury companies and brands began to report their earnings for the first half of the year, and each noted the same thing: luxury was rebounding.
LVMH said it recorded revenue of €28.7 billion, up 56 percent compared to the same period in 2020. Kering posted a 54.1 percent rise in consolidated revenue of €8 billion, while Prada said it saw a 66 percent jump in total net revenues. Richemont’s group sales rose by 129 percent to €4.4 billion. And last but not not least, Hermès’ consolidated revenue rocketed to €4.2 billion, up 77 percent.
The return to growth came as a stark contrast from a year and a half earlier, when the very same companies found themselves having to think on their feet and act quickly in response to the global COVID-19 pandemic, embracing new ways of working, digital technologies and adapting quickly to the challenges that arose from multiple lockdowns and store closures the world over.
Now, with the tentative easing of restrictions, it appears luxury is on a rebound.
Certainly, the conditions for the rebound have been supportive. With governments all over the world propping up their economies with fiscal stimulus packages, what would have been viewed as an economic crisis has largely been avoided, and consumer sentiment remains positive thanks to factors like low interest rates, unemployment protections and of course, a buoyant stock market – all the major indexes have grown at double-digits rates since a year-to-date.
Add into the mix, an increased availability of wealth from luxury consumers unable to spend on travel, dining, and experiences, and voila, a perfectly captive audience ready to release their pent-up demand for luxury purchases across the board.
Who Are The Winners?
It comes as no surprise that the luxury behemoths, with their strong established brands and diverse categories and geographies, as well as deep pockets to draw resources from have emerged as the winners during the pandemic. It is a well known saying that in times of crisis, consumers tend to favour more established brands, seeking out what they know rather than exploring what they don’t.
For certain, Louis Vuitton, Chanel, Cartier and Hermès, to name but a few, have all seen a rise in brand desirability, according to data compiled by DLG, which found that Google searches for the brands have grown by 15 percent, 11 percent, 39 percent and 21 percent respectively, from January 2021 to June 2021, compared to a year earlier.
In addition, search interest for their iconic products like Louis Vuitton’s Speedy Bag, Chanel’s 2.55 bag, Cartier’s Love bracelets or a Hermès Birkin bag rose by 60 percent, 38 percent, 38 percent and 18 percent, further demonstrating the importance of a brand’s signature products during a crisis.
And what helped drive this interest, was the agility of these brands to respond to the crisis, by laying the groundwork for omnichannel capabilities, through e-commerce, logistics and supply chains, but also through the creative ways they thought of to engage their consumers.
“The speed at which some of the big brands were able to react was surprising,” said Alain Zimmermann, Managing Partner at DLG. “A large part of their success has been the digital initiatives they have put in place to compensate for the closure of their retail stores, and the way in which they have been able to maintain a dialogue with their customers. This has undoubtedly been a lasting advantage for brands that have demonstrated responsiveness, innovation and agility.”
On top of this, with luxury consumers unable to travel or spend their disposable income on hospitality, entertainment or experiences, this has created a huge appetite for “revenge spending,” not just for purchases online but also on a local basis too. Once stores were able to reopen in China, after the easing of restrictions and resumption of a more “normal” way of life, brands that had established their presence in China were able to take advantage of the market conditions, and gain a head start in their recovery, noting huge increases in sales from their affluent local customers.
“We’ve observed two things,” said Pablo Mauron, DLG’s Managing Director China and Partner at DLG. “The first thing is that brands that suffered the least from the pandemic were the ones that already had a major e-commerce ecosystem in place, which helped minimise the impact of the slowdown in traffic to retail stores.”
“When it comes to the rebound itself, brands that had a strong Customer Relationship Management system in place and who were able to aggressively reactivate their audiences by – as soon as it was safe – inviting their customers to their stores though big and small scale events, installations and pop-ups, have been more warmly welcomed by the luxury consumer, who at the moment are kind of stuck due to limited travel.”
The United States has also been a bright spot for luxury brands. LVMH reported that “the United States and Asia are up sharply since the start of the year, while Europe is experiencing a gradual recovery”. Kering reported that its retail division, which includes e-commerce, second quarter comparable sales rose by 97.9 percent, driven by North America, which was up 263 percent. Europe, while further behind Asia and North American markets, is gradually recovering.
But we want to explore whether this rebound in the luxury market will last or not. While brands and companies may be benefitting from the easing of restrictions this summer, and the positive effect in consumer sentiment, the reality remains that effects of COVID are far from over and the luxury market will once again have to rethink how to adapt to the ever-changing landscape of this crisis.
“Reality is never a straight line,” said Mario Ortelli, Managing Partner of Ortelli&Co, a strategy and M&A advisory company specialised in the luxury goods industry, who believes the rebound in the market at present is an accelerated catch-up of spending condensed in a short period of time. “We are basically back at the level of 2019, and companies and brands will start to settle back to a more normalised growth rate. But, there is still a big question mark about the evolution of the pandemic and therefore, get ready for continued volatility.”
“If we were to see an acceleration of contagion and then lockdowns, spending would go down,” he added. “When you ease restrictions, then you’ll have a catch-up. And this is simply the situation we have at present.”
“I don’t see the luxury market going down,” Ortelli noted. “The average long term growth of the luxury sector has been and, in my opinion, will continue to be at a premium of about 50-60 percent to GDP growth. Clearly we will see a lot of volatility going forward, but the fundamentals of growth of luxury demand in the long run are very solid.”
But what can we learn from those who have successfully navigated the challenges brought on by the crisis?
For us, there are seven key points to consider: preparation, investment, creativity, agility, locality, data and mindset. Here, we identify the best practices demonstrated by luxury’s leading brands and how they enabled companies to rebound so quickly back to growth.
How Brands Bounced Back To Growth
- Crisis As Opportunity To Redesign Your Company’s Future: Last year, as the effects of the global COVID-19 pandemic began to hit luxury hard, established brands were able to accelerate their plans that were already set in motion to respond to the new challenges that lay ahead. By laying down the groundwork for omnichannel capabilities such as e-commerce, store refurbishments and logistics and being diversified across multiple geographies, categories and audiences, these brands were well placed to react to the crisis. Take Moncler, which recently showcased MONDOGENIUS, its latest brand experience of its Genius collections over the past four years. Presented as an immersive digital experience, the brand created a space where its global communities could connect. ““Today is not only about products but is even more about our communities and the culture we want to shape together,” said Moncler Chairman and CEO Remo Ruffini. “The world is changing, and people do not want the same things as before. They demand and expect more from brands. Today, we must find new ways to connect and engage, becoming pioneers of new messages. The greatest inspirations I had in my life came directly from people, and at Moncler, we know that the more we inspire people, the more they inspire us. I truly believe in the power of connecting communities around experiences and creative visions.”
- Invest While Others Divest: In times of deep crisis, deep pockets can help immensely. While many brands had to focus on ensuring their survival, other brands were able to rely on the financial support behind them through investment, focusing on creativity, adapting their product offering and devising new ways of engaging their audiences. Loewe, with the backing of LVMH behind it, devised its “show in a box” concept, from its Spring/Summer 2021 Mens show, guiding its audience through how its creative director Jonathan Anderson imagined and created a fashion show for the COVID-era. The brands also complemented the concept with an hourly agenda of content, for a full 24 hours on social media, from musical performances and conversation to portraiture and DIY tutorials on weaving.
- Refresh Your Signature Products To Inspire New Customers: Those who were able to focus on creativity, demonstrated a masterclass in how to innovate during these uncertain times. Luxury watchmakers showcased new novelties, jewellery brands reached out to their clients in new and different ways, fashion brands “hacked” each other to drive conversation and marketing buzz, all to help capture the attention of luxury consumers and trigger the purchase. It worked. At Cartier, which focused on returning back to its heritage but in a modern way, millennials now account for 65 percent of its customers. “The brand has been rejuvenated by selling the same thing,” CEO Cyrille Vigneron told the FT. “You have to explain classics to a young generation in a modern way. The more we focus on designs that are timeless, the more we can talk to all generations, and we have attracted younger customers with both watches and jewellery. In Asia and in the Middle East, Gen Z is already 25 percent of our clients. Gen Z is made up of people less than 25 years old, so we are in fact a much younger brand than people think.” Likewise with Tiffany, whose latest campaign “Not Your Mother’s Tiffany”, is a twist on its heritage to update its image with younger consumers.
- Attract New Clients Through New Channels: Brands that embraced agile ways of working were also able to react in more effective ways for their businesses. From adjusting sales of products to certain geographies, altering and tweaking their supply chains, and even embracing different operating models like direct-to-consumer, it was this kind of flexibility that ensured companies were able to meet the challenges that they faced. With restrictions in place in early 2020, Hermès reported its first half revenue dropped by 25 percent to €2.5 billion. But one surprising bright spot was the growth of its online channels, where sales continued to rise even as its stores reopened. The French luxury group reported that around 75 percent of their online customers were new, and its growth rates in e-commerce didn’t go down once stores reopened. “These aren’t sales that didn’t take place in stores. It took place online instead,” Hermès Executive Chairman Axel Dumas said in a conference call. “These are new customers, new customers who came to our online stores, so there wasn’t any sort of cannibalisation.” A year later, after experiencing unprecedented growth in its online channels, its chief financial officer Eric du Halgoüet told reporters that it planned to “gradually increase our offer of products online, except for the very iconic products such as Birkin. Online had now become the group’s “biggest store”, with revenues exceeding those of any of its flagship shops. Sales online grew by nearly 100 percent in all regions in the first nine months of the year.
- Prioritising Local Clients: It can be tempting for many luxury brands to rely on high spending international clients who frequently travel to the international luxury hot spots like Paris, London, Milan and New York and purchase luxury goods in abundance. However, during the height of lockdowns and restrictions, those who had prioritised their relationships with their local clients throughout the years, maintaining their connections through superb customer service and management of their database, were the ones who were able to take advantage while travel restrictions remained in place. This earned them a head start when retail stores were able to reopen as local customers were able to come in and spend, whilst international customers remained in their local markets.
- Leverage Your Data To Rethink Your Business Model : By understanding their data, brands were able to understand their audience in a faster way and use a digital toolbox, picking and choosing what worked best in an agile way, to build their future in terms of audience. When Breitling decided to shift 70 percent of its communication to digital, it did so for a reason. Online purchases are expected to account for 20 percent of sales, and e-commerce would help create a more complete experience for its customers. Building out a subscription model called BreitlingSelect, introducing more flexible financing options, have all helped to broaden the brand’s appeal to make it more accessible and inclusive. Not only did these decisions help to expand its digital toolbox, but it also helped to communicate where Breitling stood in terms of its sustainability values.
- Go Above and Beyond To Reassure and Inspire Your Team: Lastly, the most successful brands during the COVID-19 pandemic have been those who have endeavoured to build up the right team, for the right place, at the right time. It comes as no surprise that many brands and companies have hired, fired and shifted around executives and creative directors during one of the most challenging times in the luxury industry. Those who have ensured the leaders they have placed in charge have the right mindset for orchestrating change have reaped the rewards. Gucci, whose creative director Alessandro Michele and CEO Marco Bizzari, have been known as an iconic pairing in luxury fashion for quite some time. When Michele was first hired in 2015, the pair were tasked with the undertaking of reinventing the brand. Bizzari told WWD how he travelled and met 3,000 people to communicate what was then Gucci’s new strategy when he first joined the company. “Surely virtual [assets] will always remain important, you cannot go back in time, but the interpersonal exchange is something else entirely.” Six years later, Gucci remains one of the most successful and talked about brands in the fashion space. “We did not push events or our commercial communication, but focused on our people internally and externally, cementing our values and our culture — it’s easy to talk of values and people when everything goes well, but it’s something else entirely when problems and outside conditions influence you. I’m pleased with what we did. Compared to our competitors, we were understated, but we put people at the centre. We walked the talk. Culture eats strategies for breakfast, as (Austrian management consultant and author Peter Drucker) said. We continue to believe in this and we think this is how our strategy can be successful.”
In summary, it takes more than just a few moving parts to succeed in luxury, particularly during the challenging period that the world experienced during the first uncertain months of the COVID-19 pandemic. And only those who were able to leverage the opportunity as easily as some of the industry’s bigger brands were able to emerge triumphant.
What remains an even more significant question is what position the challenges of COVID-19 leaves upon the rest of luxury’s ecosystem and how they’re able to navigate through them without the support that many of the winners were fortunate enough to rely on.
In the next part of our special report, we’ll be talking to some of the industry’s leading experts in different segments of luxury, like Luxury Watches and Jewellery, Retail, Automotive, Real Estate and Private Banking, to discuss what they’re seeing and experiencing in their categories, the biggest challenges that they face and where they think the future of the market is headed.
Stay tuned for the next instalment here on Luxury Society.
Senior Editor, Luxury Society
Limei Hoang is a senior editor at Luxury Society, based in Geneva. She was formerly an associate editor at the Business of Fashion in London. Previously, Limei spent six years at Reuters as a journalist, and she has also written for the BBC, The Independent, and New Statesman.
The Deep Dive: The Luxury Market Is Rebounding. Will It Last?
Luxury Society is pleased to announce the first instalment of The Deep Dive, a new series that takes an in-depth look at the big issues and topics affecting the luxury market, and how the industry has responded to them. Through a series of interviews, exclusive data, and market analysis, we hope to provide a comprehensive view of each topic explored, adding to the wider discussions with our own expertise and that of others in the industry.
In the first part of our special report, we take a look at why the luxury market is rebounding, who the winners are, the reasons behind their success and how brands can learn from their example drawing upon insights from our own executive team at our parent company DLG as well as leading industry experts.
In the second part, we speak to leading figures in key luxury categories about what they are seeing in the market: from luxury watches and jewellery, to private banking and retail, we aim to give our readers a deeper understanding and insight into the trends happening in the market through their eyes. And in the third part, we analyse and discuss our findings from our data, surveys, and interviews to try to predict what may lie ahead in the coming months.
Part One: The Bounce Back: How Luxury’s Leading Brands Won Over The Market
Luxury brands are seeing a return to growth, a stark contrast from a year earlier when the impact of the global COVID-19 pandemic began to take its toll on the industry. But what goes up, must come down. In the first instalment of our special report, we take a look at the reasons why the market is booming and what lies ahead in the coming months.
It first began with LVMH. Then Kering. Then Prada, Hermès and also Lamborghini. One by one, nearly all the major luxury companies and brands began to report their earnings for the first half of the year, and each noted the same thing: luxury was rebounding.
LVMH said it recorded revenue of €28.7 billion, up 56 percent compared to the same period in 2020. Kering posted a 54.1 percent rise in consolidated revenue of €8 billion, while Prada said it saw a 66 percent jump in total net revenues. Richemont’s group sales rose by 129 percent to €4.4 billion. And last but not not least, Hermès’ consolidated revenue rocketed to €4.2 billion, up 77 percent.
The return to growth came as a stark contrast from a year and a half earlier, when the very same companies found themselves having to think on their feet and act quickly in response to the global COVID-19 pandemic, embracing new ways of working, digital technologies and adapting quickly to the challenges that arose from multiple lockdowns and store closures the world over.
Now, with the tentative easing of restrictions, it appears luxury is on a rebound.
Certainly, the conditions for the rebound have been supportive. With governments all over the world propping up their economies with fiscal stimulus packages, what would have been viewed as an economic crisis has largely been avoided, and consumer sentiment remains positive thanks to factors like low interest rates, unemployment protections and of course, a buoyant stock market – all the major indexes have grown at double-digits rates since a year-to-date.
Add into the mix, an increased availability of wealth from luxury consumers unable to spend on travel, dining, and experiences, and voila, a perfectly captive audience ready to release their pent-up demand for luxury purchases across the board.
Who Are The Winners?
It comes as no surprise that the luxury behemoths, with their strong established brands and diverse categories and geographies, as well as deep pockets to draw resources from have emerged as the winners during the pandemic. It is a well known saying that in times of crisis, consumers tend to favour more established brands, seeking out what they know rather than exploring what they don’t.
For certain, Louis Vuitton, Chanel, Cartier and Hermès, to name but a few, have all seen a rise in brand desirability, according to data compiled by DLG, which found that Google searches for the brands have grown by 15 percent, 11 percent, 39 percent and 21 percent respectively, from January 2021 to June 2021, compared to a year earlier.
In addition, search interest for their iconic products like Louis Vuitton’s Speedy Bag, Chanel’s 2.55 bag, Cartier’s Love bracelets or a Hermès Birkin bag rose by 60 percent, 38 percent, 38 percent and 18 percent, further demonstrating the importance of a brand’s signature products during a crisis.
And what helped drive this interest, was the agility of these brands to respond to the crisis, by laying the groundwork for omnichannel capabilities, through e-commerce, logistics and supply chains, but also through the creative ways they thought of to engage their consumers.
“The speed at which some of the big brands were able to react was surprising,” said Alain Zimmermann, Managing Partner at DLG. “A large part of their success has been the digital initiatives they have put in place to compensate for the closure of their retail stores, and the way in which they have been able to maintain a dialogue with their customers. This has undoubtedly been a lasting advantage for brands that have demonstrated responsiveness, innovation and agility.”
On top of this, with luxury consumers unable to travel or spend their disposable income on hospitality, entertainment or experiences, this has created a huge appetite for “revenge spending,” not just for purchases online but also on a local basis too. Once stores were able to reopen in China, after the easing of restrictions and resumption of a more “normal” way of life, brands that had established their presence in China were able to take advantage of the market conditions, and gain a head start in their recovery, noting huge increases in sales from their affluent local customers.
“We’ve observed two things,” said Pablo Mauron, DLG’s Managing Director China and Partner at DLG. “The first thing is that brands that suffered the least from the pandemic were the ones that already had a major e-commerce ecosystem in place, which helped minimise the impact of the slowdown in traffic to retail stores.”
“When it comes to the rebound itself, brands that had a strong Customer Relationship Management system in place and who were able to aggressively reactivate their audiences by – as soon as it was safe – inviting their customers to their stores though big and small scale events, installations and pop-ups, have been more warmly welcomed by the luxury consumer, who at the moment are kind of stuck due to limited travel.”
The United States has also been a bright spot for luxury brands. LVMH reported that “the United States and Asia are up sharply since the start of the year, while Europe is experiencing a gradual recovery”. Kering reported that its retail division, which includes e-commerce, second quarter comparable sales rose by 97.9 percent, driven by North America, which was up 263 percent. Europe, while further behind Asia and North American markets, is gradually recovering.
But we want to explore whether this rebound in the luxury market will last or not. While brands and companies may be benefitting from the easing of restrictions this summer, and the positive effect in consumer sentiment, the reality remains that effects of COVID are far from over and the luxury market will once again have to rethink how to adapt to the ever-changing landscape of this crisis.
“Reality is never a straight line,” said Mario Ortelli, Managing Partner of Ortelli&Co, a strategy and M&A advisory company specialised in the luxury goods industry, who believes the rebound in the market at present is an accelerated catch-up of spending condensed in a short period of time. “We are basically back at the level of 2019, and companies and brands will start to settle back to a more normalised growth rate. But, there is still a big question mark about the evolution of the pandemic and therefore, get ready for continued volatility.”
“If we were to see an acceleration of contagion and then lockdowns, spending would go down,” he added. “When you ease restrictions, then you’ll have a catch-up. And this is simply the situation we have at present.”
“I don’t see the luxury market going down,” Ortelli noted. “The average long term growth of the luxury sector has been and, in my opinion, will continue to be at a premium of about 50-60 percent to GDP growth. Clearly we will see a lot of volatility going forward, but the fundamentals of growth of luxury demand in the long run are very solid.”
But what can we learn from those who have successfully navigated the challenges brought on by the crisis?
For us, there are seven key points to consider: preparation, investment, creativity, agility, locality, data and mindset. Here, we identify the best practices demonstrated by luxury’s leading brands and how they enabled companies to rebound so quickly back to growth.
How Brands Bounced Back To Growth
- Crisis As Opportunity To Redesign Your Company’s Future: Last year, as the effects of the global COVID-19 pandemic began to hit luxury hard, established brands were able to accelerate their plans that were already set in motion to respond to the new challenges that lay ahead. By laying down the groundwork for omnichannel capabilities such as e-commerce, store refurbishments and logistics and being diversified across multiple geographies, categories and audiences, these brands were well placed to react to the crisis. Take Moncler, which recently showcased MONDOGENIUS, its latest brand experience of its Genius collections over the past four years. Presented as an immersive digital experience, the brand created a space where its global communities could connect. ““Today is not only about products but is even more about our communities and the culture we want to shape together,” said Moncler Chairman and CEO Remo Ruffini. “The world is changing, and people do not want the same things as before. They demand and expect more from brands. Today, we must find new ways to connect and engage, becoming pioneers of new messages. The greatest inspirations I had in my life came directly from people, and at Moncler, we know that the more we inspire people, the more they inspire us. I truly believe in the power of connecting communities around experiences and creative visions.”
- Invest While Others Divest: In times of deep crisis, deep pockets can help immensely. While many brands had to focus on ensuring their survival, other brands were able to rely on the financial support behind them through investment, focusing on creativity, adapting their product offering and devising new ways of engaging their audiences. Loewe, with the backing of LVMH behind it, devised its “show in a box” concept, from its Spring/Summer 2021 Mens show, guiding its audience through how its creative director Jonathan Anderson imagined and created a fashion show for the COVID-era. The brands also complemented the concept with an hourly agenda of content, for a full 24 hours on social media, from musical performances and conversation to portraiture and DIY tutorials on weaving.
- Refresh Your Signature Products To Inspire New Customers: Those who were able to focus on creativity, demonstrated a masterclass in how to innovate during these uncertain times. Luxury watchmakers showcased new novelties, jewellery brands reached out to their clients in new and different ways, fashion brands “hacked” each other to drive conversation and marketing buzz, all to help capture the attention of luxury consumers and trigger the purchase. It worked. At Cartier, which focused on returning back to its heritage but in a modern way, millennials now account for 65 percent of its customers. “The brand has been rejuvenated by selling the same thing,” CEO Cyrille Vigneron told the FT. “You have to explain classics to a young generation in a modern way. The more we focus on designs that are timeless, the more we can talk to all generations, and we have attracted younger customers with both watches and jewellery. In Asia and in the Middle East, Gen Z is already 25 percent of our clients. Gen Z is made up of people less than 25 years old, so we are in fact a much younger brand than people think.” Likewise with Tiffany, whose latest campaign “Not Your Mother’s Tiffany”, is a twist on its heritage to update its image with younger consumers.
- Attract New Clients Through New Channels: Brands that embraced agile ways of working were also able to react in more effective ways for their businesses. From adjusting sales of products to certain geographies, altering and tweaking their supply chains, and even embracing different operating models like direct-to-consumer, it was this kind of flexibility that ensured companies were able to meet the challenges that they faced. With restrictions in place in early 2020, Hermès reported its first half revenue dropped by 25 percent to €2.5 billion. But one surprising bright spot was the growth of its online channels, where sales continued to rise even as its stores reopened. The French luxury group reported that around 75 percent of their online customers were new, and its growth rates in e-commerce didn’t go down once stores reopened. “These aren’t sales that didn’t take place in stores. It took place online instead,” Hermès Executive Chairman Axel Dumas said in a conference call. “These are new customers, new customers who came to our online stores, so there wasn’t any sort of cannibalisation.” A year later, after experiencing unprecedented growth in its online channels, its chief financial officer Eric du Halgoüet told reporters that it planned to “gradually increase our offer of products online, except for the very iconic products such as Birkin. Online had now become the group’s “biggest store”, with revenues exceeding those of any of its flagship shops. Sales online grew by nearly 100 percent in all regions in the first nine months of the year.
- Prioritising Local Clients: It can be tempting for many luxury brands to rely on high spending international clients who frequently travel to the international luxury hot spots like Paris, London, Milan and New York and purchase luxury goods in abundance. However, during the height of lockdowns and restrictions, those who had prioritised their relationships with their local clients throughout the years, maintaining their connections through superb customer service and management of their database, were the ones who were able to take advantage while travel restrictions remained in place. This earned them a head start when retail stores were able to reopen as local customers were able to come in and spend, whilst international customers remained in their local markets.
- Leverage Your Data To Rethink Your Business Model : By understanding their data, brands were able to understand their audience in a faster way and use a digital toolbox, picking and choosing what worked best in an agile way, to build their future in terms of audience. When Breitling decided to shift 70 percent of its communication to digital, it did so for a reason. Online purchases are expected to account for 20 percent of sales, and e-commerce would help create a more complete experience for its customers. Building out a subscription model called BreitlingSelect, introducing more flexible financing options, have all helped to broaden the brand’s appeal to make it more accessible and inclusive. Not only did these decisions help to expand its digital toolbox, but it also helped to communicate where Breitling stood in terms of its sustainability values.
- Go Above and Beyond To Reassure and Inspire Your Team: Lastly, the most successful brands during the COVID-19 pandemic have been those who have endeavoured to build up the right team, for the right place, at the right time. It comes as no surprise that many brands and companies have hired, fired and shifted around executives and creative directors during one of the most challenging times in the luxury industry. Those who have ensured the leaders they have placed in charge have the right mindset for orchestrating change have reaped the rewards. Gucci, whose creative director Alessandro Michele and CEO Marco Bizzari, have been known as an iconic pairing in luxury fashion for quite some time. When Michele was first hired in 2015, the pair were tasked with the undertaking of reinventing the brand. Bizzari told WWD how he travelled and met 3,000 people to communicate what was then Gucci’s new strategy when he first joined the company. “Surely virtual [assets] will always remain important, you cannot go back in time, but the interpersonal exchange is something else entirely.” Six years later, Gucci remains one of the most successful and talked about brands in the fashion space. “We did not push events or our commercial communication, but focused on our people internally and externally, cementing our values and our culture — it’s easy to talk of values and people when everything goes well, but it’s something else entirely when problems and outside conditions influence you. I’m pleased with what we did. Compared to our competitors, we were understated, but we put people at the centre. We walked the talk. Culture eats strategies for breakfast, as (Austrian management consultant and author Peter Drucker) said. We continue to believe in this and we think this is how our strategy can be successful.”
In summary, it takes more than just a few moving parts to succeed in luxury, particularly during the challenging period that the world experienced during the first uncertain months of the COVID-19 pandemic. And only those who were able to leverage the opportunity as easily as some of the industry’s bigger brands were able to emerge triumphant.
What remains an even more significant question is what position the challenges of COVID-19 leaves upon the rest of luxury’s ecosystem and how they’re able to navigate through them without the support that many of the winners were fortunate enough to rely on.
In the next part of our special report, we’ll be talking to some of the industry’s leading experts in different segments of luxury, like Luxury Watches and Jewellery, Retail, Automotive, Real Estate and Private Banking, to discuss what they’re seeing and experiencing in their categories, the biggest challenges that they face and where they think the future of the market is headed.
Stay tuned for the next instalment here on Luxury Society.
Senior Editor, Luxury Society
Limei Hoang is a senior editor at Luxury Society, based in Geneva. She was formerly an associate editor at the Business of Fashion in London. Previously, Limei spent six years at Reuters as a journalist, and she has also written for the BBC, The Independent, and New Statesman.