Source: Watches & Wonders
Here, Dakota Murphey follows up her COVID-19 & small retailers piece, with a post focused on the luxury market when it comes to the pandemic. Dakota has more than a decade of experience in business growth, working independently as a business consultant for a number of years.
It became apparent that COVID-19 was something very serious when the world’s biggest brands began cancelling their plans: the NFL, NBA and Broadway Theatres in the US, the Premier League in the UK, and now even the Olympic Games scheduled for Tokyo this year. The fact that they were postponing events indicated that this wasn’t something that wasn’t going to be sorted out in a matter of weeks.
And just as these brands were cancelling events, so to was the luxury market ,acting as bellwethers. Watches & Wonders is one of the most important dates in the calendar for the luxury watch market – as the largest brands showcase their new models and innovations, last year attracting 23,000 attendees from around the world to Geneva.
2020 was to be the 30th edition of the event with 30 brands ready to show off their new creations. And yet, due to the coronavirus, the event is not going ahead – postponed until next year. What this tells us is that no brand is immune to the issue of COVID-19. So how will this all affect the luxury market?
A worldwide problem
The watch industry had seen strong growth in 2019 – but this is an area of the luxury market that will certainly be impacted by Coronavirus. And part of the reason that this area of the market will be so badly hit is that the virus has caused serious problems in China which is a major customer base for luxury watches.
The picture more generally isn’t much better. Some numbers have been projected – and they don’t look very positive for the luxury goods market as a whole. The coronavirus epidemic is set to cost the luxury market in excess of $43billion in sales.
The fact that markets around the world are affected simultaneously could cause a problem, as luxury goods sellers do not have the option to refocus their marketing efforts elsewhere.
How does the luxury market cope with a recession?
The 2008 worldwide financial crisis is probably the most recent event that comes close to affecting consumers and businesses the way that the coronavirus has and will. So it is worth looking at this as an example. The luxury goods market actually held up much better than many other sectors during the 2008 crisis and recession, but it was not entirely recession-proof.
Many parts of the sector – especially those relying on physical stores – were hard hit. It seems this time the key thing to understand is the importance of eCommerce. And with non-essential stores and shops being closed as part of lockdowns across the world, it is only natural that the luxury market needs to focus online.
Is eCommerce the solution?
There is no doubt that with many governments around the world enforcing lockdowns on citizens and forcing non-essential retail stores to close, the whole of the economy is looking at what it can do via the internet and in the form of eCommerce solutions. However, is it oversimplifying the issue to suggest that brands should focus on online retail and attempt to carry on as normal?
Luxury children’s clothing store Childsplay Clothing has a positive take on the matter. “We ship worldwide and see that as a real positive over this period,” says Moby Latif, Head of eCommerce “with different countries at different stages with the pandemic, it is always possible to take advantage of opportunities as they arise. We are optimistic – it is important to be ready to adapt in the face of this crisis”.
Now, more than ever, the luxury goods sector needs to ensure that it is doing everything it can to improve its eCommerce and online shopping facilities, in order to cater for a huge number of people now staying indoors and browsing the web all day.
Just as the luxury goods sector was able to recover quickly from the 2008 financial crisis, there is every reason to expect that once the worst of the coronavirus pandemic is over, things will return to normal at a quick rate. However, that’s no excuse to take anything for granted. The luxury sector now needs to work harder than ever before to come up with innovative solutions to ensure that their brand is making the most of the opportunities through the crisis.