Competitor strategies across the luxury goods landscape have been evolving in recent years under the impact of digitalisation and changing consumer values. The impact of the global coronavirus pandemic however has weighed heavily on luxury corporates and the lack of certainty accompanied by a recessionary consumer mindset threatens to delay any glimpse of full recovery in the short ti medium term. This report analyses business strategies and explores key opportunities in the luxury goods space.
The COVID-19 pandemic continues to have an unprecedented impact on the competitive landscape in luxury goods. The main challenge for many remains the lack of certainty regarding the length of lockdowns across different markets, and the social distancing measures that have been imposed, accompanied by a recessionary luxury consumer mindset, which will delay any glimpse of full recovery well beyond 2021.
Latest company results show that Asia Pacific continues to drive sales for key players in luxury goods and remains the most important region overall making up almost half of all spending. Much of this revenue has been driven by China’s growing wealthy populations.
Digitalisation will benefit from social distancing. and further e-commerce penetration, virtual catwalks and customer engagement are likely to become mainstream. Backed by innovations and rising access to technology, COVID-19 has changed the way luxury businesses deliver products and services, and how consumers live, work, shop and play for life. Both physical and digital players will need to go above and beyond to create new bonds and partnerships, and build loyalty with customers who will be looking to be entertained, rewarded and valued.
The pandemic has driven luxury customers to shop locally. With international travel having ground to a halt, much of consumer spending on luxury goods is now taking place at home as opposed to abroad, and is giving rise to repatriated spending and the birth of the new “locavore” luxury consumers. Luxury companies are now investing in their “glocals”.
Luxury companies and brands are being forced to look beyond revenue and can no longer perceive good business purely as profit-driven entities. Protecting the health and interest of society and the planet is the new expectation in order to build back but above all to build back better, while also turning the tide on social inequity and environmental damage.
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