For the record, the international luxury industry was not at its triumph pre-COVID-19. A few of the top sectors contributors of the luxury economy globally are Fashion, Real Estate, Automotive, Hospitality, Jewellery, Health & Fitness, F&B, Travel, and Health. We all witnessed the collapse of luxury giants in the shape of filling bankruptcies/liquidations since 2017 and earlier. Let me name a few of the fashion brands that took hit pre-COVID, like BCBG Max Azria, Claire’s Stores, Nine West, Rockport Group, Diesel, Roberto Cavalli, Sonia Rykiel, Barneys New York, Forever 21 and so on…
Luxury consumers and specific connoisseurs of luxury were transmitting the signals of divergence and disparity in the form of negative growth of the international luxury market. It all converged into a massive and collective downfall when COVID-19 swapped all sectors, continents, economies, humans, and whatnot. In non-idealistic scenarios, we are not able to preempt global disasters such as COVID-19 but market trends, consumer tastes, economic fluctuations, brand PLC’s and evolution of human choices could have been predicted to some extent if not holistically.
Luxury pundits like Bain & Co. estimate that this year, the personal luxury goods market could contract 20 per cent to 35 per cent worldwide. McKinsey’s recent report predicts luxury sales for this year’s spring season are as much as 70 per cent lower than last year since we all are challenged to be in person at stores and that is a serious dent in the natural form of luxury shopping.
There must be an oversight, negligence, lack of innovation, ignorance of the inferences, and/or shying away from the clear and obvious signs of transformation. Let’s make an effort to reflect on what could have been done and what we all as an industry could learn from at least the last 12-15 months, if not beyond.
Here are the top 10 lessons luxury brands can learn from the COVID-19 crisis.
We must have a continuous stream of innovation within our luxury offerings. This is the most unwavering characteristic of a brand that keep their customers and stakeholder intact even in crises.
Artificial Intelligence (AI) and Virtual reality (VR) are two of the many technological milestones luxury brands can benefit from if utilised from the human perspective. Most luxury brands are still using these assets as push strategy rather than investing in the brand and turning tech into the catalyst of a pull strategy.
This is the most pivotal aspect of a luxury brand that distinguishes it from the mass market or premium brand. This past year has proven again that luxury brands that have already created a personalised space with their top customers have survived far well than customer-distant brands.
Commercialism is the inverse of luxury especially when we face a crisis of this magnitude. Not only that it costs more to be commercial but also creates a distorting message towards its target market that results in a lack of trust and diminishes the brand loyalty bond.
Not only in the product/ service offering but also in the distribution channels including target market and communication strategies; diversification has been one of the top salvage techniques of major luxury brands when a brand’s customer profiles shrink significantly.
Social media has been at the forefront of our attention even for the luxury segment. The more we are direct with our current and potential customers, the more the chances that we can build trust. Adopting the latest means of communication including social media beyond product and brand-centric communication will surely set a luxury brand apart from the crowd.
Nationalisation with Internationalisation
It’s a core ingredient for a luxury brand to internationalise but a crisis like COVID-19 has taught us to improvise on the national front as well. Without marginalising the national trade gains such as foreign currency and rise in exports, luxury brands have learned the lesson hard way to invest into the local markets with the same zest and zeal within as well if not more than into international.
Social Consciousness & Inclusiveness
Social consciousness with community responsibility is the pillars on which any brand builds its character and trust, more so being a luxury brand. Calamities and disasters define us who we are and what we stand for. Luxury is no more the business of exclusiveness when the times are tough, and economies are shrinking. Inclusiveness is the way forward where support is extended across all verticals of business involved in the chain of economic recovery.
It’s no more a fashion to be sustainable, [rather luxury brands need to address] the current global environmental challenges. Luxury brands must lead from the front to create a sustainable greener and cleaner environment for the current and future generations. Being climate-conscious can help us tremendously to avoid several global disasters in the making or even keep them away or decrease the intensity.
Luxury brands often ignore the real values of humanity that combine us as humans with care, feelings, and the urge to help and support each other when needed. Future luxury brands will be applauded and appreciated not because of their glitz and glamour but how they stood behind humanity across all colours, genders, languages, cultures, and religious affiliations.
There could be more verticals of learning depending on the nature of business and its core business objectives. The above pointers are tilted towards a vast range of cross-sectional luxury brands and services across the globe as base principal ground rules of the futuristic luxury environment.
Contributed by Shahzad HAIDER, https://shahzadhaider.org/. New York based Transformation Consultant – The Future of Luxury