Coronavirus: A Luxury Nightmare
13th April 2020
We can all agree that staying at home during the Coronavirus outbreak is quite a luxurious experience!
All-income groups of people are going out less than they did before the pandemic, but wealthier people are staying home the most since they can afford it. However, the confidence in spending has dropped, and so, the luxury industry is struggling.
The wealthy people started to prioritize things in their lives such as fitness, health, education, and as well as experiences that they can share with each other, both in real life and virtually – something luxury brands should take a look at.
Many luxury department stores were already struggling even before the pandemic arouse. This was obvious when I met the top-earning luxury retailers during my previous visit to Dubai at the end of November 2019 and from many other luxury retailers, we deal with globally.
Over 35% of global fashion luxury goods were being produced in Italy, which is currently shut down. Hence, the COVID-19 crisis is resulting in a near paralysis of the luxury market.
Since COVID-19 initially originated in China, up to the enormous spread of the virus in the U.S – the world’s largest luxury market (more than twice the size of China geographically), the luxury industry is expected to be amongst the fastest dropping market in the world.
According to an ad-hoc survey conducted last February by Italian luxury brand consortium Altagamma, in association with Boston Consulting Group and investment firm Bernstein, this pandemic coronavirus could wipe out an estimate of €30 billion up to €40 billion in sales.
Therefore, the luxury world is currently on break and its industry will gradually become unsure of how to convey a marketing message that will not sound out-of-context to HNW individuals who are experiencing fear and paranoia.
What if the coronavirus pandemic has a much deeper and long-term effect on the mental health of HNW individuals since this issue can grow more rapidly than the virus itself? Therefore, no luxury brand is immune or safe, and the psychological impact of this problem may extend longer than what the human race could experience physically.
In conclusion, I, personally, don’t see any future growth in the luxury industry until the end of 2021 and I hope that the luxury industry will start to invest more in creating better market awareness and consumer education – the mission which will be one of The Luxury Network’s pillars for the upcoming 2 years.
Coronavirus will change the luxury world forever.
