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Luxury industry decision makers remain bright despite Covid-19

In these difficult times, the top executives of the Global Luxury Group were very confident and optimistic and emerged from a survey conducted by French consulting firm MAD. This survey understands sector trends and understands leaders’ priorities.

The latest Spring / Summer 2021 Louis Vuitton show-© Pixel Formula

Founded and supervised by Jean Révis and Delphine Vitry in early September, MAD interviewed 57 decision makers in various segments of the luxury goods industry. 55% are members of the group’s executive committee and 45% play an operational role. At national or regional headquarters. After publishing the “Luxury Convalescence-Fast Forwarding” report, which assesses the state of the industry after the blockade, MAD has published a new study entitled “Luxury Convalescence-the Luxury Barometer.” It is updated every 3-4 months.

According to the survey, 49% of executives interviewed believe that their company will achieve sales equivalent to 2019 in 2021, and 69% expect it to reach 2022. Only 30% of interviewees believe it will take more than two years. Sector to recover. Views shared by all luxury sector categories. Despite the Covid-19 crisis, the luxury industry seems to be more resilient than, for example, the airline and tourism sectors. This is even stronger resilience in the event of an economic crisis. Even better, 2020 turns out to be simply “an anomalous period with relatively limited results over time.”

Of course, we expect the sector to start growing again next year, but this does not mean returning to the pre-Covid world. Interviewed managers said that future quarterly growth will be primarily due to improved final consumer information (by 62% of interviewees), China and its local consumption (by 60% of interviewees), and new distribution. Strategy (up to 45% of interviewees).

Given this situation, one of the authors of the study, Thomas Mesmin, told “While the European retail network and staff will be significantly streamlined, the opening of a large number of stores will accelerate investment in China.”

“When it comes to paying rent for stores in traditional luxury shopping districts where the streets are abandoned, labels cut very quickly because they can’t wait for the flow of tourists to regain. We need to, “added Mesmin.

Significant changes will also occur in the distribution sector, removing the barrier between physical and digital shopping modes. For example, during a lockdown period, a remote sale made at a store with virtual customers was video-linked to a shop assistant on the web.

According to the survey, 80% of respondents feel they are well-equipped to manage the surge in domestic demand in China, but otherwise they appear to be unprepared. In particular, it is about big data such as how to collect and use consumer information. According to the survey, executives in the luxury goods industry “feel vulnerable to the issues of value creation through data management (55% of interviewees) and client-centricity (45%).”

Another concern, especially for 37% of interviewees, is to keep staff motivated. In many cases, especially in the retail sector, staff experienced true moral and psychological distress, and management did not always know how to deal with it.

There are five investment priorities that companies should focus on in the next 18 months: e-commerce (86% of interviewees), digital communications (74%), CRM tools (61%), and retail. The field has emerged clearly. China (57%), and customer experience (53%).

“The top five coherent, not surprising, reflecting the vision of a more digital, more customer-oriented, Chinese market-dependent post-covid world,” concludes the report, instead “the West without three areas. Respondents who insisted on reducing their investment in retail and wholesale channels do not consider it a priority. “

There is a clear gap between players who continue to invest, especially those who have the ability to leverage their bargaining power to leverage stronger financial conditions and economies of scale, and those who do not. Invest. “In the future, some financial statements will show a growth rate of 15%, while others will show a decline rate of 20%,” Mesmin predicted.

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