COVID-19 health crisis: in fashion, luxury brands also vacillate

COVID-19 health crisis: in fashion, luxury brands also vacillate

COVID-19 pandemic hinders tourism and causes massive store closures and therefore job cuts.If sales of luxury products in the world fall all over the world, the health crisis has accentuated several consumption trends, such as online purchases.A shopping channel that should intensify tomorrow.

"COVVID only reveals possible weaknesses in the model"

Big names in the trade have been struck by a succession of crises: 2015 attacks, movement of yellow vests, strikes.The health crisis, which has dried up tourist flows and reduces store attendance, has gone to them the blow of grace.

Having a storefront was not enough to guarantee him a future: "After 73 years of activity, Parisian leather goods will close its doors definitively at the end of the year," said a message published on the site of this Paris institutionspecialized in high -end accessories.And it is not the only renowned victim of the health crisis.Last week, spring expressed its desire to close several department stores in different cities.

"COVVID only reveals possible weaknesses of the model," explains AFP Serge Carreira, lecturer at Sciences Po Paris and luxury specialist.The brands that depend on physical stores have an "extremely heavy and heavy load structure", he specifies, notably evoking rents."Within a group, we are in a logic to limit costs, losses, viability is less questioned, while for an independent house, his very life is at stake," explains the specialist.

"The companies that do the best are those that have started digital transformation"

The health crisis is of such a magnitude that even the most robust luxury groups are shaken.The French flagships LVMH, Kering and Hermès saw their income collapsed in the second quarter, before straightening the bar in the next quarter, in particular thanks to the dynamism of Asia, where the epidemic seems better controlled.In the United Kingdom, another destination shopping prized for wealthy tourists, Burberry's profits were laminated.The Selfridges and Harrods department stores, whose activity has plunged, intend to delete 450 and 700 jobs respectively.In the United States, the pandemic has completed several high-end channels including Neiman Marcus.

Crise sanitaire de la Covid-19 : dans la mode, les marques de luxe vacillent aussi

"The companies that do the best are those that started digital transformation a long time ago and those who have evolved towards a marketplace model", putting buyers and sellers in touch, details AFP Audrey Depraeter-Montacel, luxury and beauty director at Accenture.

An appetite for the intensified web

Before the pandemic, online sales represented only a small share of the turnover of luxury brands."Digital investments for the past ten years have cost a lot for a relatively low return on investment, it was the large groups that have been able to make them, the little ones do not have sufficient cash," decrypts the luxury director andBeauty at Accenture.

It is also less obvious for actors of modest size to take advantage of the flight of online sales in the context of the pandemic."Large groups are better armed to respond to this sudden growth, they can put resources, transfer resources," explains the luxury expert.

This crisis has also reinforced the appetite of high -end brands for digital.Some want to develop their online sales when they were still recently hostile to this idea in order to preserve their exclusive side.

In this context, new rapprochements could take place, like that between the Swiss giant of Luxury Richemont and the Farfetch fashion portal, which distributes brands of creators."The situation is obviously tense, but it is also a moment of adaptation and innovation which can, in the long term, be rather positive," said Serge Carreira.

23% fall in the global luxury market

The COVVI-19 pandemic should lead to "an unprecedented fall" of the activity of the global luxury market in 2020, according to a study by Bain and Co, published on November 18.

"The crisis causes the heaviest falls ever recorded" with a planned decline in 23% in 2020 compared to 2019, only China being spared, says the report.In Europe fall is 36%, for the American continent, the decline is 27%, Japan loses 24%and the rest of Asia refused by 35%.

These difficulties are accompanied by profound transformations: online purchases should make a leap to represent 23% of the market against only 12% in 2019, continues the firm.In this context, consumers also expect more and more from luxury brands of demonstrations of their liability commitments, underlines the firm.

"Uncertainty should dominate again in the coming months" he anticipates, providing for a return to 2019 by 2022-2023.And according to bath and co., all products - leather goods, fashion, watchmaking, jewelry and perfumes and cosmetics - should be withdrawn.