With most of us living in some form of isolation, to minimize contagion as COVID-19 spreads worldwide, people with vested interests in the luxury industry are looking for insights, recommendations, predictions – anything they can get their hands on, to help project how the world will look post virus.
We have quoted Luxury Institute here in the past – the organization, based in New York, that conducts crowdsourcing projects with its Global Luxury Expert Network (a growing network of high level executives and experienced management representatives from dozens of luxury premium good and service companies).
A few days ago the Luxury Institute released a white paper with insights gathered from people in their network, including these seven consequences of COVID-19:
1. Will the Chinese consumer continue to be the engine of growth for the luxury industry? They been shaken and economically hit hard by these events. It remains to be seen if their values and purchasing habits change post virus.
2. The fear and uncertainty among affluent consumers related to their health as well as the health of family, friends and loved ones will be made even tougher by massive financial losses in the stock market. These will cause affluent consumers, as well as mass market consumers who buy luxury periodically, to pull back sharply on spending medium term.
3. Travel restrictions as a result of the virus will dramatically affect the airlines, luxury and premium travel and tourism, travel retail, global conferences and events, and the entertainment and sports industries most. This impact will be felt for several months.
4. Luxury goods supply chains will be affected by Chinese and European dislocations. They will be fixed, but a major loss has already taken place and will reverberate for months. Alternative supply chains will be seriously considered.
5. The global luxury workforce will be impacted severely unless governments and brands step up to protect them.
6. Digital capabilities and skills are very important right now and will become even more so in the long-term. Will luxury consumers still have their appetite for in-store experiences at the same levels seen pre-crisis (which were declining)? Some experts think that most of whatever can be done online will be done online in the future.
7. Many uber-wealthy consumers have escaped the major cities in their private jets to their enclaves and are hunkering down and assessing the meaning of their lives. How will they be affected by this experience? No one will escape the mental and behavioral effects of the transformation.
These are issues to watch out and plan for. Another point that stood out in the Luxury Institute paper: Luxury needs to have a soul. It needs to be part of the solution.
“Consumers and employees will be scrutinizing brand leadership for true expertise, deep empathy, trustworthiness, generosity and kindness like never before. Ethics, security, sustainability, personal data privacy, and true personalization will be big tests for all luxury brands. Do not fail them, or you will have wasted the few opportunities that a pandemic crisis creates.”
Words to live by.