By publishing disastrous quarterly effects one after the other, luxury brands show the extent of the economic crisis unfolding. This week’s industry leader Herms recorded a 42% drop in sales in the last quarter of 2020. Burberry’s shares fell 40% in the following year. LVMH, the industry leader, said its profits fell more than industry forecasts in the first part of the year. Richemont, the Swiss giant and owner of Cartier, IWC and Piaget, also suffers. Johan Rupert, its owner, announced in May that it would take at least 3 years to return to the effects prior to coronavirus. The decline continues despite relative sales resistance in China.
The broader economic environment is smart and even bleak for the rest of the year, according to the International Monetary Fund. The United States has just announced its worst quarterly GDP collapse, 32.9%, at the time of the quarter. At the same time, GDP in the euro domain fell to a record 12.1% in the quarter. While the virus is emerging strongly in several European countries and continues to grow in the United States, South Asia and South America, while activity in Southeast Asia remains moderate, luxury brands still do not have the option of reinventing themselves with agility to survive.
Let’s not forget, we’ve been talking about luxury reinventing itself for quite some time now. So, what exactly does a decisive transformation means for all the brands across the different luxury sectors, in automobile, hospitality, fashion, watches, jewelry, and cosmetics?
Independent brands, with their lack of head restrictions and their opposite trend to the current one, as discussed in an earlier article, are well positioned to lead the way.
Here are seven new tactics that independent luxury brands believe will trump COVID crisis-induced adjustments and will recover strongly. These new practices would possibly benefit the industry at large.
There are multiple dimensions of emotion that can have effects on the luxury consumer. The coronavirus and our overall reliance on virtual communication have certainly helped luxury brands locate their position in the global virtual marketing market. It was a great challenge to do it before the coronavirus: the virtual was for the masses and the luxury was for the few.
Kurt Kupper, board member of Louis Moinet Watches, specialist in terrestrial and extraterrestrial materials, explains that his company has “accelerated the virtual wave with business partners for news percentages, updates, images, videos […] to create more bonus emotions. Some new virtual anchors. »
He gave an example of a production update of a customer’s masterpiece, a live chat with the workshop, adding: “I read that Porsche will now offer this with cameras in their factories.”
On the one hand, the coronavirus ruined the game because the fashion shows were going to achieve. But beyond that, even when they come back, what they will actually do one way or another, the industry has begun to question its value. The intriguing thing is that this doesn’t just take place in fashion.
Also speaking, Kurt Kupper of Louis Moinet said: “Our marketing harvester will evolve in a sustainable way: we will consult the return on investment of major industry shows, events, product launches and we will experience more, implementing flexible virtual marketing initiatives.”
This, like so many others, goes hand in hand with the virtual that takes an intermediate stage, as he suggested: “Our sales and marketing will be more for those of many other niche manufacturers: more virtual, more agile with our retail partners and more direct.”
For Knirke Fester Schindler, brand manager at La Vallée, an independent Swiss logo of luxury cosmetics, interviewed for this article, the logo would have in the brain a mixture of long-term and short-term strategies. He explained how La Vallée’s strategy would prioritize social impact, diversification of the source chain and the emergence of what is the logo at its core: an agile and independent logo.
He stated that the component of the reorganization of the strategy would be “to respond to new trends and behaviors to which our active, ambitious and executive objective will be maintained in the post-COVID-19 market”.
Florian vom Bruch, CEO of Buben-Zorweg, luxury rope watches and safes, says he believes the company’s recent appreciation of finding a balance between the long-term rational business and short-term emotional impulses has come to stay. “Our goal is to get a higher proportion here,” he said, presenting new spaces of interest as examples, as COVID-19 is “more hybrid sales channels” and a space “probably more stable.”
You should not think much to link this concept of response to visitor orientation, which may be the maximum non-unusual area, with independent brands surveyed for this article.
According to Mario Peserico, Managing Director of Eberhard and Co Italy, the Swiss luxury watch company, the long-term company will see an ongoing emphasis on visitor appointment control (CRM):
“Our ability to respond quickly, even in times of severe foreign crisis, has been highly appreciated in recent weeks and has made us feel the importance of keeping our procedures simplified so that the customer feels at the center,” he said. Training
For Jean-René Bouton, CEO of Parisian fashion designer Koché, also known as the best streetwear brand, the luxury market and its consumers would now seek more relevance in terms of products: “A collection will have to be more applicable than its clientele: quality, design, durability and social messages. The acquisition will be more reflective. Brands that “have something to say” will be more desirable than others, he added.
David Candaux, of the eponymous watch brand, said that his vision was not to cloud the waters in those times: “The purpose is to continue on the same path that we have taken, even if unforeseen demanding situations arise. Value has more vital than ever and that’s what we offer, genuine value, genuine knowledge.”
While acknowledging that this attitude is nothing new, it marks a renewed conviction in a concept of sale; One of the most demanding situations for luxury brands in recent years has been to make the most productive use of social networks without compromising the values of the brand.
Perhaps it’s probably not even a fear for luxury brands, newly convinced that values trump a safe type of presence on conventional social media.
According to Patrick Delarive, founder and owner of the Whitepod Ecoluxury Hotel in the High Alps, “we will have done more in 2020 than in 2019”. thanks to the brand’s ability to attract local Swiss consumers in this case, not just foreign consumers.
Reconnecting with local consumers, i.e. Americans in the United States, Europeans in Europe, Delarive believes that it is imperative to be in tune with post-crisis trends: other people lately are emerging a discernible preference for delight and quality. This repairs trust in luxury brands.
“We are better known than ever at this stage, suffering with the crisis. We expect wider margins and infinitely what we can offer in terms of delight and quality.”
The logo is being trustedly internationalized and plans to open a new hotel for a year until 2025.
Delarive believes that the long term of luxury is brilliant, especially for independent brands, because they are in a better position to deliver hyper-customized reports than giant multinationals suffering from stifling governance. For multinationals, he says, the only way will be to “seal their brands more and more” to succeed over this rigidity and more applicable locally.
It has been thought that luxury brands are correct in terms of price for your staff. Markus Kramer wrote a complete column on how corporate culture can be highly informed of luxury brands in 2014. Certainly, anyone who has noticed the 2009 documentary The September Issue, which goes behind the scenes of Anna Wintour’s Vogue or anyone who largely follows the ethics of the source chain. might have a thing or two to say otherwise.
In general, corporations have a strong interest in aligning their corporate culture with logo values. And yet, institutionalizing those values and defining how they relate to your organization’s behaviors and expectations (which textbooks recommend you do) is not an easy task.
The Maison de Cosmétiques Maison Valmont temporarily understood the cohesion of the team, as Sophie Guillon, CEO and co-owner, put it. The coronavirus gave him the possibility to witness the dynamics of the collaborative team involved and to need to bottle them forever.
“Percentage [now] of a link, which we highly praise,” he said, referring to how the company got here in COVID-19 combination. “I think we will pay more active attention to the wishes of others. Our groups have been flexible enough to suspend their daily responsibilities and stick together behind any new opportunity, clutter or restriction, which I think everyone would like to continue to do. . […] The team spirit was and will be our motto, ” he told me.
It turns out that there are many headlines at the moment that focus on resumption of sales in the “heavily affected luxury sector.” China has continually emerged as a ray of hope imaginable, a bright spot suggesting a return to customer confidence, as overall purchasing behavior has recovered first.
But what if the industry is busy dictating a new path forward? So far, it seems that
Small independent brands in particular depend on the key parts of agility: visitor-centered, immediate adaptation, team collaboration around a transparent and non-unusual goal, in the long term combined with short-term experimental methods and simplification of bureaucracy, to redefine luxury.
It is still known what the reaction of the main brands will be to the new direction of independent brands. But given the trends explored here, it would only be a smart thing to do if they followed suit, given that the technique is solid and the sector was, before the coronavirus, desperate for an excuse to reappear reformed.
Thank you Alice Tozer for your help in the investigation.
At the International Institute for Management Development (IMD) in Switzerland, I am a professor and organizational innovation. My research, my coaching and
At the International Institute for Management Development (IMD) in Switzerland, I am a professor of strategy and organizational innovation. My research, coaching and consulting interests on the transformation of agility, strategy, organization and leadership. Kogan Page will publish my eBook “Re-Establishing Management for Business Agility” in 2021.
I specialize in luxury management. I run the annual open program Reinventing Luxury: Strategic Conversations. On open systems, I also co-direct virtual execution. In custom systems, I design systems for customers in the real goods and customer services sectors.
Mi has been published in leading journals such as Harvard Business Review, Organization Science and Strategic Management Journal. I have published several articles on innovation and disruption in luxury in China Daily, Womens’ Wear Daily, Luxury Society, HandelZeitung and Balance Luxe.
I won my Ph.D. Oxford University.
I love friendship, gardens, collecting arts and tennis. I speak seven languages