Luxury At It’s Best- Kick your Feet Up
So this morning, I am drinking my coffee and reading an article on the McKinsey & Company website about the Luxury Market. As everything during this interesting time, many companies may have been concerned for their business, as the future is never promised.
Reading this article provided some interesting perspectives that I thought I would share.
Due to hard times, luxury-good companies must take action to “navigate the now,” plan for the recovery, and shape the future. It would make sense that every company’s first priority would be to protect the health and safety of employees, consumers, and business partners. These luxury companies appear to be making appropriate changes to ensure everyone’s safety. For example factories that produce scarves and perfumes now appear to manufacture face masks and hand sanitizer.
It is to soon to quantify exactly what this current event has done financially to this sector, but it certainly has shaken some of the foundational aspects of the luxury industry and some of these changes, could be permanent.
Even before our current situation with these uncertain times began, some companies were already struggling, partly because of luxury brands moving to vertical integration one the past 20 years and, more recently, the growth of e-commerce.
Some business’ may be forced to shut down due to this. The damage possibly could extend to brands that have not yet fully transitioned to a vertically integrated distribution model. It could be possible that some wholesalers, in order to survive , are likely to adopt aggressive commercial and discount policies, which at lease in the medium term, could hurt the luxury positioning of brands that don’t have a concession model.
According to the article, 20–30 % of the industries revenues are generated by acquisitions outside of their home countries. “In 2018, Chineses consumers took more than 150 million trips abroad; we estimate that purchases outside the mainland accounted for more than half of China’s luxury spending that year”.
According to another article on Bain & Company, it will take take for the market to recover. It is anticipated that a recovery to 2019 levels will not occur until 2022 or 2023. Market growth is estimated to resume gradually from then on.
Ms, Levato stated, “The speed of future market growth will depend on luxury players’ strategic responses to the current crisis and their ability to transform the industry on behalf of the customers.
I want to share another article I came across with you as I think you can get some helpful information from it.
What are your thoughts on the luxury sector? Do crave the finer things in life or settle for the mundane?
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