By publishing disastrous quarterly effects one after the other, luxury brands show the extent of the economic crisis unfolding. This week, herms, the industry leader, recorded a 42% drop in sales at the time of the 2020 quarter. Burberry shares fell 40% over the following year. LVMH, the industry leader, said its profits fell more than industry projections 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 the worst quarterly drop in GDP, 32.9%, this quarter. Meanwhile, GDP in euro dominance fell to a record 12.1% in this 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 have no choice to reinvent themselves with agility to survive.
It’s not like we’re talking about a luxury that’s been reinventing for a long time. So what exactly does a decisive transformation mean for all brands in the other luxury sectors, in the automotive, hospitality, fashion, watchmaking, jewellery and cosmetics sectors?
Independent brands, with their lack of head constraints and irritating trend, as discussed in a previous article, are well positioned to lead the way.
Here are seven new tactics that independent luxury brands believe will trump coVID’s crisis-induced adjustments and recover stronger. 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 global virtual marketing. It was a big challenge before the coronavirus: the virtual was for the masses and luxury was for a few.
Kurt Kupper, board member of Louis Moinet Watches, the specialist in terrestrial and extraterrestrial hardware, says his company has “accelerated the virtual wave with business partners to the percentage of news, updates, images, videos […] to create more emotional bonds. some new virtual anchors. »
He gave an example of a production update of a customer’s masterpiece in 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 fashion shows had to do it. 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 happen in fashion.
Also speaking, Kurt Kupper of Louis Moinet said: “Our marketing mix will evolve in the long run: we will consult the return on investment of shows, events, launches of products from the primary industry and experience more through the implementation of flexible virtual marketing initiatives. “
This, like so many others, goes hand in hand with the virtual that takes the middle stage, as he suggested: “Our sales and marketing will be more to those of many other niche manufacturers: more virtual, more agile with our retail partners and more direct.”
For Knirke Fester Schindler, Brand Director of La Vallée, an independent Swiss luxury cosmetics logo, 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 “responding to the new trends and behaviors to which our active, ambitious and executive objective will adhere to in the post-COVID-19 market”.
Florian vom Bruch, executive director of safes and coils of luxury watches Buben-Zorweg, says he believes the company’s recent appreciation of finding a balance between rational long-term business and short-term emotional impulses came to stay. “Our goal is to achieve a higher ratio here,” he said, setting an example of new spaces of interest, as COVID-19 is “more hybrid sales channels” and a “probably more stable” space.
You won’t want to think much about linking this concept of responsiveness to visitor orientation, which may be the maximum non-unusual area, with the 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 of the company will see an ongoing emphasis on visitor appointment control (CRM):
“Our ability to respond quickly, even in times of severe external crisis, has been highly appreciated in recent weeks and has made us feel the importance of keeping our procedures agile for the customer to feel at the center,” he said. Training
For Jean-René Bouton, CEO of Parisian fashion designer Koché, also known as the leading urban fashion brand, the luxury market and its consumers would now seek more product relevance: “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 watch brand of the same name, 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. […] The 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 more productive use of social networks without compromising the values of the brand.
Perhaps this is no longer a fear for luxury brands, newly convinced that values trump a secure presence on major social networks.
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.
When reconnecting with local consumers, i.e. Americans in the United States, Europeans in Europe, Delarive believes that it is imperative to be aware of post-crisis trends: lately, others are showing a discernible preference for delight and quality. This repair of 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 until 2025.
Delarive believes long-term luxury is brilliant, especially for independent brands, because they are better able to deliver hyper-customized reports than giant multinationals suffering from a sweltering government. 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.
Luxury brands are intended to be right in terms of price for your staff. Markus Kramer wrote a complete column on how corporate culture can be well informed by 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 home network. 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.
Cosmetics corporation Maison Valmont temporarily understood the cohesion of the team, as said through Sophie Guillon, CEO and co-owner. The coronavirus gave him the possibility to witness the dynamics of the collaborative team in question and have to bottle them forever.
“We [now] give a percentage of a link, which we praise a lot,” he said, referring to how the company came here in combination with COVID-19. “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 limitation, which I think everyone liked that everyone will continue to do. […] The team spirit was and will be our motto, ” he told me.
It turns out that there are many headlines right now who are focusing on resuming sales in the “luxury sector greatly affected.” China continually appears as a ray of hope imaginable, a bright spot suggesting a return to customer confidence, as overall purchasing behavior has resumed first.
But what if the industry is busy dictating a new way forward? So far, it seems that
Small independent brands, in particular, rely on key parts of agility: focus on visitors, 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 wise for them to do the same, given that the technique is sound and the sector was, before the coronavirus, desperate for an excuse to reappear reformed.
Thank you to Alice Tozer for her help in the investigation.
At the International Institute for Management Development (IMD) in Switzerland, I am a professor of 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 “Resetting 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, design systems for customers in the customer goods and 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 PhD. University of Oxford.
I love friendship, gardens, collecting and tennis. I speak seven languages.