Impact and 5 recommendations to face covid19 in the global luxury industry

Dear readers, in this hard and unexpected times at home I start this article by thinking not about economic profits but life profits: health, love, family, happy experiences... and I ask, what changes will we implement in our lives and soul after covid19?. Richness and Luxury are a priviledge, but a rich life is Health and Happiness.

Said that, amid the coronavirus pandemic every company’s first priority is, of course, to protect the health and safety of employees, consumers, and business partners. Indeed, we have seen in Spain and abroad how well-known luxury companies have pivoted to address urgent public-health needs: factories that produced cars or clothes now are manufacturing face masks and hand sanitizer, or hotels offering their facilities to use them as hospitals.

Thank you all.

Here I share an analysis after reviewing reports by international consultancies as McKinsey or Boston Consulting Group (BCG), spoken with luxury market executives, suppliers, key clients and KOL so that the Altagamma Worldwide Luxury Market Monitor by?Bain & Company and we also state that

the impact on fashion and luxury will likely be worse in 2020 than during the recession over a decade ago with total sales dropping between $450 billion to $650 billion from 2019 levels.

SOUTHERN EUROPE is expected to suffer the largest drop, seeing a dreaded ‘L’ curve. With sales falling between 85% to 95% between March and May, Southern Europe will likely see a slower bounce back than any comparative market.

CHINA looks set to enjoy a quicker period of recovery than other markets – partially because its drop occurred earlier than the other areas, but also because it has long since managed to bring down the number of Covid-19 infections.

Sales in NORTH AMERICA, are expected to fall somewhere between 75% to 85% compared with last year’s first half.

According to McKinsey analysis, there is 3 possible scenarios for how Covid19 will evolve, quick recovery, global slowdown and global pandemic and recession.

As shown in the charts below, Italy has been strongly affected by covid19. And let′s not forget that

more than 40 percent of global luxury-goods production happens in Italy

and all the Italian factories have temporarily shut down.

Coronavirus (COVID-19) cases in Italy as of April 9, 2020, by region

Forecasted impact of coronavirus (COVID-19) on the Italian Gross Domestic Product (GDP) in 2020 and 2021.

In this new scenario, I give you 5 KEY RECOMMENDATIONS:

1. review your supply chain and "clean" your portfolio offer
2. develop different sales experiences for different age populations
3. reduce your inventory
4. implement a complete corporate digital strategy (with KPIs)
5. implement corporate health and quality controls and make it public.

On the other hand, it is important to remind that Chinese consumers remain the biggest growth opportunity for the luxury sector.

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#exenergroup #luxuryindustry #covid19 #stayhome

Hector de Castro, Exener Group founding partner and CEO of Ecohotelprojects. 18+ years experience making hotel FF&E companies grow in The Caribbean, and South Asia. Global EMBA from top?IE Business School, BA (Hons) in International Business, BA (Hons) in Legal Trans., Ms in Hotel Mngmt.

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