The luxury market post Covid-19 rebound
27TH November 2020
The luxury market post Covid-19 rebound
The ongoing sanitary crisis has been a major source of change to the way business is done in today’s world. It has been and is the responsibility of world leaders to navigate this crisis, rebound, find quick and applicable solutions and plans and strategies for the future.
In this interview, Stanislas de Quercize, former CEO of Cartier International, Van Cleef & Arpels and Group Richemont France, shares his thoughts on the impact of COVID-19 on the luxury market.
Xperts Council: The COVID-19 pandemic has made it a challenge for several companies to keep thriving. How did it affect the luxury market?
Stanislas de Quercize: The COVID-19 was the most challenging crisis ever in the luxury market due to two main reasons. The first being the boutiques closing during the lockdown, the second is the travelling restrictions that made it a challenge for these luxury boutiques to thrive even in a post lockdown period as its first source of sales is tourists. And hence, profit for the luxury brand has dropped significantly.
XC: Do you see any area in luxury retail thriving more than another?
Stanislas de Quercize: Prior to this sanitary crisis luxury sales have reached unprecedented levels of growth, that was, later on, slowed down by the COVID-19. Nevertheless, the luxury market growth is expected to pick up soon, and that is due to the fact that through sanitary crises as such, people start appreciating life more and therefore tend to share the love and friendship through gifting as a form of gratefulness.
I recall that back in the time following the tsunami disaster in Japan. There was a surge in Jewellery sales as the Japanese realized that they are mortal and that they should enjoy the gift of life.
Regarding the areas that would surge, digital is one with much potential as before the global lockdown it represented only 5% of total sales, whereas during the lockdown it has increased to 100% in countries where retail was closed and now it should reach between 25% and 30%.
Moreover, the second-hand vintage market is also going to thrive as it represents a source of sustainability to luxury brands as the integration of second-hand markets within the companies should be essential, which will enable them to grow in the market of carbon-neutral luxury.
XC: In July, the men’s fashion week in Paris was entirely digital, do you think that digital will be a big part of the new normal?
Stanislas de Quercize: Digitalization is a form of the accelerator, we can see that through the Louvre and, as a board member of the American Friends of the Louvre, I witnessed the Louvre averaging 10 million visitors a year whereas during the lockdown with the digitalization of the visit, the number was multiplied averaging 10 million visitors in 2 months proving that digitalization is a fabulous accelerator to reach out to people.
Another example is Louis Vuitton. They were averaging 1 million in audience per show and by moving to digital they averaged 10 million views for their show in Shanghai and therefore we can see the key role digitalization is playing in reaching more people.
It is also important to point out that the crisis has made it an opportunity for several start-ups to offer great rebound solutions for the “maisons”. The growth of these start-ups will create a solid digital eco-system around the luxury market.
From the corporate side, we can also notice several start-ups making their way into becoming important pillars in the development of the luxury market.
Luxurynsight created by Jonathan Siboni, for instance, is a business intelligence, data company for the luxury market, the Bloomberg of the luxury world, as it clusters and reprocesses data from 2000+ sources to provide quantitative, factual and strategic decision-making tools that will help luxury companies improve the understanding of their brand, competitors competitive advantages, and their consumers and represents their real GPS to navigate the future.
Moreover, Place2Swap created by Estefanie Larrañaga & Lucie Soulard is a start-up that is reimagining luxury through its platform as it is the first white label Re-commerce platform that allows brands to integrate second life into their business model and reduce the impact of reverse logistics.
Furthermore, Oktave a company created by Frederik Schreve to help global retail brands develop opportunities for enhanced in-store customer experiences and sustainable revenue generation through consultancy services, training and digital tools.
It is key to further improve the clients’ experience with better trained and motivated retail teams, that is what Oktave delivers. Payment start-ups will also play an important part in the rebound as well through companies such as Cresh, a financing solution created by Matthieu Girard, which allows consumers to pay their shopping carts in several instalments making luxury more accessible to consumers.
Finally, lately, we have been noticing the growing importance of finding solutions for a better impact on the environment. We can see that through the growth of ReValorem a French start-up created by François-Marie Barrès & Eric Legent that specializes in the reuse, recovery and recycling of unsold products for the luxury sector.
XC: Will this sanitary crisis impact consumer behaviour?
Stanislas de Quercize: We can notice the impact of the sanitary crisis on consumer behaviour through several changes happening to the market. First we will soon notice market growth, thanks to people wanting to share love following a crisis and therefore demand for luxury items that would be destined for gifting or personal use is going to increase.
Moreover, consumers will be more ethically demanding towards the luxury groups, Maisons and brands which will incite them to invest more in its sustainable growth strategies.
Furthermore, the COVID-19 crisis will be an important accelerator of digital in the retail luxury market as mentioned earlier, luxury brands will invest massively in digitalization.
This would allow seeing new trends in their seasonal shows, their marketing, e-commerce and payments as we expect to see more and more luxury brands to adapt instalment payments on their websites, where buyers could have the opportunity to pay in several times.
Finally, we noticed lately that consumers are shifting to the vintage second-hand market resellers, to buy and sell their luxury items. The growth in this market represents an opportunity for luxury brands to allow them to be closer to the client through the integration of manufacturing, wholesaling, retailing, e-commerce and now re-commerce.