Where Will The Luxury Industry Go Under The Epidemic?

Affected by the global new crown pneumonia epidemic, Chanel, a famous luxury goods company, recently announced its shutdown. There is a female fan who uses cocoa Chanel to quip: "without perfume, where is my future?"

To curb the spread of the virus, luxury brands have shut down the stores where they are located, cancelled and postponed some activities and stopped factory production. With the spread of foreign epidemics, the sale of luxury goods in the first half of 2020 will not be in suspense. Then, where will the luxury industry go? Some people believe that after the stabilization of the epidemic, it will trigger a "retaliatory" consumption. More people in the industry believe that the digital transformation of the luxury goods industry will be promoted.

(shooting: Zhongfu net)

Discussion on Chanel's shutdown

In March 18th, the French luxury brand Chanel (Chanel) officially announced that under the current global epidemic situation, the brand decided to stop working for two weeks under the proposal of the local government and the global health organization, and gradually shut down production bases in France, Italy and Switzerland.

The news of Chanel's shutdown prompted a heated debate on the Internet, reflecting the widespread concern of netizens.

Prior to this, Chanel decided to close all American stores in March 16th, cancelled the early spring holiday fashion show originally scheduled for May in Capri, postponed the advanced custom fashion show scheduled to be held in London in March 26th and the advanced hand workshop series which was scheduled to be held in Beijing, China at the end of May. This "2019/20 Paris Kang Peng Street 31" is the first advanced handcraft show since CHANEL Viard, the creative director of Virginie.

In the globalized economy, the luxury consumption of Chinese people is the highest in the world. However, due to the outbreak of the epidemic, luxury brand sales were suddenly cold. Dong Xiaolin, an economics professor at Guangdong University of Foreign Studies, told the Yangcheng Evening News reporter: because of the decrease in travel, the purchasing power of Chinese consumers for luxury goods has also dropped dramatically, and foreign luxury goods sales market has lost a large part of its consumer groups.

Factory downtime is also related to a decline in sales of brand stores. Italy, France and so on belong to the center of luxury goods sales. Under the present circumstances, the goods produced by factories are hard to sell, and they can only be stored in warehouses. "I think this is also the decision made by these top brands when they are forced to do so. It is still uncertain when we can see the current situation of the European epidemic and when it will be resumed." Professor Jiang Lin, Department of economics, south of the Five Ridges College of Zhongshan University, told the Yangcheng Evening News reporter.

Many international luxury brands are under attack.

Chanel is not the first company to adjust to the epidemic. As the epidemic center moved from Asia to Europe, in order to curb the spread of the virus, the major luxury brands have closed down the major epidemic locations, cancelled and postponed some activities and stopped production.

In stopping production and shutting down, Gucci began to close 6 factories and all physical stores in Italy in March 17th, and all entities in Italy will be closed until April 3rd.

French luxury group Herm s also shut down 42 production bases in France until March 30th.

Kai Yun group's brands including Paris family, Saint Laurent, Alexader McQueen and Messi stores, Tiffany, Ralph Lauren, Sephora, H&M and so on have announced that they will temporarily close their stores in North America. Some brands are clear that the store will last until at least the beginning of April.

Affected by the epidemic, many international brands have cancelled most of their major activities. Gucci announced the cancellation of its annual grand show which was scheduled to be held in San Francisco, USA in May 8th. Dior will postpone the release of the "Air Dior" capsule series that is co operating with Jordan Brand of NIKE. Italy luxury brand Max Mara announced that it would cancel its scheduled holiday show in St Petersburg, Russia, in May 25th.

Hermes also cancelled the 2021 early spring holiday show scheduled for April 28th in London, and equestrian competition to be held in The Grand Palace, Paris.

The epidemic situation is still spreading abroad, and the specific time for major brands to resume production and store operation is not yet known, but there is no doubt that sales of luxury goods industry will drop sharply in the first half of 2020. According to the latest report by investment company Bernstein (Bernstein), the new crown virus will cause the luxury industry to lose 43 billion US dollars in sales in 2020.

Epidemic situation promotes digital transformation of industries

There is a view that after the epidemic becomes stable, there will be retaliatory consumption in the Chinese market. The survey of "2020 international luxury brands in China's new crown stress assessment report" also shows that more than half of the top brands do not change confidence in the Chinese market.

Reporter observed, since March, Guangzhou has begun to appear some luxury brands have "retaliatory" consumption phenomenon. Guangzhou's Louis Vuitton, Gucci and CHANEL often appear in queues before entering the gate of Tai Koo Hui. In the early April, 50 percent off of the goods were cleared from the site, and the commodities were "sold out" within a few days. And the flagship store of Guangzhou's Archaean Hermitage opened in April 11th. There was also an unexpected scene of bustling consumption. According to media reports, the sales volume of the store was considerable on that day.

The emergence of the epidemic also accelerated the process of digitalization of luxury goods to some extent. In the case of the impact of the epidemic on the luxury industry, some of the brand activities have been turned online, and some luxury brands have also been sold online. Professor Dong Xiaolin said: online live broadcast and sales have opened up new sales channels and space. Although the situation is pressing, it is beneficial to the transformation and development of the industry.

The Milan Fashion Week held in February 28th is an online live broadcast of brand activities. The video of Milan fashion week in Tencent attracted many netizens. It also gave the public a chance to sit in front of the fashion week. After the fashion week in Milan, Paris fashion week was also broadcast to the public. Among them, the Chanel show attracted 3 million 500 thousand people to watch online.

Moreover, according to the latest report released by Bain consulting agency and Alibaba, there are several luxury brands combined with Tmall to get through online and offline channels during the epidemic. For example, Italy luxury brand Prada (Prada) was stationed in Tmall's e-commerce platform in February 25th; Armani (Giorgio Armani) announced its entry to Tmall in March 20th, and the 30 remaining products are the exclusive start of the whole network.

In Jingdong, more than 200 luxury brands have officially entered. Such as Chanel group's cashmere workshop BARRIE knitting, jewelry workshop GOOSSENS and other brands, have opened an official flagship store in Jingdong.

Innovation is the first driving force for development. The digital transformation of the luxury industry is a new balance and adjustment of brand development in the epidemic situation. In response, Professor Jiang Lin said: with the development of technology, some luxury goods can be promoted through online mode, but there are still a number of products that can not be done. However, the general trend is to change its original business to suit the changes in consumption after the outbreak.

At this stage, the loss of every major brand luxury enterprise is inevitable, but crisis and opportunity coexist. After the outbreak of the market, the offline market should continue to consolidate. Walking on two legs requires a mutually reinforcing relationship. " Professor Dong Xiaolin said.