The Proportion Of Chinese Consumers' Purchases Will Grow Further.

The impact of any form of crisis is directly proportional to the existing vulnerability, which applies to individuals, enterprises, individual institutions and various economic sectors. The foundation of the luxury industry is quite solid: the global market for personal luxury goods (clothing, accessories, jewelry, watches and cosmetics) has demonstrated its ability to withstand various economic and financial crises. From the beginning of twenty-first Century, even in the worst case, sales of luxury goods were relatively stable. Many years maintained a two digit or high single digit growth. If the new crown outbreak did not erupt, it would be the same in 2020.

Claudia D 'Arpizio and Federica Levato, two analysts from Bain & Co., said: "in 2019, the luxury industry recorded sales of 281 billion euros, up 7% from the current exchange rate in 2018, up 4% from the fixed exchange rate, and by 2025, we expect annual growth to be between 3% and 5%. However, sales in the first quarter of this year fell by 25% to 30%. Compared with 2019, the annual loss will be between 22% and 25%, equivalent to 600 to 70 billion euros.

The title of Bain's report is a pun: "Luxury after Covid-19: changed for (the) good?" - luxuries after the new crown epidemic: always change (for good) / become better (for the good).

Two analysts stressed: "in 2021, we expect that the market will resume growth. This is the trend we have identified since 2019 and will become the keynote of 2020. The driving force will come from the Chinese market, digitalization and Y generation and X generation consumers. This is a huge difference compared with other economic crises, the SARS in 2003 and 2004 and the world after "9-11". The new crown crisis may accelerate the development of this trend, and the role of the Internet and digital technology has begun to show its good side. The recovery of the Chinese market is also based on the fact that the epidemic has been concentrated in a city (Wuhan) and a region (Hubei), far away from Beijing and Shanghai, which is quite different from Italy Milan, Spain Madrid and the United States New York.

According to Bain's analysis, the short-term strategy of luxury companies and groups must be based on three points:

The priority is to provide protection and assistance to employees at all levels from factories to stores.

Enterprise leaders must make plans to deal with and try to get rid of emergencies.

Starting from the supply chain of luxury goods, enterprises should regard this crisis as an opportunity to aim at future challenges.

Claudia D 'Arpizio and Federica Levato stressed: "in a sense, maintaining stability and health is a double-edged sword. Those changes that are considered too risky are delayed and enterprises are hesitant. This applies to all walks of life. To be honest, it may be less effective for luxury goods, especially for fashion industry, because its market uncertainty, volatility and the industry needs that need to be updated many times in a year make it more responsive. But in the face of such a crisis, no one is really ready. "

In other words, Bain said: in other words, it is time to implement a truly digital boost strategy. "Luxury supply chain is very long and complex, the main participants are large enterprises, but they need to make each decision process more agile, and the supply chain must follow two principles: flexibility and sustainability. Only in this way can economic rebound be achieved, and in society and environment, enterprises are required to adhere to responsible actions.

Bain expects the proportion of Chinese consumers to buy will grow further: from 2019 to 35%, which accounted for 50% of global luxury consumption, compared to 46% we forecast four months ago. The prospect of tourism retail is still very uncertain because tourism will be a difficult industry to recover, especially outside China. "We must not forget psychological factors. The Chinese have already started spending again, and the United States and Europe will take longer. "