The fashion and luxury category as a whole will lose between $450 and $600 billion in sales, BCG continued.
The current crisis is more significant than the great recession of 2008, said Javier Seara, BCG’s global sector leader for fashion and luxury, in an interview with Vouge business
“The previous recession was not a consumer crisis, but a financial crisis, he stated. “What we are living through right now is more deeply and drastically on a human dimension, it has to do with existential anxiety more than financial anxiety.”
Just a few days later, representatives from from McKinsey, Digital Luxury Group and Lamborghini joined an MID webinar that focused on the significance of the COVID-19 crisis for the luxury industries. While 10 percent felt it would be negative for their business and 24 percent were uncertain about its impact, and two thirds believed that the crisis would bring positive changes.
COVID-19 MAY SEE CHINA’S DOMINANCE BEING CHALLENGED
While Asia is likely to recover faster than Europe and the United States in the short term, all key markets will emerge from the downturn.
Indeed, the speakers noted, the crisis could have the effect of the suppressing the growing dominance of China, which was a trend that was considered irreversible until the start of the year.
This could be particularly relevant if more Western manufacturers select to rebuild previously eroded production capacity closer to home.
Support for local markets and domestic manufacturing capacity could be a decisive factor, as government pump money into their own economies to encourage economic growth and recovery.
If manufacturers step up their local production capacity, some luxury brands are suggesting that the crisis could have the effect of the suppressing the growing dominance of China, which was a trend that was considered irreversible until the start of the year.
With Augmented Reality and Virtual Reality technologies are going to be more frequently used in the luxury retail trade, holographic experiences could become more commonplace for consumers.
The role of the business community is paramount in this respect. The 2020 Edelman Trust Barometer showed that people have more trust in the private sector than in either the government to help them through the crisis. Luxury firms, the MID webinar was told, will need to continue engaging in public-private partnerships to show that they are contributing positively to society, but if they will earn the respect of consumers.
VIRTUAL EXPERIENTIAL LUXURY TO BE MORE COMMONPLACE
What is clear is that there will be a rebalancing between digital and physical retail, webinar participants were told, and this may mean brands might accelerate the downscaling of their stores network, especially in China.
An instant poll conducted by IMD during the webinar indicated that 72 percent of participants felt that that those luxury brands that do not sell online should now reconsider this choice.
Experiential luxury was already a trend before the crisis, webinar participants heard, and now the digital shopping experience is likely to improve considerably. Augmented Reality and Virtual Reality technologies are going to be more frequently used in the luxury retail trade, with holographic experiences that placing consumers in virtual stores that mimic their physical counterparts becoming more commonplace.