Overall, the impact of this epidemic on luxury goods It is both a challenge and a magnifying glass for the industry.
Affected by the epidemic, many luxury brands have had to lower their performance expectations for fiscal year 2020 and take measures such as temporarily closing stores in China and shortening business hours.
Recently, Bernstein collaborated with the Boston Consulting Group to investigate the Bernstein asked 28 industry executives to learn about the impact they expect the virus will have, but Bernstein declined to name the executives interviewed.
It is reported that these executives expect that luxury goods sales will be hit by 30 billion to 40 billion euros (approximately $32 billion to $43 billion) in 2020 due to the spread of the new coronavirus. Additionally, 43% of executives surveyed said they expect industry sales to be affected over the next three to six months before leveling off.
In fact, the impact of the new coronavirus is often compared to the SARS epidemic in 2003, which also hit luxury sales at the time, but brands quickly recovered from the incident. Recovered.
And Bernstein’s report points out a key difference between the two epidemics, as a group of the firm’s analysts wrote: In 2003, Chinese consumers accounted for only a 10% share of global luxury goods market demand. 2% to 3%, but now the contribution proportion of Chinese consumers is already 10 times this number.
According to data from Bain & Company, global consumers spent US$306 billion on personal luxury goods in 2019, and Chinese shoppers accounted for more than one-third of global luxury goods sales. Among them, Chinese consumers also contributed two-thirds of the growth of the global luxury goods industry.
This means that the impact of the luxury goods industry on the Chinese market will expand. According to E-Commerce News, Burberry Group has closed about one-third of its Burberry stores in China, but the traffic of the stores that are still open has dropped by 80% year-on-year. Therefore, Burberry has also withdrawn its 2020 full-year performance forecast. .
In addition, Capri, the parent company that owns the Michael Kors, Versace and Jimmy Choo brands, also said that they decided to close 150 of their 225 Chinese stores and lowered their sales forecast for this quarter by US$100 million.
It is not difficult to see that the most intuitive impact of the epidemic on the luxury goods industry is reflected in the shrinking sales of offline stores. According to statistics from the Shanghai Jiao Tong University Industry Research Institute, in the five central cities of Wuhan, Shenzhen, Guangzhou, Shanghai, and Beijing, the flow of people in top shopping malls and luxury flagship stores during the Spring Festival dropped by about 80% compared with the same period in 2019.
However, just as many luxury brands’ offline activities and physical retail store businesses have been hit, many luxury goods companies have set their sights online. Take the luxury e-commerce company Secoo as an example. Secoo has previously issued an initiative announcement to attract more brands and buyer stores to the Secoo online mall to help digest existing inventory and increase cash flow.
Recently, Ontimeshow officially announced that due to the recent pneumonia epidemic caused by the new coronavirus, the Ontimeshow 2020 autumn and winter exhibition originally scheduled to be held from March 27 to March 30 will be postponed, and all merchants will start online for the first time. Launch the ordering mechanism and exclusively open all brands to the Secoo platform.
It is reported that the fashion show is actually a platform for buyers from various countries to purchase goods and exchange the latest information. It also indirectly maintains the relationship between high-end VIP customers and media who are invited to participate in the fashion show every season. Cancellation or postponement will have a certain impact on the brand.
With this cooperation, Secoo will not only launch Ontimeshow live broadcast special topics, but all Ontimeshow contracted brand designers and buyer stores can live broadcast in real time on Secoo’s live broadcast page while shooting and selling.
In addition, the Prada Tmall flagship store has also been officially launched in the past two days and is in the trial operation stage. The operating entity is authorized Tmall. The domestic delivery warehouse is located in Jiaxing, and SF Express is used for free shipping. Louis Vuitton seized the marketing node and launched a Valentine’s Day limited-time store on the WeChat mini program, achieving online channel sales that were twice as high as the same period last year.
On the whole, this epidemic is both a challenge and a magnifying glass for the luxury goods industry. After all, offline offline is a problem currently facing the entire Chinese luxury goods industry, but it can also force online sales. The integration of the Internet is accelerating and the luxury industry is closely integrated with the digitalization of the Internet.
Source: E-Commerce News</p
