How are luxury & premium brands supporting the pandemic relief effort and what’s in store for them post-Covid?

21 May 2020
Author: Linzi McGuire

Global sales of luxury goods are expected to slump by 50 - 60% in the second quarter, even as some countries begin to ease lockdowns, Bain reported.

This may come as little surprise as the virus hits global hotspots for buyers and manufacturers of luxury brands, like China and Italy. So, while sales are low and several luxury brands have suspended normal production how will they survive the pandemic?

Protect your reputation and leverage your audience for the greater good

It’s a trend we’ve seen emerge as the pandemic progresses. Luxury brands around the globe have diverted resources to make and source health care products that are in short supply, like surgical gowns, masks, hydroalcoholic gel, hand sanitiser and even electrical equipment like ventilators.

GQ Magazine include brands like LVMH, parent of Louis Vuitton, Dior, Marc Jacobs, Givenchy and Celine; Kering, parent of Balenciaga and Saint Laurent; Coty, owner of Gucci, Burberry and Clairol; the Armani group, parent of Emporio and Giorgio, and Ralph Lauren on the long list.

We’ve even seen Tech giants and globally recognised innovators like Dyson, Tesla, and Apple get involved.

And not only are they supplying the goods, but they’re drawing on their loyal communities around the world to join them in supporting Covid-19 initiatives. One example of this is the #GucciCommunity campaign which calls on global advocates to support the WHO and Italian charities to help prop up local health service. 

The demand for luxury may have dwindled but consumers still want to pay for premium quality when they purchase

If we turn our attention to the automotive sector, when BMW first launched their ecommerce store, the data revealed an unexpected trend - most sales came from the higher end of the product range, suggesting there was an interest from well informed, time poor consumers.

Car showrooms will be eager to re-open their doors following the recent unprecedented 97 per cent drop in new car sales. With just 4,321 vehicles bought in April, it was the worst month for car registrations on record since 1946. 

However, a poll by What Car? revealed the demand to buy exists, with 18% of buyers intending to purchase a new vehicle as soon as the Covid-19 crisis ends, while 6% want to purchase in the next 4 weeks. So, what’s the downside? Well, one-in-three eager-to-buy drivers said they will be unwilling to wait more than a month for their vehicle to arrive, and if that’s the case they’ll shop elsewhere or buy another brand. Meanwhile a quarter are unwilling to wait more than 8 weeks for a vehicle to arrive, despite some production lines not yet operating again after the pandemic.

To combat this, UK manufacturer Bentley restarted production last week, following in the footsteps of rival luxury vehicles makers Rolls-Royce and Aston Martin, both of whom restarted manufacturing 2 weeks ago.

Additionally, despite the pandemic, the demand for Tesla is higher than ever. The premium brands of old are now competing with this new kid on the block. The Tesla Model 3 is the UK's top-selling new car and requests for the vehicle have still been coming in, even with the nation's car dealers in lockdown.

So, armed with this knowledge how can luxury brands capitalise on this?

Premium and luxury brands could learn 2 lessons from China

Hindsight is a wonderful thing, but with China xx weeks ahead of the UK and Ireland, brands can learn a thing or two by looking to the East:

1. Brands need to maintain connections with their loyal advocates

2. Brands need to embrace the new digital lives that consumers have built, even after stores reopen, to bridge the gap between the physical and digital store.

Despite a slump in sales, Bain reports that online luxury has remained resilient, commenting that the pandemic will spark the shift from physical to digital shopping to 30% by 2025, from 12 percent in 2019.

In 2016 BMW, inspired by Apple, created an in-showroom area similar to Genius Bars where consumers can get advice from an expert who isn’t there to force a sale or paid on commission.  With government restrictions and fears over health continuing even as stores reopen, is now the time to move this service online? The technology to deliver a brilliant personal brand experiences already exists, as demonstrated by HP in 2018. Could more premium brands take advantage of this?

Linda Gallagher, Managing Director of experiential agency, Wave comments, “Covid-19 has influenced significant changes in the consumer shopping journey, and the increased role of online for both influencing and purchasing will live long after lockdown. All brands, but particularly premium brands who rely on the personal touch, need to consider adopting technology that enables consumers to get that personal experience digitally and take them through to actually buying the product”.

Follow our entire retail series on our LinkedIn page all week. If you’d like to chat to us about anything mentioned here or any other related queries, please contact us.  



For more information on Linda Gallagher, Wave Managing Director, visit her LinkedIn page

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