An expert suggested a business strategy for luxury market players where they would continue to maintain their earnings amid the pandemic. He claimed that the disruption of supply chains in China might compel the companies to adjust to a new reality like other industries. However, fashion brands may still generate profit as long as they continue to digitize their products and services.
Program leader of the postgraduate fashion business course at Instituto Marangoni in London and former lecturer with the Fashion Business School at the University of Arts in London Abdullah Abo Milhim shared his insights. He claimed that luxury brands and other luxury market industry players might weather the pandemic storm if they rely lesser on retail stores and focus more on digitization.
He claimed that companies must start looking at how to reconnect and engage their customers to maintain their brand loyalty. Milhim suggested that the pandemic changed the psychological behavior of luxury brand consumers in terms of developing relationships with brands. He also claimed that their shopping behaviors had added pressure to luxury companies after the former have been used to staying at home for a more extended period and prefer to shop online.
Mulhim then suggested that consumers may be focusing on essential purchases, but companies should not be cutting marketing budgets since this business strategy is a necessity during the pandemic. He highlighted that luxury brands might need to monitor their consumer behavior as they would need to reconnect with their customers when the pandemic halts.
He then likened the situation with the 2008 financial crisis where luxury brands recovered from losses. He claimed that companies who survived the crisis took advantage of growth opportunities by focusing on monitoring consumer behavior.
In Hong Kong, customers have started to sell their used luxury items. Milhim suggested that this market behavior would create new markets for re-sale and second-hand opportunities that would boom in the region. He also highlighted that the luxury market is the most vulnerable during the crisis, but new opportunities would rise once the crisis is averted.
In other news, the Business of Fashion reported that the luxury market's future much depends on China's recovery from the pandemic. It was revealed that the country's GDP contraction suggests that a global recovery may take longer than previously anticipated. Thus, most luxury brands may need to await the country's recovery from financial losses and decreased business activity for the market to gain momentum.
