The COVID-19 pandemic has had a significant impact on the luxury industry, causing a sharp decline in revenue. In response to this, Delphine Vitry and Jean Révis, founders of MAD Network, conducted a study to analyze the financial impact and future of luxury brands. While exact figures for 2020 are still uncertain, it is estimated that revenue will decrease by 20% to 35% across different groups and product categories.
Given this challenging situation, the question arises as to how the luxury industry will recover. Vitry and Révis point out that luxury brands have fixed costs of around 70%, making it difficult for weaker groups with lower profit margins to survive. However, they do not foresee a catastrophic outcome for the industry as a whole.
There are two potential solutions to the crisis: increasing prices or reducing costs. It is crucial for luxury brands to carefully evaluate where cost-cutting measures can be implemented without hindering a swift recovery. Surprisingly, recovery seems to be happening faster than anticipated, largely due to the rise of e-commerce and digital communication. However, it remains uncertain whether these trends will persist in the long term.
Vitry and Révis also discuss the new rules that have emerged in the luxury market as a result of the crisis. They emphasize the shift in consumer consumption towards mainland China, driven by a sense of national pride. Luxury brands need to focus on China as a whole, rather than just Chinese consumers. Additionally, no-channel strategies and brand purpose have become more important than ever. Luxury brands must define their purpose and bring their brand culture to life for customers on a daily basis.
The duo delves deeper into topics such as cultural shocks, the changing role of sales teams due to digitalization, the revival of the employer brand, and the need for everyone to be on board. Their full presentation can be viewed on the Salon du Luxe Paris 2020 platform.
[Link 1: Salon du Luxe Paris 2020](https://salonduluxe.paris/)[Link 2: MAD Network](https://www.mad-network.com/)
