COVID-19: Sale Of Luxury Goods Hit Hard; Impact Not Felt In China
The COVID-19 pandemic has hammered the luxury market and to make up for their losses in Europe and the US, brands are focusing on China.
From the earliest stages of the pandemic, the luxury industry has been highly attuned to the spread of the Coronavirus and its massive implications for the sector. Luxury brand owners felt the first rumbling of the storm when COVID-19 spread through China, the country whose citizens accounted for 90% of global luxury market growth in 2019. When the virus reached Italy, where many brands are headquartered and have key supplies, they faced the additional challenge of operating as and where possible amid a national lockdown.
In the first quarter of 2020, it was predicted that global luxury sales will suffer a year-over-year decline of 25 to 30 per cent, although there are signs of recovery in China. For the year as a whole, three scenarios were modelled for the likely performance of the market, involving contractions of 15 to 18 per cent, 22 to 25 per cent and 30 to 35 per cent. Leadership teams can mitigate today’s threat and accelerate into an eventual recovery if they govern through a new leadership framework.
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