With the world beginning to emerge from the COVID-19 crisis, luxury brands are facing challenges due to a significant global economic downturn. Many preexisting trends—particularly digital transformation—are accelerating, and an industry that was built family business by family business is now dominated by conglomerates.
This changing environment will require new ways of engaging with consumers and force the recalibration of operating models. It will also demand that family businesses develop new approaches to compete with the scale and scope of conglomerates.
To succeed, luxury brands must focus on what they can control now—their supply chains, their channels, and their consumer communications—so they can adapt as new conditions emerge. Focusing on three key characteristics can help luxury brand companies prepare for the future.
Right now: Relevance
In a world that has become reset and perhaps revalued, the luxury market will have to carefully position itself. It must reengage consumers in a dialogue that is relevant and authentic.
Near future: Agility
While relevance is important for the immediate future, having a robust supply chain and a product cycle that can react and change in the face of uncertain market demands is becoming essential for the near future.
Long term: Endurance
Building and perpetuating an enduring brand are every luxury company’s goals. And optimizing cost structures, supply chain relationships, operations, channel mix, and direct relationships with consumers can help maintain efficiency and profitability in the future.