No part of the retail industry is immune from the impact of the pandemic. The sad news from Harrods that circa 680 redundancies are planned (approx. 14% of workforce) is a stark reminder of how the luxury sector is also being hit by the destruction of tourism and a contraction of discretionary spending in wealthier customer demographics. It is also a valuable insight into the fact they believe that the industry is unlikely to recover anytime soon.

All luxury brands & retailers are in the same boat. Expect more restructuring over the next few months as businesses act to protect profitability over the short to medium term. Pre-crisis, luxury was one of the most valuable sectors in the industry and frankly the fundamentals over the long term are still positive. However, the way brands and retailers navigate the next couple of years will be key to longer term prosperity. Customers will not only be experiencing a reduction in discretionary spend but also a much greater 'guilt factor' - consumers asking themselves if buying a luxury item is really appropriate in the middle of a global health and economic crisis? Luxury brands need to ensure their relevance is reinvented for a new age of conscientious consumers as well as ensuring that customers can access their products and the experience safely and conveniently.

In the meantime, luxury players will continue to reduce costs and create more resilience to counter weak demand and prop up profitability. In reality, certainly compared to other retail segments, many of these organisations have not been run in a particularly lean way in the past, so there is a greater opportunity for productivity improvement than in low margin sectors. Retail leaders are taking the opportunity to create a more efficient structure to assure the viability of the business. However, this needs to be done with extreme care. It is vital to protect and enhance the uniqueness and exclusivity of the customer experience otherwise customers will simply not return.