COVID-19 IMPACTING THE LUXURY INDUSTRY
Coronavirus or the recently named COVID-19 has since its first outbreak has caused millions of lives to be impacted directly while the billions of other people are left in a cautious and feared state of mind.
When it comes to travelling, it is not as normal as it was earlier, it has become the luxury and in such a situation, buying luxury is not the natural choice of people. All over the world, with the visuals of the malls that have been deserted, operations of brands been closed, and factories are in quarantine, the luxury industry is witnessing one of the worst phrases.
CHINA AND LUXURY
Now, even before the COVID-19 crises had hit China, the signs were appearing that showed the extravagant Chinese spending period was coming to an end. With the fact that China had previously been known as a nation of savers that only more recently moved towards consumerism, this change is not surprising and the younger generation seemed to have a more holistic view of values.
They choose not to let their identities be defined by logos and labels, and their enlightened understanding of the world and an anti-consumerist attitude. Their intensely conscious effort to connect with the world and find real purpose has pushed health, culture, and experimentalism to the forefront.
The Chinese market was already maturing before Covid-19 hit. But, along with the social transformation, wealth is also an important factor. The country has a class structure defined by larger differences between rich and poor, and recent events show that the widening wealth gap is creating tensions in society.
In such a scenario, it is not suitable that the parading one’s wealth ostentatiously is now less appropriate than before. However, one cannot ignore the exceptions. Yes, there are still consumers who belong to the “aspirational class” belonging from the second- and third-tier cities who will continue to chase brands and products that signal a base form of luxury.
SOUTH COAST PLAZA- CALIFORNIA
The luxury shopping centre in the state, South Coast Plaza at California, LA, that has been home to various showrooms of leading brands like Balenciaga, Chanel, Gucci and Christian Louboutin was seen deserted according to a report as there has been a significant decline in the visitors because of the coronavirus scare. The state has witnessed its third death from the virus recently on March 10, 2020, of a woman in her 90s in a nursing home. The virus seems to continue to spread deeper into Californian communities as many have been tested positive and the cases begin to increase in numbers.
FACTORIES IN ITALY IN QUARANTINE
Being the 5th largest market globally for personal luxury goods, with leather goods dominating sales, Italy is impacted by the COVID-19 especially its manufacturing and production. With the decision imposed by the Italian government of there is a lockdown on the national territory until at least 3 April, the Italian luxury brands have been constantly fighting with the virus. Many shows by the brands which have the luxury products manufactured in Italy are now opting for a different course of action by cancelling and shifting their shows be it Giorgio Armani’s cruise show, scheduled for 19-20 April in Dubai which has been shifted to October or Versace and Gucci shows in the US, both of which are cancelled.
This health epidemic has caused the situation of inflation and deflation of various products across the world influenced by the customer decisions and in future, it affects the customer decisions. Having mentioned that, even a decade after the Greta recession, one could see the change in the shopping patterns of American and European millennials for good, luxury brands had been mostly unprepared for those changes.
Today, it can be seen that as China is coming back to the track, the thrifty spending habits were expected to rise anyway due to the novel inflation affecting the consumer goods prices especially. The “fearonomic effect”, according to a paper published in regards to Ebola epidemic said that certain sectors such as health, aviation, and hospitality felt the biggest repercussions while the economic impact was even stronger in other Ebola-infected countries such as Liberia, Sierra Leone, and Guinea.
As the luxury industry globally is still in a critical situation, as of March 11, despite the decline in the number of new cases of coronavirus recorded in China along with the return of Chinese employees to work earlier this week, the near-term outlook for luxury brands is deteriorating. While in China, the situation is not well, the other countries are also cropping new coronavirus cases impacting the luxury shares.
According to recent studies and reports, the navigation to normalcy is predicted as the analysts are expecting luxury sales to bounce back quickly once the worst of the coronavirus epidemic is over.