Amid the pandemic and the ensuing public health and economic crisis, luxury brands have to find their footing. Whereas before, their largest market—the Chinese consumers—spend billions of dollars on luxury items, this is not what economists see in the future. Although companies remain bullish about China’s recovery in the next couple of years, their domestic spending has to increase to cover the losses these brands incur abroad. Luxury brand Hermes alone saw a 42% decline in their sales in the second quarter of 2020, and Burberry’s shares are down 40% last year, too.
The common perception is that consumers will not want to buy products that they cannot show off to their friends. Who’s going to see your limited-edition Louis Vuitton handbag if you are staying at home? Who’s going to notice that you have the latest Birkin if all your business meetings are done via Zoom?
For many, this is not the time to buy luxury items. They are focused on merely surviving each day without contracting the virus that has killed millions of people around the world. But surprisingly, luxury brands made a shift that seems to resonate well with their target market.
Unfortunately, electric cars still fall under the category of luxury vehicles. With people more conscious about their activities’ impact on the environment, they are turning to more sustainable ways of traveling. Despite the pandemic, Tesla reported that its sales grew by 36% last year and that it delivered 499,500 vehicles in 2020. Despite it falling short of the company’s lofty delivery goals, it’s a far better outcome than what anyone would hope from a year that saw the world in isolation.
Even amid the health crisis, people still want to travel, but they are doing it safelier than before. Instead of taking public transportation (and yes, that includes airplanes), many of them want to travel on the road by taking an RV, bus, or rented car. Those who have a bit more in their bank accounts are more likely to buy a luxury coach for sale because this can take them to more places conveniently.
The stock market is volatile, and so are other forms of investment. But there’s one investment that people like making right now—buying luxury jewelry items. Gold and other precious metals will only increase in value in the future. Although the price of gold in the market is also jumping up and down, it’s still a stable investment compared to the stock market and mutual funds.
You will find that many people are buying branded jewelry. The more limited the pieces are, the more they are willing to pay for them. The message of these luxury items is simple enough: their exclusivity will more than make up for the upfront payment you will make. When the time comes, you will reap the rewards of expensive purchases.
The apparel industry has been in a dire situation since before the pandemic. In terms of luxury clothing, people are still buying these thousands of dollars’ worth of accessories, pantsuits, dresses, and more. But here’s the thing: they found a way not to spend too much and enjoy such luxury items. They are reselling them. This phenomenon has been present for some time. Over the past five years, reselling clothes grew more than acquiring new ones. This is worth looking at in the future as luxury brands reinvent themselves to answer the demands of this emerging market.
So how can luxury brands survive during this time of great uncertainty? Luxury brands have to humanize themselves. They cannot be on that lofty perch they have been for most of their lives. They have to create affinity with their consumers (and even non-consumers). That’s where cause marketing comes in.
During the outbreak, luxury brands showed support to the fight against the spread of COVID-19. They gave donations to non-government agencies. They also manufactured personal protective equipment (PPE), sanitizers, and alcohol for frontline workers during the shortage of these items last year. Many of their ambassadors also encourage the public to support medical workers and heed the government’s advice on how to stay safe.
If the pandemic wasn’t easy on small businesses, it sure wasn’t easy on luxury items, too. However, as with many things in a world forever changed by the pandemic, businesses must learn how to innovate and use their strengths to champion not only their brands but their consumers as well. Through this innovativeness and resourcefulness, you can still find these luxury brands thriving despite the decline in sales.