Traditionally reliant on in-store sales to drive growth, the pandemic has accelerated the importance of ecommerce with more luxury brands embracing digital as the go-to channel.
2020 marked the first major dip in luxury market growth, with Kering Group seeing sales drop 16.5%. But, there is hope. In Bain & Company’s 2020 Worldwide Luxury Market Monitor, the firm estimates that the market will recover to near pre-COVID-19 levels sometime between 2022 and 2023.
Joining us in our latest unEDITED: Inside Retail episode, Carlo Moltrasio, Senior Manager at Bain & Co., explains the findings in Bain’s research. An expert in luxury fashion with over seven years of experience supporting several notable luxury brands, Carlo provides data-backed insights into the market’s performance over the past year, as well as an overview of where it’s heading next.
- When the entire world faced strict lockdown measures and stores shuttered, luxury brands were forced to adopt digital strategies in order to reach customers. According to Bain & Co., digital penetration from brands went from 12% in 2019 to a staggering 23% in 2020. This digital acceleration increased luxury sales from €33 billion in 2019 to a whopping €49 billion in 2020.
- In the luxury market, the digital space has traditionally been dominated by multi-brand retailers such as Farfetch. With more luxury brands partnering with third party sites, there has been pressure on these marketplaces to be more disciplined on pricing and discounting strategies for luxury products. Carlo says, “The digital space is not a battle of one. It’s a battle of an ecosystem in which you really need to find the right model to work with other players and incumbents in that space to make sure your brand is visible 100%.”
- While the pandemic’s impact continues to wreak its effects, Carlo mentions that the biggest game changer in this market has been the changing face of the consumer. Carlo explained, “The consumer is at the center of this discussion. This industry has been historically very product focused rather than consumer focused. The real opportunity is to be consumer centric and then flow that into the different areas of the business to understand how to best serve consumers.”
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