Post Covid-19: How can Luxury Fashion Brands rebound in India?

As coronavirus impact seems to be slowing down in some parts of the globe like China, luxury brands sales have started rebounding. Lately, with Covid-19 lockdown lifted, flock of Chinese shoppers have been found in luxury boutiques in mainland China. The ultra-high net worth individuals are the major drivers of luxury sales under Covid-19, as they are least affected financially. Even if there is some cut in their numbers, it is just like a drop in the ocean. However, young consumers are also seen contributing in this drive as they are diverting their travel and holiday budgets into buying luxury items.

Now, the key question coming in our minds- Will the similar buying pattern be witnessed in India also after the lockdown is over? Will we see surge in luxury spending post covid-19 in India?  Will the consumers become desperate for ‘revenge buying’ after being in quarantine for so many weeks? Of course, there will be a set of consumers who would be rushing to indulge in luxury shopping experiences to rejuvenate themselves as luxury is the ‘way of their life’ and they cannot live without it. (As we recently witnessed that even after 70% ‘corona’ tax people were queuing outside the liquor shops). While, there would be other set of cautious buyers who would want to move away from discretionary spending and save for the unforeseen future. Luxury marketers have to devise right set of strategies to entice both these segments.

Here are the 5 comeback strategies for luxury fashion brands.

Emphasize on products with “Long Term Value” or “Investment Appeal”: India is a value-conscious market.Luxury brands will be able to capture the attention of luxury buyers by clearly communicating the long-term value proposition and investment rationale in the ownership of their products. Believe it or not, connoisseurs will be willing to pay even more on quality, timeless items that offer high value and perceived as investment items. The record high sales of $2.7 million of Hermes recently in China on the first day of its reopening post lockdown is the best case to learn from.

Note: Companies should highlight the legacy, craftsmanship and hard work that goes behind producing such items via Instagram stories, videos and other digital means.

Add “New Product” Categories: Companies will need to introduce new product categories keeping in view the altered lifestyle of luxury consumers. Fashion items which we considered essentials such as pajamas, masks, aprons or comfort wear can be new style statements. Hence, luxury brands should focus on these categories and extend their product lines. Brands like Louis Vuitton are selling designer masks to consumers to turn the new necessity as a way to express one’s identity. Similarly, luxury brands should focus on introducing new sustainable or green products to capture on the prevailing sentiment of the luxury buyers. During these times, most of the consumers have realized that ‘less is more’, so they would prefer to go for quality rather than quantity. They might shift from fast fashion to slow fashion. Instead of buying 10 articles from Zara, they may settle in buying one piece from Chanel.

Note: The companies should focus on more meaningful luxury.

Sustainability and Cause Marketing- A Must Have Arsenal in the Marketing Mix: Covid-19 has left a deep impact on the emotions, thought process and perception of luxury buyers. Consumers across the globe have realized the power and importance of ‘Mother Nature’ in our lives. It has made all of us more concerned, attached and sympathetic towards the society and environment we live in. In view of these circumstances, sustainability has become the cornerstone of all strategies and marketing efforts of companies and luxury brands are no exception to this phenomenon. For instance, haute couture brands from Chanel to Burberry are using their resources to make protective clothing to safeguard healthcare workers. Cause Marketing can be a major arsenal for luxury brands to win customer’s attention during these sensitive times.

Note: Companies which will act responsibly will only be able to survive and thrive during these difficult times.

Prepare for new business models: During this pandemic, consumers may shift from the unhealthy ‘throwaway’ culture to new economic model – ‘circular economy’, which brings the notion of restoration and regeneration in place of traditional end-of-life concept. New business models like re-commerce, pre-owned fashion or consultancy services will emerge stronger. For instance, consumers could pay on an hourly basis, for getting one-on-one styling advice in person or online. These services will facilitate consumers to learn to use already available clothes in different ways rather than buy new ones.

Note: This is the right time for companies to explore new business models.

Formulate Strategic and Tactical Plans around Digital

Digital has to be the new normal for luxury brands.As even post lockdown consumers due to the fear of pandemic will increasingly shop over digital channels. Companies will need to invest in technologies that offer omnichannel shopping experience to luxury buyers, be it use of Augmented and Virtual Reality, Shoppable Videos driven Live Fashion Shows, Data Analytics and AI driven personalization tools or Virtual Shopping Assistants. Recently, for the first time ever, Shanghai fashion week went completely digital. Over 150 brands live streamed their collections via Tmall, Alibaba Group’s e-commerce platform. Consumers were given the opportunity to ‘see now buy now’, which allowed the shoppers to buy runway items instantly with their phones.

Note: In future, more and more brands have to adapt to connect with consumers online.

The outbreak of Covid-19 has altered the shopping behavior of luxury consumers. The luxury buyers, who were always on the hunt for something new, have become more cautious about value, conscious about environment and concerned about the society. Luxury brands will need to take a serious relook on their strategies in order to reestablish themselves in the Post Covid era.

Note: This article has been previously published in Fibre2Fashion Magazine.

6 Key Revival strategies for Luxury Industry: Post-Covid

Luxury consumption is driven by feelings, emotions, self-identity and social status. These motivations will never wane or fade. However, the beliefs and values that shape what people consume and how they consume is undergoing drastic changes. With the outbreak of Covid-19, there has been paradigm shift in luxury consumer behavior. This makes it imperative for luxury companies to transform their strategies as well as offerings.

Here are the 6 key shifts that will determine the success of luxury players in the Post- Covid era.

  1. Opacity to transparency: With consumers’ growing concern about the environment, fair trade practices and sustainable resourcing,luxury companies should ensure transparency and visibility in the entire supply chain, right from the procurement of the raw material to delivery of the final product to the consumer. Luxury brands such as LVMH are embracing blockchain technology to trace luxury goods supply chain. Such technologies will help in gaining consumer confidence and trust by bringing awareness about the authenticity of the product.

Note: Ethics will become as important as aesthetics as consumers prioritize purposeful brands.

  • Disconnection to connectivity: Despite of gradual reopening of the stores, consumers are reluctant to visit these stores as the fear of the virus still surrounds. Across the globe, there has been massive shift to digital channels. It is highly probable that some shoppers will stick to digital offerings even after the pandemic is over as it will become the ‘way of their life’. Therefore, luxury companies should make all efforts to connect with their consumers at all touch points, be it physical or digital. In the near future, if the companies do not have their own digital platform, they should look for partnerships with existing marketplaces (for example, Farfetch; YOOX Net-a-Porter) to sell online. They should explore collaborations with tech companies to boost not only their digital sales but also give a compelling reason to shoppers to visit their physical stores.

Note: Companies should invest in technology to build deeper connect with people both online as well as offline.

  • Linear economy to circular economy: The long-term sustainability of the luxury industry is under significant threat from various social, economic, human rights and climatic factors. Circular economy approach requires companies to use sustainable raw materials, close the material loops and keep the material and products in the loop, as long as possible. Transition requires a new organization, a new mindset and new forms of action by companies. Italian fashion label, Gucci has recently announced that it will cut the number of fashion shows from five to two every year in an effort to reduce waste.It is first major brand to make such a bold decision to support the move to a leaner, less wasteful fashion system. Similarly, Adidas and Allbirds have collaborated to create a sneaker with the ‘lowest ever carbon footprint’.

Note: Luxury brands need to do careful and smart slowdown with more emphasis on sustainability, creativity and craft.

  • Status symbol to self-expression –Today, consumers want to spend on luxury products to express themselves rather than to flaunt.  They want to rejuvenate themselves and feel special by owning high-end items. Luxury is no longer about ‘fit in’. In the most recent quarter during the pandemic, affordable luxury brands have been severely hit as compared to true luxury brands. Although, Hermes reported a 6.5% drip and LVMH’s fashion category reported a fall of 9% in revenue, affordable luxury brands such as Coach has seen a drop of around 20%. Affordable brands which are resorting to deep discounts to get the sales may run into the risk of jeopardizing their brand equity. During this crisis, even the younger generation has started valuing quality, craftsmanship and design over quantity. Hermes sales of $2.7 million on a single day after reopening of its Guangzhou flagship store, clearly highlights that there is increased aspiration for timeless and eternal luxury.

Note: Luxury brands should focus on values, heritage, craftsmanship and authenticity rather than emphasizing on loud logos.

  • Rigidity to flexibility: Companies will have to devise newer ways to work, add new product lines as per the changing consumers’ lifestyles and explore new strategic associations. Once the lock down lifts, companies will have to redefine their processes. They have to ensure that safety, hygiene and social distancing norms are adhered in-store through contactless selection and try-ons, self-checkout counters, automated doors, etc.

Also, with onset of the pandemic, health and well-being has become priority for everyone. From ethical beauty products to organic food; from conscious clothing to fitness equipment, are seeing increase in demand.  Likewise, there is surge in demand for household appliances, home decoration pieces, indoor games and electronic devices, as people are spending more time in their homes. Luxury brands should capitalize on the opportunity to serve these areas. Recently, French Fashion house, Louis Vuitton has unveiled designer gym equipment range. Similarly, top designers are entering into home décor or selling designer masks and chic track pants.

At this time of crisis, companies can look for new partnerships and alliances to strengthen themselves. For example, Walmart for the first time has entered the clothing resale market with online fashion resale platform ThredUp to sell previously owned branded clothes, shoes and handbags.

Note: The ability and speed to adapt to the new environment will be the key factor in determining the success of the brands.

  • Classic stores to experiential places: Today, brands need to make their physical stores instagrammable, sharable and relatable to entice millennials and Gen Z who breathe in the digital world. However, while doing this, they must stick to their brand’s DNA and core values. This will make the brand authentic and meaningful for the new generation.

Note: Brands need to redesign their stores into experiential places. They must be innovative and modern, yet holding to their roots.

To emerge as winners in the ‘new normal’ luxury companies have to understand the evolving expectations of consumers, their changing preferences and priorities. Luxury companies that restructure their business processes, relook at their value chain, rework on their product portfolio, redesign their distribution channels and redefine their communication strategies to embrace the new needs of the consumers will certainly emerge as champions.

Note: This article has been previously published in Indiaretailing. Com

Going Digital: The only option for Indian Luxury Market

For a long time, luxury brands from Rolex to Rolls Royce and Louis Vuitton to Lamborghini, have been facing ‘Internet Dilemma’ of how to be inclusive and yet maintain an aura of exclusivity. Therefore, this sector has been the last one to embrace digitization. But, with the outbreak of Covid-19, the rules of this industry are certainly bound to change.

Covid-19 is wrecking a severe blow to luxury sales globally and India is no exception to the same. Luxury market, although rapidly growing in India, is still at a very nascent stage and thus, unforeseen events like this pandemic is forcing luxury brands to take steps in all fronts to keep the industry growing. One such step which brands have relatively ignored over the years is online luxury retail.

We all know that luxury is one of the most difficult and challenging sector to replicate offline purchase experience in the digital realm. The task of creating unique, magical and unparalleled shopping experience online for luxury brands is a long, challenging path that luxury brands in India must navigate in order to remain afloat during these troubled times.

The key question that keeps coming in the mind of luxury entrepreneurs and professionals – how luxury brands pursue the digital path? To answer this question, we need to first understand psychology of luxury consumers and their purchase behavior. In the past we have seen during other crisis that luxury industry has been the first one to be affected but also the first to bounce back. It is simply due to the phenomenon of ‘Revenge Buying’ – an increase in consumption due to forced abstinence. We have seen this phenomenon recently happening in China where Hermes achieved a record single day sales of $2.7 million during the reopening of their flagship store post Covid-19 lockdown.

So, can this phenomenon occur in India as well- Absolutely Yes! After witnessing this deadly incident so closely, ‘YOLO’ (you only live once) will be the reason for irrational spending behavior of the new age consumers. The number of luxury shoppers driving this spree may be limited but those who will buy will possibly overspend as they get the opportunity to splurge for the first time after so many weeks.Also, millennial population will be more inclined to do digital shopping rather than visiting physical stores. The fear factor of getting virus at crowded places will force the luxury buyers to focus on online luxury shopping more than ever before.

However, easier said than done, the route towards digital for luxury brands in India require lot of strategic thinking and tactical plans. The task of replicating unique, personalized luxury buying experience offering in offline stores will require investment in world class digital technologies- ranging from augmented reality/virtual reality to artificial intelligence, data analytics and so on. Tools like 360 degree viewing, virtual dressing room, etc. are some of the latest must-haves that brands will need to incorporate for successful digital retail foray. In addition, the humanistic element should be intertwined cleverly with digital tools to make consumers feel pampered and well attended during their purchase experience.

We all know that Indian consumers primarily buy luxury goods to show off or their luxury purchases are motivated by significant others. As per recent research, 57% of Indian consumers shop via social media compared to 30% global average. Hence, luxury brands should use social media to their best use and deploy all tactics to integrate social commerce in their digital strategies. 

The brands will also need to be very selective and focus on the digital communication, online public relations and allied content strategy. Today, consumers are becoming increasingly concerned about sustainability and environment, focused on frugal lifestyle and avoiding discretionary expenditure. Hence, companies need to clearly deliver their commitment towards sustainability element in their brands and long term value proposition over generations for luxury buyers. Indians are value conscious buyers and events like Covid will make them even more concerned about the value derived from purchases. Hence, it is critical to understand these idiosyncrasies of Indian luxury consumers. 

As per the recent McKinsey Report, India is home to the second largest digital base in the world. From the current around 600 million internet users, it is projected to reach 800 million internet users by 2023. With democratization of internet, rising number of HNIs, increasing brand consciousness and growing number of new age consumers, the online luxury market in India is ready to bloom. The time is ripe for Indian luxury brands to wake up and take the digital route. Digital is the way forward but the path towards digitization is full of challenges, yet rewards are attractive enough to navigate this challenging path. Take the right steps, get your act together and establish your presence in one of the world’s most rapidly growing luxury market.

Note: This article has been previously published in ET