Yahoo Movies As Luxury Sales Recover, Industry Heavyweights Muse on Post-Pandemic Retail Scenario
MILAN — After almost 14 months of store closures and lockdowns of varying degrees, the luxury sector seems on track for recovery, with financials that are either improving or even skyrocketing in the first quarter of 2021 for groups from LVMH Moët Hennessy Louis Vuitton to Kering and Hermès.
The rollout of vaccinations in Europe and the U.S., as well as a consistent rebound of luxury spending in Asia, helped boost revenues in the three months ended March 31.
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Now that the sector is rebounding — and on track to meet the Bain & Company growth forecast for luxury goods of between 10 percent and 12 percent, or 17 percent to 19 percent depending on macroeconomic conditions and the evolution of COVID-19 — brands and retailers are left wondering how consumers will shop in the post-pandemic era and whether they will return to stores or surf e-commerce sites.
As outlined in research by consultancy KPMG presented during the Il Sole 24 Ore Luxury Summit held digitally on Thursday, online commerce jumped 23 percent in 2020, in 12 months equaling the growth previously expected over three years.
This compares with a 30 percent to 33 percent decline in physical retail sales and a drop of between 15 percent and 20 percent in tourism spending, leaving room for new strategies aimed at courting domestic markets with tailor-made approaches.
“The e-commerce channel has changed the consumers’ approach for good,” offered Diego Della Valle, chairman and chief executive officer of the Tod’s Group. “This shift has accelerated in the past 12 months because they experienced how easy, comfortable and seamless the purchasing experience online is.
“If we still aim to draw shoppers on a Saturday afternoon in our stores, we’d better offer a reason for them to stop by…physical stores will increasingly become communication assets, especially in Asia,” Della Valle said.
“The future will be a match between brands that have a story to tell and those which are able to intercept today’s lifestyle,” he added.
Della Valle spoke one day after Tod’s SpA reported a 17 percent increase in first-quarter revenues to 178.7 million euros, helped by triple-digit growth in China, a strong performance at the Roger Vivier brand and in e-commerce.
While the recent announcements that LVMH had acquired additional shares in Tod’s and Chiara Ferragni’s appointment as a member of the group’s board sent Tod’s shares up by 11.39 percent and 14 percent, respectively, the Italian brand’s shares closed up 6.43 percent to 47.04 euros on Thursday following the encouraging signs of recovery in the first quarter.
Even if e-commerce in 2020 compensated for only 20 percent of the 80 billion euros lost from in-store sales, Massimo Curcio, associate partner at KPMG, said that the omnichannel strategy has to be re-evaluated in line with future “omni-customers,” such as “shoppers that easily transition from physical to digital, but with the same expectations in terms of experience and level of satisfaction.”
While in the pre-pandemic era consumers were clearly divided between the “e-commerce tribe” and the “boutique addicted,” especially in those countries in which e-commerce penetration lagged, the months and years ahead will be marked by a more blurred scenario.
Micaela le Divelec Lemmi, CEO of Salvatore Ferragamo, underscored how the pandemic has taught brands, big and small, the importance of acknowledging the “fluid customer experience,” which transitions from physical to digital. She described the Italian brand’s strategy as rooted in a “phygital approach.”
In the first three months of 2021, retail sales at Ferragamo jumped 17.2 percent despite the effects of the retail stop-and-go lockdowns in Europe and Japan.
Giacomo Santucci, president of Camera Buyer Italia, the association representing around 85 fashion multibrand stores in the country with a total turnover of 2 billion euros, described the modern omnichannel strategy as increasingly customer-centric. “I tend to describe today’s customers as ‘authors’ who actively contribute to the creation and spread of the values a brand — or retailer — stands for.”
Since experiential retail is viewed as the real holy grail in the post-pandemic scenario, companies should leverage technology to enhance both physical and digital shopping sessions as data and technological tools by themselves are not enough.
The KPMG study highlighted the importance of rethinking the retail network, in addition to strengthening e-commerce operations. Curcio pointed to the need for a new relationship model with clients aimed at increasing brand advocacy across different touchpoints.
He cited store visit bookings, a centralized CRM system that allows brands to keep track of a customer’s history for both online and offline interactions and the need to enhance the merchandise’s pricing and offering across digital properties in order to better serve those customers whose journey starts and ends online — all in the name of transitioning the upstream online interactions into the physical experience.
“Customers are moving very quickly and nimbly, so when talking about the omnichannel strategy we’d better avoid trivialization,” argued Mariella Elia, chief financial officer at Rinascente. “It does not only require a shared database and cross-pollination between on- and offline experiences, but it needs to take into account the customers’ multiple facets.”
Despite the havoc wrought by the pandemic, the department store chain stood by its investment plans for physical retail, as reported, while also launching e-commerce last June.
“Physical stores will remain key, it is no longer simply a place to shop as it used to be in the ‘80s,” Elia explained. “It’s an experiential space where customers need to find themselves at ease through the experience that is offered. Then the purchase is a ‘secondary effect’ of that.”
See also:
Tod’s Group Appoints Chiara Ferragni Member of the Board
Salvatore Ferragamo Top Brass Discusses Independence, Creativity
One Year on From COVID-19, Retail Leaders Feeling Confident
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