Luxury-goods sellers have been deeply affected by the Covid-19 disaster. Many high-end stores in malls and airports remain closed, and almost all promotional events have been cancelled.
Online luxury sales have grown but tend to be at an earlier stage of adoption than broader retail. For example, Gucci’s online sales increased to just 9.5% of total revenues in the first quarter of 2020, compared to 6% in 2019.
There seems to be increasing appetite from consumers to buy luxury goods online. Brand owners are certainly rethinking their digital strategies. State-of-the-art websites are very visual and allow shoppers to closely examine the detailed craftsmanship in each item. Social-media efforts are being ramped up.
According to a recent Goldman Sachs report, 178 luxury brands took part in the Tmall 6.18 festival this year, compared to 113 last year. This online event, created by China’s largest online retailer JD.com in 2004, has become almost as important as Alibaba’s Double 11 (Singles Day) shopping saga in November.
For luxury brands, control of distribution and the customer experience is a priority, so they either run their own websites or partner with well-run third-party platforms like Farfetch or YNAP (Yoox Net-a-Porter). The latter is owned by Richemont.
With its South African roots, Richemont can be bought on the JSE. Its jewellery maisons seem well positioned to bounce back, since they sell few items at very high prices. Rich people have been sitting at home like everyone else and now have cash to burn. Asian markets will be the first to recover.
• Theron is CEO of asset manager Vestact.
• From the August issue of Wanted 2020.