Luxury brands in Europe are adapting to the challenges posed by the COVID-19 pandemic by turning to innovative strategies such as social media, video, and virtual showrooms. With the absence of tourists, particularly from China, luxury goods companies are exploring alternative methods to engage with their wealthy clientele and drive sales. For instance, Italian jeweler Gismondi 1754 successfully sold a €300,000 diamond ring to a Swiss customer using the messaging service WhatsApp. Another luxury brand, Moncler, arranged gourmet dinner deliveries to customers’ homes while they enjoyed a video of the brand’s latest collection, offering a stylish experience in the comfort of their own homes.

Although some countries have reopened retail stores, many luxury retailers remain closed or have limited access due to ongoing lockdown measures. This has resulted in a trend of selling outside of traditional brick-and-mortar stores, a trend that is expected to continue even after the pandemic subsides. Luxury brands are discovering that they can provide a high level of service with limited physical contact, presenting a new frontier that combines elements of e-commerce and traditional retail.

Lockdowns and travel restrictions have also caused a shift in consumer spending habits, with wealthy Europeans redirecting their funds towards luxury purchases instead of extravagant vacations or dining experiences. This shift has prompted luxury brands like Hermès to fully embrace e-commerce and online sales. Analysts estimate that online revenues for the luxury industry have doubled in the past year, accounting for nearly 20% of total sales. This percentage is predicted to rise to 25% by 2023.

In addition to prioritizing e-commerce, luxury brands are investing in personalized customer experiences to maintain strong relationships with their clients. Retail associates have transformed into personal shoppers, delivering products directly to customers’ homes and maintaining regular contact. Social media platforms are now utilized to showcase products and provide customers with specific product videos. This shift in strategy allows luxury brands to cater to individual preferences and deliver a level of service comparable to the traditional in-store experience.

For instance, Gismondi, previously reliant on in-person consultations for high-ticket items like a €300,000 diamond ring, successfully designed the perfect ring for a client through WhatsApp and video calls. Louis Vuitton has also launched the “LV by Appointment” campaign in the US, bringing a custom-designed mobile store directly to wealthy clients’ doorsteps.

The transition to remote sales and virtual engagements has yielded positive results for luxury brands. LVMH, the first luxury conglomerate to report first-quarter results, surpassing analysts’ expectations with a 52% surge in revenues for its fashion and leather goods division. While sales in Europe still face challenges due to ongoing restrictions, there has been a notable improvement compared to the previous quarter.

Although the luxury industry has seen strong retail sales in China since stores reopened, brands recognize the significance of connecting with customers in Europe and the United States to drive further growth. These regions accounted for 60% of total luxury sales in 2019, with Bain predicting that they will make up just under 50% of sales by 2025.

Luxury brands emphasize the importance of building and maintaining strong relationships with customers. Sales representatives have been trained to engage with clients through video chats, showcasing the latest arrivals and delivering products directly to their homes. This personalized attention and the ability to try on items in the comfort of one’s own home foster a stronger connection between the brand and the customer.

While the pandemic has presented challenges for luxury brands, it has also accelerated the adoption of digital platforms and remote sales strategies. Luxury brands are finding innovative ways to engage with their customers and provide a level of service that adapts to their evolving needs. As the industry continues to navigate the changing landscape of luxury retail, these innovative approaches are likely to shape the future of luxury shopping.

Useful links:
Luxury Brands Reshaping Strategies in China
How Luxury Consumers Went Digital During COVID-19