Overall, COVID-19 has disrupted all truths of the past for luxury companies. After hard times during the pandemic (ex: LVMH -36% of sales versus Q4 2019), brands have showed great recovery signals: +132% of sales growth for Hermès, +124% for LVMH or +120% for Richemont. So what should you be focusing on if you are in a luxury sector in 2023?
Today, a big trend for luxury retailers: expansion. For luxury stores, to cope with fewer travels, they need to be closer to their Asian clientele with 55% of new luxury POS opening in Asia in Shanghai, Hainan and Singapore. In Asia, customers are fostering luxury brands such as Rolex, Chanel and LVMH. Dior even opened a special “Dior Prestige” store, focusing on its most expensive skincare line. More surprisingly, luxury retailers also are popular among North American clients - with 14% of new openings in 2021.
Despite the inflation, wealthy people keep on spending on Luxury Good, which means that after a slow-down during the pandemic, luxury brands need to invest more in new production capabilities: in terms of Capex, they need to increase their speed of projects execution, in order to cope with this rising demand (+120% sales for Richemont versus Q3 2019 (Kearney Study).
Regarding a POS, the property (if not rented) is part of the CAPEX as well as all other investments that are made regarding the store itself. For both retail and luxury companies, opening new stores leads to having similar investments on a specific geography and/or global level. Thus, adopting a unique CAPEX management strategy is a key success factor: allowing information to be shared vertically and horizontally across divisions and geographies. With the right tools, managing store CAPEX on a global scale is easier, because it leverages all data the correct way for.
For luxury companies, new technologies are key in their CAPEX strategy. Digital-in-store investments are highly popular in 2022 and are well received by clients. Investing in the right digital in store tools, leverages more possibilities regarding their client data having a positive impact on their 360 marketing strategy. Recently, Farfetch partnered with Gucci on a futuristic store combining in-store technologies and online tech, collecting and combining online and offline data about customers. Basically it enables shoppers to get a more personalized retail experience in terms of recommendations, the staff having access to their profile, history and wishlist.
Digital projects in stores need to be managed even more efficiently to achieve excellence: it means having a unique and shared process for all digital projects in all shops, with the same validation processes and data collection and circulation.