Despite efforts from the scientific community and health officials around the world to contain COVID-19, the coronavirus is still spreading, causing fear and slowing down the world’s economy. From stock markets to supply chains, every industry has been impacted by the outbreak. Luxury goods is one of the most affected markets, as its sales and revenue are closely linked to the purchasing behaviour of Chinese consumers.
Recent reports from a wide range of consulting firms—from Boston Consulting Group (BGC), AB Bernstein and Altagamma to Bain, Coresight Research and Vogue Business—all predict a $32 to $43 billion drop in luxury brand sales in 2020. Most CEOs and CFOs surveyed for these reports also anticipate a negative impact worldwide for the next 3 to 6 months, but mostly in China. Here are some of the key takeaways from recent research on the topic.
● In 2019, Chinese consumers accounted for 35% ($107 billion) of luxury good sales worldwide, and made about 70% of luxury purchases outside of China (Bain, Coresight Research).
● The coronavirus outbreak has paralyzed consumption in China. With city lockdowns and Chinese people avoiding public spaces, shopping centres are deserted and shops are closing down.
● Luxury brands are feeling the effects in China but also abroad—mainly in Europe and in the U.S.—due to expanding international travel restrictions by the Chinese government.
● Luxury brands are postponing the opening of new physical stores in China, allocating stock and budgets to other countries, and focusing on online sales.
● Ecommerce in China is also negatively impacted, as coronavirus creates ongoing challenges in terms of supply, shipping and delivery.
In the face of the coronavirus outbreak, companies have been looking at new opportunities and technologies to reach their customers. OTT Pay is no exception, as we remain committed to connecting our Canadian clients with their Chinese consumers. If you have concerns about how the coronavirus might impact your business, don’t hesitate to reach out. Give us a call at (+1) 800-688-9838 or email us at email@example.com.