The outbreak of Coronavirus has put China in the intensive care of global luxury retailers.
The outbreak of Coronavirus has hit the world. And now it has a name, the unknown virus from the Corona family is now dubbed, Covid-19. According to researchers the virus that caused it is SARS-CoV-2.
As of now, the death toll in China has reached 1113. China’s National Health Commission informed this on Wednesday. Throughout China so far the number of infected cases has reached a mark of 44,653 people. Last week, China amended its guidelines on prevention and control of the virus stating that confirmed cases would only be recorded when asymptomatic cases show clinical signs.
The virus hit the market at the time of the Chinese New Year and the impending fashion season hurting the Chinese economy in the worst ways. Chinese consumers are the deepest pool of spending customers. According to McKinsey and Co, in 2018 Chinese people spent €100 billion out of €313 billion globally. The Chinese market provides half of the luxury market growth globally. To simplify, out of approximately 1.4 billion people of China, 50 million are affluent and spend heavily on luxury via travel and purchases.
To contain the virus, all the travel to, from and within China is on a hold. Major stores are shut and the ones that are open have seen a sharp fall in footfalls. The impact of the Coronavirus in China can be measured in the Parisian balance sheets.
Trade and Markets on Hold
Trade shows lined up in February are on a hold. Shanghai Fashion Week that was scheduled for March has been postponed. Luxury stores have considerably reduced their store hours – the fate of shipping, supply chain and logistics looks uncertain.
Design house like Ralph Lauren has closed half of its 115 stores, Adidas reports to have temporarily shut down many out of 12000 stores. Nike stating ‘material impact’ on its operations has shut half the stores and remaining are working with reduced hour. VF corp, owner of shoe brand like Vans and Timberaland, whose 16 percent of total cost of goods sold comes from Chinese market has also shut down 60 percent stores in the country.
Design luxury house Burberry saw decline of 2 percent of its share also closed 24 out of 64 stores across China. Bulgari, a holding of LVMH has 51 stores in Great Chinese Region admitted while shutting half of the stores that ‘Coronavirus has hurt their sales significantly.’ Gucci owner Kering’s officials have stated that its ‘impossible to access the impact of Coronavirus in China.’
The Luxury Calls
But what can luxury do when the basic necessities are scarce? As a fundamental luxury’s only job is to entertain and distract the customers. So who cares about luxury when survival is at stake but Luxury Cares!
In a day and age when people are opinionated and well-informed brands get an onus to respond any way they can. Many luxury market players – Luxury houses, e-commerce giants and local brands have decided to put in their work.
International luxury group Kering has donated $1.1 million (7.5 million RMB) to the Red Cross in Hubei. The money is being used to frontline prevention and control work along with training and health education for the deployed hospital care staff and patients in the area. Kering group owns major luxury brands like Gucci, McQueeen, Boucheron, Brioni, Yves Saint Laurent, Balenciaga, Bottega Veneta and Pomellato
Kering’s arch-nemesis LVMH Moët Hennessy better known as Louis Vuitton has also stepped up. The group is known to donate towards global causes like Amazon rainforest fire, Notre Dame Cathedral restoration among others. The group has provided assistance to the Chinese Red Cross in gathering much needed supplies from France and throughout Europe. They also donated $ 2.3 million to the Red Cross for the shortage of medical supplies in Wuhan.
Chinese tech giant Alibaba leveraged Alibaba Health, the healthcare wing of the giant into a telemedicine center that people can access easily. They also blocked vendors from jacking up prices of healthcare products, cleaning supplies and masks.
International beauty retailers like Estee Lauder and L’Oreal has pledged $300,000 and $720,000 respectively. Chinese beauty brand Perfect Diary is broadcasting safety recommendations.
So who can say luxury is vain, finally in some twisted turn of fate it is paying off the heaviest price in a global crisis situation and that too luxuriously!