The coronavirus, or simply the COVID-19, has engulfed nearly the entire world with its terror. The virus not only poses dangers to human health, but it has also disrupted the economy of every country. To help you get a perspective on the situation, the International Monetary Fund (IMF) has been recording the World Uncertainty Index for different countries since 1996. It detects the uncertainty of the economy in different countries with respect to a pandemic or an epidemic. The IMF recently released a report of this index, and it reveals that the coronavirus has had the worst impact on the economy since it started recording the data. Be it GDP growth, employment, capital investment, manufacturing of goods, or the luxury market; no one is safe from the side-effect of the virus.
According to another ad-hoc survey conducted by the Italian luxury brand consortium, they published that the effects of the coronavirus are going to have a very alarming impact on the luxury industry. People might start seeing a lot of changes like lower production, unemployment, etc. in this industry as the demand for these items has hugely decreased since the virus took over the world. A survey conducted by the executives working in the luxury industry also predicted that the virus is expected to bring a loss of about €30 to €40 billion in the sales of luxury items, which will be the lowest since 2015.
The Effects of Coronavirus on Industry Giants
Right now, it is extremely hard to predict when the industry will bloom to the success where it once stood. No luxury brand is immune to the losses and the change brought by the coronavirus. Brands like Bottega Veneta, Gucci, Hermes, and Burberry stand to lose as much as 40% of their revenue stream. On the other side, Richemont, Saint Laurent, Versace, and Salvatore Ferragamo have predicted almost a 30 percent decrease in revenue. Other luxury companies like Jimmy Choo, Ralph Lauren, Canada Goose, and Michael Kors are expected to suffer losses around 20% or less in regards to average yearly revenue.
Nonetheless, luxury brands are confident that they will be able to pull through this epidemic by compromising on their short-term goals and developing long-term plans for success. Most of the luxurious brands have started to focus on online shopping platforms by making their products readily available. As most of the markets are closed all over the world, you can buy products like the Rolex Date just for men online. Similarly, other luxurious industries have caught on with the latest trend and are giving incentives to people if they buy online products.
Psychological Impact of the Virus on Buying Habits
The luxurious industry is different from the rest. The psychological state of a person plays a vital part when he is buying a luxury item. The reason why the luxury market is not doing so great is since the people are not buying these products in a given time, the industry doesn’t get the sales back, and their items go out of fashion. As people are not feeling safe right now, they are not in the right state of mind to shop for items.
Due to the current situation, people are having a lot of financial security concerns, and they are not feeling safe to make any purchase. This epidemic has proved to be a time stopping element for the luxury industry and has dramatically halted the progress made by the market. If this contagion continues to grow at the current rate, we might see a very substantial change in the luxury market sooner than later.