Historically, luxury brands have gone to great lengths to preserve their elite status, including going so far as burning excess inventory rather than sully the brand’s reputation by posting a sale price - a practice that was largely stopped in 2018. But with falling demand fueled by Coronavirus and 58 percent of consumers we surveyed recently cutting spending, luxury retailers are looking at a glut of inventory 32 percent higher than that of a year ago, according to a Vogue piece quoting EDITED retail analyst Krista Corrigan.
Further, Bain & Co. estimates that this year, the personal luxury goods market could contract 20 percent to 35 percent worldwide.
It begs the question: What will luxury brands do with all of that merchandise? Will Coronavirus finally drive luxury brands to value margin preservation over brand preservation?
The answer may lie in what the majority of retailers have long understood - put customers in the center of decisions.