The global economy has taken a hit once again since the financial crisis in 2008. Every sector has experienced the consequences of the global pandemic, yet some are suffering more than others. Curated ME takes a deep dive into what this crisis means for businesses and what opportunities it presents once it ends.
The spread of COVID-19 has had a large-scale impact on the global economy, with stock markets suffering dramatic falls due to the outbreak and multinational companies’ sales shattering across industries. Among the most notably impacted being travel & tourism, oil & gas, automotive, in addition to retail & luxury.
Several key factors played a role such as governments closing borders, enforcing nation-wide shutdowns, as well as ordering the closure of non-essential stores. This resulted in substantially lowering demand for apparel goods and retail brands forced to temporarily shut their doors in many parts of the world.
Some retailers have resorted to e-commerce however, in addition to the shortage of labor, the COVID-19 pandemic has impacted global shipping which has caused severe disruption across industries. Luxury brands in particular are among the most affected, as luxury consumers tend to be less likely to purchase products online. As such, this has resulted in luxury e-retailers such as Net-a-porter and Mr. Porter to temporarily close their U.S. shopping sites. Closer to home, local based luxury e-commerce website The Modist felt the brunt of the crisis as it announced a complete shutdown of their online operations.
Recent events should encourage companies to take a long-term approach to avoid similar occurrences. Organizations need to address the immediate effects by making hard decisions when it comes to the business, its employees, customers, technology, and partners. Evaluating market potential, identifying opportunities with a higher potential return on investment and streamlining costs to off-set the decline in demand becomes of utmost importance. Moreover, brands need to think further about how and where products should be manufactured, how to optimize shipping and delivery timings, or in the absence of e-commerce solutions, how CSR can become a more integral part of a company’s continuous visibility and development. One such interesting trend is seeing how brands such as LVMH, Burberry, Ralph Lauren, Chanel, Bulgari, Capri Holdings and many more have been agile and proactive in the face of an unprecedented situation, by shifting their operations to producing hand sanitizers, hospital gowns, face masks, among other medical supplies to be donated to hospitals or donating substantial amounts to fund the fight against COVID-19.
With economists predicting a surge in demand and sales after the passing of this phase, this presents organizations with an opportunity to also work on creating a detailed plan to return to business quickly and efficiently.
Curated ME’s Take:
In times like these, brands should focus on building awareness as a strategy to promote loyalty and remain on top of consumers’ minds. As such, investing in market research becomes of utmost importance, as it is the gateway that enables brands to get in touch with their consumers and exploring how attitudes, behaviors and habits have changed towards categories, industries and brands.
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