SHOPSMART AUTOS – CUSTOMER INFORMATION – JANUARY 15, 2021
Luxury after Covid-19: Changed for (the) Good? (PT.6)Take short-term operational contingency actions.
- Optimize working capital for the current season (for instance, by reallocating stock, opening temporary stores or rescheduling production of permanent items with sufficient stock levels).
- Put your supply chain in crisis mode, adopting measures such as a “red and blue team” approach to prototyping/manufacturing/warehousing (splitting core functions so that one team can work if someone on the other team gets sick), as well as relocating production where necessary.
- Develop a buying approach and guidelines for next season (how to allocate the open-to-buy, how to cluster stores based on expected impacts on consumption of Covid-19, what and how much to buy for identified store clusters).
- Review the open-to-buy for next season, accounting for the evolution of consumption in China and elsewhere; develop scenarios and be ready to act (for instance, by unlocking extra budget if the situation rapidly improves).
- Review the structure of next season’s collection to anticipate potential production issues and availability of key raw materials.
customer-centric, digital, agile
and
sustainable
. As they reset short-term targets and adopt new ways of working to cope with Covid-19, companies can still move toward these longer-term goals. One way to become more customer-centric is to refresh (if not establish for the first time) a
360-degree customer strategy
that coordinates the plans, value propositions and actions of all functions―with the overarching aim of greater customer intimacy. Some companies will emerge from the crisis able to make
much faster decisions
, especially if they jettison inefficient legacy processes and embrace advanced analytics. The coronavirus is accelerating ad hoc adoption of video conferencing, cloud-based collaboration and telecommuting. Companies that systematically embrace these digital tools and flexible working practices will become more agile, save money, reduce their carbon footprint and attract talented young employees. The Covid-19 response can become the catalyst for a
supply chain reinvention
in the luxury industry. The goal here is to preserve the elements of today’s short-term scrambling that can underpin a more reactive and flexible operation in the future—one that is increasingly decoupled from the rhythm of seasonal collections. One tactic is to prioritize suppliers and vendors that can react quickly at scale, while maintaining quality. The strongest luxury groups will keep redesigning internal processes to cut lead times and keep innovating. Finally, the shift to online purchasing during the pandemic has highlighted the need for luxury goods manufacturers to
unlock the full potential of omnichannel retailing
and
master digital marketing
. Many leadership teams have been breaking down internal silos to streamline their response to the current disruption—and companies can’t rebuild those silos if they are to blend online and offline channels seamlessly. Companies might also want to start bringing more of their digital marketing in-house now, while moving to a nimble test-and-learn marketing model. The global nature of luxury will be a strength again The scale of the disruption caused by Covid-19 has little precedent—in peacetime, at least. Unlike the 2008–2009 financial crisis, there is no new pool of luxury consumers to compensate for the drop in spending by established consumers. The worldwide scope of the outbreak is particularly bad for luxury, one of the most globalized industries on the planet. It has shut down several growth engines that had powered luxury brands to ever-increasing heights over the past two decades, most notably Chinese consumption (both in China and at tourist destinations throughout the world). We don’t think that will be a permanent state of affairs, though. Luxury’s global reach should become a strength once more when the current situation has stabilized. Brands can even emerge from the crisis stronger. Lessons in resilience learned in the dark days of 2020 can power a sustainable recovery in 2021 and beyond. This crisis may be transforming the luxury industry for good, but it could also be a transformation for the good. Make It A Champion Day!
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