How Did 2020 Impact Luxury? | Transforming Luxury

The Business of Fashion Podcast

The Business of Fashion

Fashion & Beauty, Business, Arts

4.6 • 770 Ratings

🗓️ 13 September 2021

⏱️ 29 minutes

🔗️ Recording | iTunes | RSS

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Summary

Critic Robin Givhan, analyst Luca Solca, author Dana Thomas and Métier founder Melissa Morris discuss how luxury became a winners-take-all market and how growing consumer scrutiny is driving change.

BoF is investigating how market disruption, new technology and increasing consumer scrutiny are driving transformative change in the $300 billion luxury goods market, in an exclusive new podcast series presented by Klarna.

As the extraordinary events of 2020 — from the global pandemic, lockdowns and economic downturns to the accelerating climate crisis and social justice movements — impacted the luxury industry, scale-driven advantages widened the performance gap between the industry’s super winners and the rest of the market. In 2020, BoF reported that 75 percent of companies did not generate enough economic profit to cover the cost of their capital. Yet, the leading mega brands and conglomerates reported record sales.

However, a growing dissonance is emerging between luxury’s traditional values of scarcity and exclusivity, and the emergence of a more inclusive, egalitarian and sustainable global consumer culture, making the luxury industry vulnerable to shifting consumer sentiment. Today, businesses must respond to growing consumer scrutiny around the sociological and ecological impact of how they operate and what they produce.

Follow the series to ensure you never miss an episode and discover actionable insights into the opportunities and challenges a redefined industry will bring and how luxury’s transformation will impact your business.

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Transcript

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0:00.0	I'm Robin Mallory Pratt, and this is Transforming Luxury, a new podcast series from
0:07.1	The Business of Fashion, in which we're investigating how market disruption, new technology,
0:11.8	and increasing consumer scrutiny are driving transformative change in the $300 billion luxury goods
0:18.1	market over a six-ep episode series presented by Klarna.
0:22.3	In this episode, we'll establish how the events of 2020 have impacted the luxury industry,
0:27.2	and we speak to Lucas Sokha and Melissa Morris about the widening performance gap between
0:31.5	the mega brand super winners and smaller independent luxury companies. Plus, we explore the growing dissonance between luxury's traditional values and a more inclusive
0:41.3	and sustainable global culture with Robin Gavann and Dana Thomas.
0:49.3	In 2020, Bof reported that 75% of companies did not generate enough economic profit to cover the cost of their capital,
0:58.0	while the leading mega brands and conglomerates reported record sales.
1:02.2	To kick things off, we're going to take a snapshot of the luxury industry today
1:05.4	and speak to Lucas Solka, managing director of luxury goods at Bernstein,
1:09.7	about the impact of scale-driven advantages
1:11.9	and why luxury is becoming a winners take-all market.
1:16.9	I think that there are probably forces on both the demand and the supply side. When it comes to
1:23.2	the supply side, we've seen the number of fronts that luxury goods brands need to manage
1:28.4	has continued to explode. The digital revolution has brought so many new things that brands
1:35.6	need to invest on, that bigger brands clearly have a scale advantage. Think about the multiple
1:42.7	social media platforms as an example. They need to have more frequent
1:47.0	content, they need to invest in CRM, and so on. When it comes to the demand side, a lot of the new
1:55.0	luxury market growth is coming from middle-class consumers. Middle-class consumers are more
2:00.0	conservative by definition.
	...

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