Luxury Brands Management in the Period of COVID-19 (Research Paper Sample)

Luxury Brands Management in the Period of COVID-19 (Student’s Name) (Name of Institution) (Name of Professor0 (Date) Abstract Given the massive impacts of the Covid-19 pandemic on the overall functioning and performance of the global luxury industry, it becomes important to determine the kind of adjustments that luxury brands have been making in surviving the adversities and creating better prospects for themselves in the new environment. Even though the subject relative to the impact of the Covid-19 pandemic has been researched significantly, a gap exists in the context of empirical studies on the adjustments that luxury brands have made in continuing their businesses amidst the hardships created by the pandemic. Consequently, this paper delved into conducting an exhaustive literature review on the impact of the pandemic on luxury brands, and the short-term and long-term strategies they have adopted in combating the hardships created by the new challenges. In effect, the topic is of much significance in view of the coping strategies that luxury brands have taken, because of which they are in a stronger position now. The methodology was based on conducting interviews of respondents chosen from amongst marketing, managerial, and operations personnel and leaders of luxury brands. They were asked questions on pertinent issues faced by their respective luxury brands, and on the strategies that they have been adopting to tide over the ongoing challenges. It emerges from the study that luxury brands are no longer emphasizing on continuing to sell only through their physical stores. Digitalization has enabled these firms to use VR and omni-channels to provide new and exciting shopping experiences to luxury customers, who are now eager to engage in online shopping because of the novel, entertaining, and more exciting experiences they are able to get on digital shopping platforms. Keywords: Covid-19, luxury brands, pandemic, lockdowns, store closures, supply chains, luxury consumers, online selling, digital technologies, consumer behavior, virtual reality. Table of ContentsIntroduction………………………………………………………………………4Purpose of the Study………………………………………………………….…..5Rationale for Research…………………………………………………………...6Research Question…………………………………………………………….….7Literature Review………………………………………………………………...7Definition of Luxury Goods……………………………………………………...8Immediate Impact………………………………………………………………...9Noteworthy Adjustments…………………………………………………………11Impact of Digital Technologies…….………………………………………….…13The Need to Make Adjustments………………………………………………….16Measures Being Taken……………………………………………………………17Short Term Measures……………………………………………………………..21Long Term Initiatives……………………………………………………………..22New Business Model……………………………………………………………...24Focus on Supply Chain Resilience………………………………………………..25Theoretical Analysis………………………………………………………………26Implications for Luxury Brands…………………………………………………..29Conclusion………………………………………………………………………...31Methodology………………………………………………………………………32Research Design…………………………………………………………………..32Population Sample………………………………………………………………...33Instrumentation……………………………………………………………………34Data Collection …………………………………………………………………...34Data Analysis……………………………………………………………………...35Findings……………………………………………………………………………36Analysis……………………………………………………………………………40Adoption of New Management Perspectives………………………………………42Enduring the Covid-19 hardships………………………………………………….44Focus on E-Commerce…………………………………………………………….45Acceptance of New Market Conditions……………………………………………46Conclusion…………………………………………………………………………49References…………………………………………………………………………………50Appendix……………………………………………………………………………….…..54 Introduction The Covid-19 pandemic has imposed major challenges for the entire world in virtually all areas of human activities. It has severely impacted the business environment, particularly the luxury industry, which is much reliant on the shopping patterns of customers in physical stores, and on the communication efficiency of stores staff. There was a sharp decline in demand for luxury goods after onset of the pandemic, because consumers altered their purchasing behaviors, shops had to close down in keeping with lockdown restrictions, and international travel was reduced dramatically. By the beginning of 2020, luxury conglomerates had begun feeling the pinch, with many luxury brands reporting decline of sales by up to 36 percent, even though the extent of decline varied in different product categories (Kearney, 2022). Nevertheless, the pandemic had a major impact on the purchase behaviors of consumers. At the same time, restrictions on international travel created major adversities for companies providing luxury travel and tourism experiences for consumers. The pandemic has created a major issue for the luxury travel industry, particularly luxury hotels, luxury hospitality services, and high-end travel, because of major losses that have accrued on account of consistently declining global demand. In addition, the long-term prospects for the industry continues to be uncertain because consumers continue to be reluctant in spending on luxury goods. A major area of concern for the luxury goods industry is the severe hit to consumer confidence and the consistently lingering anxiety of contagion. In effect, contagion is the biggest apprehension for luxury goods consumers, while another emerging issue is that many do not consider it worthwhile to purchase luxury goods like jewelry, time-pieces, footwear, apparel, and leather goods. Given that most consumers buy luxury goods in view of their conspicuous nature, many have now begun thinking there is no value in making such purchases. Global studies referred to by Statista (2022) indicate that the personal luxury goods industry has been impacted in different ways. The biggest decline in 2020 has been observed in the jewelry and high-end watches categories, which declined by over 25 percent in comparison with 2019. The high-end apparel industry has seen a decline of around 20 percent, while the fragrances and cosmetics sector has seen reduction in market size by 15 percent. Even though some categories of retail channels and luxury goods may have been impacted less severely in comparison to others, there is no doubt that the Covid-19 pandemic has created an unparalleled shock, and that no category of luxury goods will gain from the crisis. Purpose of the Study The purpose of this research is to ascertain the kinds of adjustments that luxury brands have made in order to remain afloat despite the adversities and challenges created by the COVID-19 pandemic. It is true that the topic of luxury brand management is common in business research, but in view of the prevailing conditions of the luxury industry, there is need to conduct exhaustive research to gain better insights about the emerging issues that have had major impacts on the industry. Millions of people, including those working in the luxury brands, have lost their jobs during the initial months of the pandemic. According to Achille and Zipser (2020), “more than 40% of global luxury goods production happens in Italy—and all the Italian factories, including small, family-based faconniers, have temporarily shut down” (p. 3). However, new circumstances have arisen in 2022 with the easing of restrictions and lockdowns (Statista, 2022). In addition, brands have been taking added initiatives in order to attract new customers for their products and services. In view of such circumstances, the objective of this research is to determine the adjustments that luxury brands have made in order to survive during the pandemic. It is interesting to note in this regard that luxury brands have begun adopting novel strategies to motivate and encourage luxury customers to return to their old consumption patterns of luxury goods. Getting to know of the adjustments that some luxury brands have made in order to continue with their businesses during the pandemic helps other luxury firms to frame strategies focused on increasing their sales and revenues. In addition, getting to know of such adjustment strategies will allow creating a new body of knowledge about how firms can adjust with such pandemics in the future. For this reason, this study strives to determine the actions that luxury brands can take in reducing the impact of such a crisis in the future—and this is what this research would like to present. Rationale for Resea...