Our actions today will

shape our tomorrow( E R M E N E G I L D O

Z E G N A )

LUXURY BRANDS INA TIME OF CRISIS

Learnings on creating long-term

value following the COVID-19 crisis

A P R I L 2 0 2 0

Understand how luxury brands have

pivoted during the crisis

Identify consumer engagement best

practice

Uncover sustainable strategies that

luxury brands could use after the crisis

O U R A P P R O A C H

K E Y O B J E C T I V E S

This study was

designed to answer

3 key questions: Secondary research

A scan of news and perspective articles published

between February – April 2020

Social media analysis

A scan of luxury brands’ websites and official Instagram

accounts

Implications and strategic opportunities

An understanding of how current crisis-related tactics

might be shaping the future for luxury brands

WHAT ACTIONS ARE

LUXURYBRANDSTAKING

DURING THE OUTBREAK?

3 KEY AREAS OF FOCUS

P R O D U C T C H A N N E L SC U S T O M E R

E N G A G E M E N T

KEY LEARNINGS

S T R AT E G I C I M P L I C AT I O N S W H AT M I G H T B E N E X T ?

LUXURY BRANDS

ARE PIVOTING

PRODUCTION TO

ADDRESS PUBLIC

HEALTH NEEDS

01 03

02

C H AN N E L S

P R O D U C T

W H AT C A N B E T U R N E D I N T O A

S T R AT E G I C O P P O R T U N I T Y ?

C U S T O M E R

E N G AG E M E N T

Luxury brands

are adapting their

production lines

to manufacture

medical supplies,

from hand

sanitizer to

surgical masks

and medical

overalls

FROM DESIGNER

APPAREL TO MEDICAL

SUPPLIES…

LVMH is producing alcohol-based

sanitizers for French health authorities

Prada started producing 80,000 pairs of

medical overalls and 110,000 masks for

healthcare professionals following a request

from the Tuscany Region

Zegna converted part of its production to

produce sanitary masks

More luxury brands like Coty, Gucci, YSL,

Balenciaga, Ralph Lauren, Burberry and

others adopted similar approachesSources: BBC; Jing Daily; WWD

WHAT MIGHT

BE NEXT?

Think about product

portfolio diversification

opportunities

S P O T N E W

C O N S U M E R H A B I T S

I N FA S H I O N

Social distancing

and self protection behavior

will continue even after

COVID-19 crisis, creating

opportunities for upcoming

collections to address new

consumer needs

I N N O VAT E A R O U N D

N E W N E E D S

Fashion accessories to cater to

extended social distancing and

protection needs, such as all-

season gloves and scarves,

fashionable masks, or high-end

hand sanitizers

E-COMMERCE

AND DIGITAL

EXPERIENCES AS

SUBSTITUTION

FOR IN-STORE

INTERACTIONS

01 03

02

P R O D U C T

H O W T O TA K E A D VA N TA G E O F T H E

S H I F T I N G C O N S U M E R O N L I N E B E H AV I O R ?

C U S T O M E R

E N G AG E M E N T

C H AN N E L S

Luxury brands

are finally

optimizing their

e-commerce

experience, given

the expected

growth in the

online channel,

following a dip in

offline purchases

during the

outbreak

Sources: WARC; Forrester;

AfterPay Insights; Bain &

Company

G L O B A L LY, E - C O M M E R C E

A C C O U N T S F O R 4 % O F L U X U R Y

G O O D S R E V E N U E S

Traditionally, luxury brands have been reluctant to

embrace e-commerce, which has created challenges once

their physical channels shut down and all shows cancelled

I N C H I N A , O N L I N E A C C O U N T S

F O R A B O U T 1 4 % O F L U X U R Y

S P E N D I N G , a l s o d r i v e n b y t h e

S A R S o u t b r e a k i n 2 0 0 3

Major luxury brands regularly engage with empowered

Chinese consumers across top digital marketing and

e-commerce platforms such as JD’s TopLife, Tmall

Luxury Pavilion, WeChat, and Weibo

E-commerce

seen as a

long-term

strategy

A Bain & Company survey with senior

executives in consumer goods, apparel and

luxury industries shows 60% are planning to

overhaul the way their brands went to

market, moving away from offline

spending and toward online channels

After SARS, China

witnessed an

unprecedented

uptake in

e-commerce,

boosting

online investments.

COVID-19

might have a

similar effect in the

rest of the world

J D . C O M

Controls 17% of China’s e-commerce market

and is Alibaba’s biggest competitor

A L I B A B A

Prior to SARS, Alibaba was a B2B

platform, connecting U.S. buyers with

Chinese suppliers

During the epidemic, Alibaba ramped-up

its e-commerce channel by adding 4,000

new members and 9,000 listings each day:

a 3-5x increase over the pre-SARS rate

Due to global travel bans to China

because of SARS, international

businesses increased their use of Alibaba

In July 2003, Alibaba launched Taobao,

which became China’s number one

consumer-to-consumer marketplace,

surpassing eBay

Alibaba’s

business

grew 50%

that year,

with daily

revenues

of 10

million

RMB

Currently controls 55% of China’s

e-commerce market

The growth of e-commerce in China following SARS (2003)

JD.com

became

one of the

largest

online

retailers of

electronics

and later,

other

categories

in China

JD.com started as a chain of 12 small

electronics shops that launched an

online e-commerce site

Following interest from users on internet

forums, the brand set up a revenue-

sharing agreement with CNBest, driving

an increase in sales

As business plummeted during SARS,

JD closed all but one of its stores to

save resources

Within a year, JD launched the

e-commerce website 360buy, and invested

in building its online business

China’s

Second Largest E-tailerBiggest Consumer

Marketplace

In China

C AS E S T U D Y

Sources: DigitalCommerce 360;

eMarketer

10

© 2019 Grail InsightsDraft for internal discussion only

Immersive digital

experiences

are essential

to luxury

e-commerce

success, now

more than ever

Creating

Digital

Customer

Experiences

LIVE

STREAMING

‘SEE NOW

BUY NOW’

FUNCTIONALITY

VIRTUAL POP-UP

STORES

L IVE

STREAMING

Shanghai

Fashion Week

experiment:

the first-

ever entirely

digital event

Luxury

brands adopted

live streaming to

showcase their

new collections

Sources: China Daily;

Jing Daily; Forrester

23 Feb: Armani was the first luxury brand who decided to

showcase its Autumn-Winter collection without public, and

live-streamed the event, during Milan Fashion Week

25 Feb: Dior broadcast on Weibo their 2020 Autumn-

Winter women’s collection show in Paris, to engage Chinese

consumers

24 – 30 March: Shanghai Fashion Week turned into a digital

event. All showcases of the Autumn-Winter 2020 edition were

broadcast in China via Alibaba’s Tmall, with 2.5 million viewers

registered in the first 3 hours

26 March: Louis Vuitton is the first international luxury

brand to host a live streaming session on Little Red Book,

the Chinese social media and e-commerce platform

“SEE NOW,

BUY NOW”

AND V IRTUAL

POP-UP

STORES:

Technology

driving

immersive and

instant

purchasing

experiences

Sources: ICG;

Forrester; Vashi

Diamonds Facebook

page

“ S E E N O W , B U Y N O W ”

F U N C T I O N A L I T Y

E M B E D D E D I N L I V E -

S T R E A M E D S H O W S

Shanghai Fashion Week enabled

viewers to pre-order new looks from

the collection in real time via their

smartphones

French label Lanvin also joined forces

with the high-end e-commerce

platform Secoo, live-streaming their

Fall/Winter 2020 runway show with

the popular “see now, buy now”

functionality

V I R T U A L P O P - U P

E X P E R I E N C E S D R I V E

S A L E S

Louis Vuitton’s Valentine’s Day

exclusive pop-up store via a

WeChat mini program allowed

customers to place orders online.

Despite the outbreak, Louis

Vuitton doubled its online

sales compared to last year’s

Valentine’s season

Other brands had been already

experimenting with 3D virtual

pop-up stores on Tmall’s

Luxury Pavilion before the

pandemic (Alibaba’s B2C section

for premium and luxury brands)

Other brands are experimenting with technology to provide a personalized service normally provided in-

store: London-based diamond brand Vashi setting-up video appointments with their sales associates.

Embracing new technologies will enable luxury

brands to maintain a constant conversation with

their customers, and create a closer integration

between the digital and the physical touchpoints

WHAT MIGHT

BE NEXT?

B U I L D C R E D I B I L I T Y

Continue to invest in building trust and credibility online, with technology

investments to focus on creating an immersive digital shopping experience

STRATEGIC

IMPL ICAT IONS

Opportunities for

the future

L E V E R A G E T E C H N O L O G Y

Adopt live streaming and 'see now / buy now' technology to showcase new

collections. This can help to reach new audiences and positively impact the

brand's sustainability commitments

A D O P T S T R AT E G I C PA R T N E R S H I P S

Enhance your own websites and consider strategic partnerships with established

local e-commerce sites to boost your online reach

P R I O R I T I Z E Y O U R P O R T F O L I O

Analyze sales data to identify shifts in consumer behavior. Consider a bigger push

for promoting accessories online, as they are easier to sell through digital channels

SOCIAL MEDIA

BECOMES

INSTRUMENTAL IN

KEEPING

CONSUMERS

UPDATED ON

LUXURY BRANDS’

SOCIAL

RESPONSIBIL ITY

INVOLVEMENT

01 03

02

C U S T O M E R

E N G AG E M E N TP R O D U C T

H O W C A N L U X U R Y B R A N D S C O N T I N U E T O

B E R E L E VA N T ?

C H AN N E L S

Brands are

leveraging social

media to

communicate

positive

messages and

outline their

efforts to support

the cause…

Positive

Personal

Messaging

Sources: Kering Instagram;

Dolce & Gabbana Instagram;

Trussardi Instagram; Moncler

Instagram; Dior Instagram;

Quid.com

“ T O G E T H E R .

K E R I N G ”

C A M P A I G N

W E A R E U N I T E D ,

T O G E T H E R ,

S T R O N G E R

“ L O V E H A S N O

F E A R ” C A M P A I G N

O N W E I B O

4.2 billion views in a week

# C O N T R U S S A R D I

/ # C O N B E R G A M O

C A M P A I G N S

# W A R M L Y M O N C L E R

Positive messages series:

Find warmth at home; Find

warmth in reflection; Find

warmth in togetherness

# D I O R S T A N D S W I T H

Y O U C A M P A I G N

…Some are

taking a step

forward by

engaging

consumers

through relevant

content and

addressing their

new needs

Inspirational

Content

Sources: Oakley Instagram;

Michael Kors Instagram, Hugo

Boss Instagram; Chloe

Instagram; Harper Bazaar

B O T T E G A

R E S I D E N C Y :

a virtual platform featuring

content from designers and

artists, rising chefs and

musicians. Available via

Instagram, YouTube, Weibo,

WeChat, Line, Kakao, Spotify,

Apple Music, SoundCloud, and

the Bottega Veneta website

#ForTheLoveOfSport

At home workouts from Oakley

Athletes

The brand adopted a more

personal touch, with video

content showing Michael himself

cooking and enjoying life with his

cat in his Manhattan apartment

#BOSSTOGETHER

“Every Friday we will share

moments of inspiration and

ideas from our BOSS family”:

A series of inspirational messages

from various public figures,

recorded in their homes

Chloé Voices: uplifting content,

live interactions and

performances on Instagram feed,

Live and Stories

Most luxury

brands supported

the cause by

providing strong

financial

contributions to

local communities

Sources: Business Insider;

WWD

Corporate and

Personal

Donations

$ 1 . 4 M I L L I O N

T O T H E R E D

C R O S S

S O C I E T Y O F

C H I N A

‘ T O G E T H E R

W I T H L O V E ’ : € 3

M I L L I O N

P E R S O N A L

D O N A T I O N T O

I T A L Y ’ S C I V I L

P R O T E C T I O N

A G E N C Y , A M O N G

O T H E R S

€ 2 M I L L I O N T O

L O C A L H E A L T H

O R G A N I S A T I O N S

I N I T A L Y

$ 1 0 M I L L I O N

T O H E L P U . S

E M P L O Y E E S ,

P A R T N E R S

A N D

C O M M U N I T I E S

I M P A C T E D

D O N A T E D T W O

I N T E N S I V E C A R E

U N I T S T O E A C H

H O S P I T A L I N

M I L A N

€ 2 0 M I L L I O N

T O P A R I S '

P U B L I C

H O S P I T A L S ,

A L O N G W I T H

H A N D

S A N I T I Z E R

A N D M A S K S

P R O D U C E D I N

I T S

F A C T O R I E S

€ 1 0 M I L L I O N

F O R T H E

C O N S T R U C T I O N

O F A H O S P I T A L

I N L O M B A R D Y

€ 2 M I L L I O N T O

I T A L I A N

H O S P I T A L S

$ 1 M I L L I O N T O

U S A N D U K

C H A R I T I E S &

W I L L A L S O

M A T C H A N Y

E M P L O Y E E

D O N A T I O N T O

T H E C A U S E

CASE STUDY

Nike’s customer

engagement

approach boosted

e-commerce sales

by 30%

Sources: Retail Dive; Marketing

Week; Fortune

E - C O M M E R C E : When offline sales began to slow,

Nike quickly moved resources to support its e-commerce

channel. The workout app Nike Training Club saw an

increase in sign-ups, which in turn, created a surge in

Nike’s e-commerce app

P R O M O T I O N S : The brand offered a 90-day free

trial to its workout apps → opportunity to increase the

number of paying subscribers when the crisis is over as

well as to promote its products

S O C I A L M E D I A : “At home” video workouts with

water bottles instead of weights posted on Douyin (TikTok)

gathered 346,000 followers and 2 million+ likes

C A U S E M A R K E T I N G : Nike donated $15 million

to help fight the pandemic

Nike’s digital sales in

China are booming,

despite the fact that

80% of the stores have

reopened

Digital

Consumer

Engagement

Continue to stay relevant to consumers by

addressing things that they care about

WHAT MIGHT

BE NEXT?

S TAY R E L E VA N T T O C O N S U M E R S

Understand consumer needs and emotions and foster a sense of community

through social media engagements

STRATEGIC

IMPL ICAT IONS

Opportunities for

the future

C O N T I N U E T O D E V E L O P R E L E VA N T C O N T E N T

Identify opportunities for content generation to share through social media (other

than COVID-19-related content)

B E S E E N A N D A C T I V E O N S O C I A L M E D I A

Ensure presence on relevant social media platforms across geographies

(e.g. Weibo, TikTok, Little Red Book, WeChat video, Youku, Snapchat)

E N H A N C E D I G I TA L E N G A G E M E N T

Ramp-up digital marketing and focus on customer activation, rather than brand

building. This would continue to attract consumers into stores when they reopen

F INAL

LEARNINGS

How luxury

brands can turn

crisis tactics into

strategic

opportunities

→ Use this time to experiment, digitize processes and

upgrade your systems and technology

→ This will enable brands to develop operational

efficiencies and provide personalized experiences to

customers when things bounce back to normal

→ Anticipate shifts in consumer sentiment and behavior

(e.g. people might continue to be more cautious in

social settings, even when the crisis is over)

→ Identify product development opportunities, especially

in the accessories space

→ Identify relevant technology to enable you to design

immersive shopping experiences across all digital

touchpoints

→ Identify relevant strategic partnerships to boost your

online presence and e-commerce sales

→ Maintain connections with consumers

→ Positive messaging and inspirational campaigns will

keep your customer community engaged

CONTINUE TO LEVERAGE

SOCIAL MEDIA

ENHANCE DIGITAL

CAPABILITY

FOCUS ON

BRAND IMAGE

EXPAND

PORTFOLIO

CREATE IMMERSIVE

DIGITAL EXPERIENCES

BE

ST

P

RA

CT

IC

E

→ Consumer perceptions of your brand are likely to be

re-defined during times of crisis, and they will stick in

the long term. It is important to reinforce your

messages now

Ready to Rise?

Reach out at:

hello@grailinsights.com

Market and Competitive

MonitoringBrand

Tracking

Customer

SegmentationBuyer

Personas

Purchase

ProcessM&A

Support

Market Entry

Assessment

Customer

Experience

Concept

Development

Product Propensity

Analysis

GRAIL INSIGHTS’ SOLUTIONS

WHAT NEXT?

How will your brand

rise to leverage these

opportunities?

We’ve seen from past recessions that consumers like to reward themselves as

they emerge from periods of austerity. The key is to prepare for that moment.

Grail Insights is here to help now and in the months ahead, with flexible

solutions that work in the best and worst of times.