Luxury labels brace for impact as coronavirus outbreak saps consumer appetite in top market China
- Top brands from Moncler to Burberry warn of negative impact from the epidemic, as they trim forecasts, scale back shipments, delay product launches and put off expansion plans in China
- Analysts say online shopping will hardly offset sales lost by physical stores, with momentum likely to pick when the epidemic ebbs completely
Luxury brands are feeling the heat from the coronavirus outbreak, as consumers in China remain cooped up at home, unable to shop or travel. Analysts say it could take months for the sector, which is highly reliant on the world’s largest consumer market, to recover.
High-end clothing labels like Moncler and Burberry and beauty giants like L’Oreal have warned of negative impact from the epidemic, with some brands trimming forecasts, scaling back shipments, product launches and delaying expansion plans in China.
“Chinese consumers have been a key part of the growth of luxury in recent years,” said James Yang, partner at global consultancy Oliver Wyman. “With this outbreak, the luxury market is highly exposed compared to other sectors.”
Though some consumers are shopping online, market observers say it is not enough to offset a lack of physical purchases. Already hit by protests in Hong Kong, the luxury sector will only start to recover when the epidemic dies down, consumer confidence is renewed and outbound tourism picks up again.
The virus, which causes the disease now officially known as Covid-19, brought China’s economy to a standstill since the Lunar New Year holiday late last month. The authorities imposed a complete lockdown on dozens of Chinese cities in a bid to contain the spread of the epidemic, which has so far claimed more than 1,360 lives and infected over 60,000 people, mostly in the mainland.