With a newly liberated consumerism sweeping across the nation, China is showing signs of an early economic recovery. Most domestic travel and outing restrictions have been lifted, and foot traffic in malls is slowly starting to attain pre-virus numbers. But for the luxury industry, things are still shaky. China, which accounts for more than a third of global luxury spending (a figure forecast to reach as much as 46 per cent by 2025), is undoubtedly where most of the attention is focused. Overall, the industry is facing disruptions from every angle, with the production side not yet operating at full capacity, and the consumer side holding back on purchases due to major financial hardship. Billionaire fintech investor Glenn Hutchins addressed the issue in May, stating that physical retail “was [already] in the last stages of its decline”, and saying its demise is now being further accelerated, turning it into an obsolete medium for luxury fashion sales in the post Covid-19 world. Despite the worrying projections, which have already been accepted as a reality for most brands, all hope is not lost. As players in the luxury sector are grasping for the rope that will pull them out of the rut, recent developments suggest there is a future, at least in China. According to global management consultancy Bain & Company, despite the expected 35 per cent overall decline in luxury sales, companies do still have a chance at emerging “stronger, more innovative, and more purposeful”. This week in luxury: ‘revenge spending’, Tencent’s Fenfu and more Earlier this quarter, French luxury conglomerate Hermès broke an industry record for Chinese boutiques, bringing in US$2.7 million in sales in a single day – the day of its long-awaited reopening. This followed an almost 8 per cent decline in sales, and growing fears that supply constraints would pose challenges when stores reopened. An apparently unappeasable appetite for buying, or “revenge shopping”, had been forecast as a probable outcome of the pandemic, though it is also argued that it will be a momentary peak unsustainable in the long-run, rather than a substantial resuscitation. “I believe that this[revenge shopping] feeling is temporary and ascribable to this long time that has given us sorrow and concern, but soon we will redress the balance and we are already on our way to a new life,” says Brunello Cucinelli, founder of the luxury brand of the same name. Earlier in the first quarter, companies such as LVMH and Kering had to absorb double-digit declines in revenue, according to Bain & Company. With their reopening, they show a slight recovery in sales, but the market consensus is that they will have to brace themselves for a total loss of more than US$450 billion in fashion and luxury sales as a result of the pandemic, Boston Consulting Group reports. How China’s young women are driving growth in the luxury car market Brands are adapting their marketing strategies to stay connected with consumers during the pandemic. Prada, known to be somewhat backward about making its presence felt online, has responded with its own Prada’s Possible Conversation – an interactive online content series. Meanwhile, Dior – which has a slightly better record in the arena – having experimented with selling on WeChat back in 2016 and being the first label to join Douyin – has followed suit with the launch of the Dior Talks podcast. The big question is, will digital connections ever be enough? “Human beings have a great desire to see, touch, try on, be advised, exchange views and therefore, in this case too, we will find a new and healthy balance between the digital and the physical world. I also believe that the great value of physical contact, of looking in each other’s eyes, of paying compliments, will never lose its charm,” argues Cucinelli. Ming Gao, managing director of Ruder Finn’s Greater China luxury business, maintains that “brands will face a tougher challenge” due to the spending cutbacks. Gao advises brands to begin formulating plans on how to “build a better relationship with their customers”, in order to lay the foundations for when normality resumes in the industry. Fashion’s post-coronavirus digital transformation in China was ignited by the Shanghai Cloud Fashion Week – the live broadcast that launched on March 24 in partnership with Tmall. The enormously successful event showed that the inventive solution not only created a viable substitute for traditional fashion weeks, but also presented an attractively accessible alternative. So has luxury successfully adapted to the world of live streaming and consumer-centric social-media event hosting? Early in 2019, the emergence of online live streaming and related mediums really began to take shape in the industry and resulted in an estimated US$61 billion in sales. Now, with online streaming being not just a supplement but a requirement, brands are waking up to the full potential of omnichannel retailing. In fact, current estimates by iiMedia Research Group suggest that sales revenue through digital networks may double in 2020 since, back in February, there was a massive 719 per cent increase in merchants live streaming on Alibaba’s popular Taobao Live and similar growth patterns on rival platforms such as Yizhibo, and Douyin, the Chinese version of TikTok. How ‘Made in China’ designers are winning the hearts of Chinese millennials Many foreign brands also woke up to the fact that this new terrain could in fact turn what seemed a threat into an incredible opportunity. Not all brands, however, have been able to utilise the emergence of live streaming sales to their advantage. Louis Vuitton was one of the first to initiate the move towards digitalisation but it had a shaky start. As the first foreign brand to dip into the Little Red Book social shopping platform, Louis Vuitton did make an effort to orchestrate its debut in cooperation with social media influencer Cheng Xiao-yue and actress Zhong Chu-xi. But the ambitious move, although giving the brand a much-needed head start in the live-streaming race, left viewers distinctly underwhelmed, according to Chinese netizens. Some commented that the ambience made the goods appear to be cheap and wholesale rather than exclusive luxury possessions. Besides the somewhat mundane setting and a less-than-great attention to detail and visible unpreparedness, Louis Vuitton seemed to be oblivious to the still-more salient fact that Little Red Book lacked the ability to actually make sales. The platform – a more content-oriented one – still cannot compare to e-commerce giants such as JD and Tmall with regard to logistics and supply chains, and therefore presented a major roadblock in enabling customers to conveniently make purchases. For many markets that were lagging behind, the current demand for active participation serves as a push that can unlock previously unexplored marketing solutions, particularly in regard to digital shopping. With all this, the direction in which the fashion sector is heading is becoming increasingly clear. Yinan Chen, a luxury brand strategist and consultant in Guangzhou, has his own take on the development. “For now, live streaming lacks a thorough business model … but it’s definitely not just a passing phase.” Who is Chinese fashion designer Angel Chen from Next in Fashion? Chen further explains that even when things do return to normal, current purchasing trends that are emerging as a response to the virus are likely to reshape consumer habits in the long run. Chen concludes brands need to pay extra attention to how they go about their online communications. “If the audience feels brands are joining this trend just because everyone else is, but in reality they have no value to add, it may backfire.” Such consumer fatigue is not an alien concept and indeed many brands have fallen victim to their own invasive and unmerited marketing campaigns in past attempts. Benjamin Bilteryst, a luxury retail veteran and founder of the luxury and retail club at the French Chamber of Commerce in Shanghai, shares a similar view. “Live streaming creates fantastic opportunities to explore new boundaries, get connected to the clients, achieve sales, or build awareness. Facing faster digitalisation, brands need to be daring, but also wary of poor execution and strive to retain their promise of a seamless luxury experience,” he says. The demands and rewards of e-commerce could make solid bricks and mortar lose its appeal. Bilteryst notes that the future relevance of boutiques is embedded in the fact that they provide an otherwise irreplaceable enhancement for the “sensorial perception of the guest”, which can ultimately elevate the experience. While live streaming and the overall digitalisation of the industry seem to be the new norm for the time being, an even more important aspect of long-term resilience will have to be the capacity to act fast and stay ahead of the next luxury fashion frenzy. This may turn out to be the perfect opportunity to tackle other problems that have been concerning the industry for years, such as insufficient supply chain processes, and unsustainable end-to-end product life-cycle management. Reshaping long-term business strategies around these emerging developments could prove to be the masterstroke that will enable early adopters to emerge from the coronavirus crunch even stronger, and more in line with the fast-paced nature of China’s luxury retail world. Want more stories like this? Sign up here . Follow STYLE on Facebook , Instagram , YouTube and Twitter .