INTERNATIONAL. Luca Solca, Senior Analyst at Bernstein and Senior Advisor at Boston Consulting Group, recently carried out a study in partnership with TW.O & Partners on the impact that COVID-19 has had on the travel retail luxury market. He will present the findings on Thursday 15 October (13:00 UK time) at the Moodie Davitt Virtual Travel Retail Expo. Here, The Moodie Davitt Report catches up with Solca to preview the event and capture some of his thoughts on the challenges facing luxury retail.
Luca, can you tell us about your recent research into the travel retail luxury sector?
This summer, I carried out a study aimed at figuring out the dramatic impact of the pandemic on the business fundamentals and the reaction of the industry. We devoted special focus to China, a rising star market that seems to have taken antithetical measures to the rest of the travel world.
The study was the result of a fruitful collaboration with TW.O & Partners, a sector specialist – our “touch point” with the travel retail market.
What, in your view, is the state of the travel retail luxury sector today?
Overall, I was surprised to read numbers and projections that do not necessarily match with those of the luxury market outside travel retail. Travel retail is a ceaselessly developing world of undoubted strategic interest for luxury brands; TR is especially suffering from the dramatic decrease traffic.
On the contrary, demand for luxury goods is proving quite inelastic and brands are showing unexpected signs of recovery, faster than imagined.
I think the big new lesson for us this year is that a sudden stop in travel is not as damaging as previously anticipated for global luxury demand – the most recent current trading data points show that spend repatriation has been stronger than initially feared.
How do you expect it to develop and evolve in the future?
In the future, consumers are unlikely to discriminate between online and offline. The two concepts will merge into one and people will naturally shift from one another without even paying attention.
Today, online shopping takes place in-store through various platforms, as the opposite happens – offline experience often triggers online shopping. Product sales and delivery are steadily moving outside the physical shop space. Stores are increasingly serving the purpose to attract the customer to the brand.
In conclusion, the store becomes a brand-owned media platform, a living ad tool. With the continuing ascent of digital, brands are likely going to trim their physical networks; they will need fewer but more memorable stores. This is an ongoing process.
Footnote: For details of the speaker line-up for the Virtual Travel Retail Expo, click here.