GENEVA: Brian Duffy says he knew it would be a good day even before Watches of Switzerland Group Plc opened the doors to its flagship store on London’s Regent Street for the first time since March.
The shop had arranged for a stream of customers to come pick up Rolex watches they had ordered, said Duffy, chief executive officer of the UK’s biggest seller of luxury timepieces. And then the phone began ringing.
“We were inundated with people calling and asking us ‘are you open?’” he told Bloomberg.
London’s reopening this week gave a fillip to purveyors of luxury goods, from Harrods, the iconic department store, to the tailors on Savile Row. But difficult questions remain over how long the demand will last, and how a global industry promising personalised services will adapt to a pandemic that’s changing the way people interact and travel, possibly forever.
“There is no going back, ” said Anita Balchandani, the UK head of apparel, fashion and luxury at McKinsey & Co.
Nearly all luxury companies “expect the rules of the game to profoundly change” because of Covid-19, she said.
One crucial variable is China, whose consumers accounted for just over a third of all luxury spending last year. Firms from Gucci-owner Kering SA to LVMH SA, which has the Louis Vuitton and Dior brands, reported a rebound in sales on the mainland in April, after lockdowns ended.
Yet a weakened economy could damage consumer confidence, and the decision this week to close Beijing’s schools and cancel flights to quell a fresh outbreak of Covid-19 reveals how fragile any recovery might be.
The cratering in intercontinental air travel also means far fewer big-spending consumers from China and elsewhere will be jetting to European tourist destinations, at least until a vaccine or cure is found.
As a result, “fashion centres like London, Paris and Milan will suffer disproportionately, ” predicted Paul Martin, the UK head of retail at KPMG.
Watchmakers have joined their luxury peers in betting that Chinese consumers will spend more on their home turf as a result of the coronavirus.
A worsening decline in watch shipments to that market last month may mean a recovery takes longer than anticipated. Total Swiss watch exports extended their slump in May, dropping 68%, industry figures showed yesterday. — Bloomberg