The World Changed by COVID-19... Establishing Online Sales Policies for Luxury Brands
UK Mulliver, Decline in European Overseas Tourists Inevitable, Digital Pricing Policies in Asian Markets Including China
[Asia Economy Reporter Cho Young-shin] British luxury leather goods manufacturer Mulberry is reported to be lowering prices, according to Hong Kong's South China Morning Post (SCMP) on the 7th (local time). It appears that the company has adopted a price reduction policy due to a sharp drop in sales caused by the novel coronavirus disease (COVID-19).
Thierry Andretta, Mulberry's Chief Executive Officer (CEO), said in an interview with SCMP, "We will reduce the prices of some products by about 20% to increase overseas and online sales." He added, "We will set sales policies focusing on Asia, especially the younger generation in China." For example, the Mulberry Iris Green bag will be sold at a price reduced by 18% to 11,800 yuan (USD 1,665) in the Chinese market.
The global demand contraction due to the COVID-19 pandemic is becoming a reality. Luxury goods are no exception. SCMP reported that luxury brands are struggling due to the collapse of the global tourism market and predicted that luxury companies will actively target the Asian market, including China, where purchasing power is high.
SCMP cited a McKinsey report stating that as of 2018, more than 150 million Chinese traveled abroad, and more than half of their overseas spending was on luxury goods. Given the likelihood that the COVID-19 situation will continue for some time, SCMP forecasted that luxury brands will establish digital sales strategies such as expanding online sales.
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CEO Andretta said, "30 to 40% of sales in Europe were generated by tourists, but that may not be the case going forward," adding, "Europe will not have the same tourist traffic as before, so the new pricing policy is important." He further stated, "Chinese consumers are less likely to purchase products locally in Europe as they used to," and "Sales in China will definitely increase due to the new pricing and sales policies." This is interpreted as a plan to reduce the proportion of offline stores and increase online sales.
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