Editor in Chief, WIRED Britain
What do you think the luxury industry needs to learn from the current situation, and how do you think the industry needs to adapt?
In many territories across the world the response of large organisations has been to move much faster than some governments in order to keep their teams safe and limit the spread of the virus. This might be because many are truly global and able to learn from what’s happening on the ground to colleagues thousands of miles away.
However, we may see a shift away from globalisation. Ironically, many of the countries in Asia that have responded most effectively to the Covid-19 crisis may suffer most as their economies are so dependent on trade. Geographic boundaries exist, but the world’s geography can be mapped another way – through infrastructure – which is one of the reasons that this has become a crisis of an unprecedented international nature. Globalised trade has enabled businesses and brands to move into new markets with speed, but it has also meant that, in the current situation, we are dependent on a myriad of suppliers in geographies which we might not have been visited.
While I’m hopeful that the crisis will be V-shaped and that there will be a strong rebound in the Q4 and maybe even Q3, we need to be realistic that, across most of the world at the moment, the demand side of the economy – capital spending, consumption, exports – is contracting quickly. It’s clear that how today’s leaders respond to the Covid-19 will be their legacy.
How should a luxury CEO run their business at the moment?
Every business should assume that its relationship with its employees has undergone a shift. For organisations, there are opportunities to rethink how they relate to their workers and forge lasting bonds – a piece of research in the UK suggested that 70 per cent of people trust their company to do the right thing in the crisis. With the right tools, there can be enhanced collaboration across organisations in ways that would not have happened otherwise. That said, my belief is that the trend towards organisations balancing profit with purpose will continue: workers will increasingly look to their companies to balance short term shareholder returns with broader societal benefit.
Crucially, companies must communicate in the right way and do the right thing by their customers – this crisis won’t last forever and there will be brands that come out of this challenging time with enhanced reputations and others that will will be damaged unless they act in the appropriate way and ensure that their messaging is on point. Consumers are reevaluating their lives and what’s important to them, meaning that brands have an opportunity to listen and be part of a meaningful conversation. Crises can drive innovation and progressive policy, so there is an opportunity to think about new ways of running our organisations both internally and in terms of business objectives.
What is the impact on retail business ?
Our businesses and society will need to be more resilient, meaning that this could see a change in supply chains and a reevaluation of the just-in-time model. Over the past decade, business has been focussed on efficiency as a determining metric – moving forward, building a mentality that enables businesses to adapt and be more flexible will be something that boards look at in the way they might the balance sheet. Boards will also be thinking about de-risking.
There are two ways of looking at the longer term impact to the luxury business – firstly, that it simply accelerates a move towards digital channels. Secondly, that enforced isolation will drive customers in-store for the type of experiences that can only be enjoyed in physical environments. Either way, it’s likely that consumers are going to look to brands to do the right thing. While it’s natural to focus on the near term, we will get through this challenging situation in the coming months and none of us should lose sight of the fact that there is much to play for – we are laying the groundwork for our businesses to thrive beyond this crisis.