Editor’s note: The following is a transcript of the accompanying video. ©2020 Thomson Reuters.
Europe’s luxury stores are slowly coming back to life. When the doors first opened, many saw a surge of business. But with tourists missing, that soon wore off.
Europe’s luxury retailers depend on travellers for up to 55% of their sales. Right now though, the big spenders from China, the Middle East, and the US are staying home. This week Milan’s upscale city-centre arcade looked quiet. The country’s business lobby said retailers there saw sales down 30% on the year since reopening on 18 May.
Paris seems a little more lively. Stores there have been open for two weeks. But this week still saw lines of shoppers outside upmarket brands like Louis Vuitton. Even so, consultancy Bain says global sales of high-end bags, clothing, and jewellery will fall as much as 60% in the second quarter.
Brands are adopting different strategies in response. Ferragamo and Burberry have written down the value of stock they can no longer sell at full price. But others like Chanel and Louis Vuitton have raised prices to protect margins. Gucci will go from five fashion shows a year to just two, and wants garments to stay in stores longer.
None of that may move European consumers. The European Commission estimates that households there will save almost a fifth of their income this year. Conspicuous consumption is off the agenda.