Opinion

Resilience gets organised

While the phrase 'reinventing the future' was one of the most sought-after phrases on the net not long ago, it has become difficult to live up to as some people in Eastern Europe are reinventing the past with determination. To rethink tomorrow, you have to be able to see it.

But what auspices can we foresee in the face of the current turmoil? For the past two years, all sectors of the economy have been able, year in, year out, to take the measure of the stakes, find the resources to hold on, and imagine new ways of doing business. The luxury sector has even performed well, showing its defensive and non-cyclical capacity. Moreover, margins have not fallen as a result of the health crisis, quite the contrary. The latest record financial figures of the luxury giants published at the end of January demonstrate this. And despite soaring oil, gas and commodity prices, luxury seems resilient and reassuring to investors. In fact, all the luxury stocks have recovered since 27 February. And the prices of luxury goods will continue to rise well above inflation, applying the pricing power strategy.

All the major luxury brands, Chanel, Hermès, Cartier, Louis Vuitton and many others have announced that they are closing their shops in Russia. Although this decision was taken quickly after the start of the conflict in Ukraine, the prospect of a reopening is becoming increasingly remote. Luxury brands have shown their resilience to the unpredictable Covid-19. Will this be the case with the Russian-Ukrainian conflict? Luxury brands are expecting long weeks of closure and substantial costs. The very good results recorded in 2021 will further encourage the biggest names to remain on the podium, ready to digest the costs. But those that were just getting back on their feet are risking a lot, as the appetite for brands without brand equity weakens significantly in uncertain times.

But not all luxury sectors reacted in the same way. Auction houses have announced that they will continue to operate in the country. And Russian shops and retailers, such as the jewellery and watch brand Mercury, remain open Resilience is getting organised.

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