The impact of the COVID-19 pandemic on fashion and luxury: an analysis of the LVMH Group’s resilience

Abstract

The socio-economic impact of the COVID-19 pandemic on global economies has been devastating. After more than two years of coexistence with the virus, it still has important consequences for companies operating in various fields. The luxury sector was no exception: 2020 represented a challenging year as companies not only had to deal with the health-related issues connected to the spread of the virus and the implementation of measures to safeguard employees and clients, but also the disruption of supply chains blocking production and distribution, lockdowns, and forced store closures. Despite the COVID-19 pandemic still affecting businesses and people’s everyday lives all over the world, the luxury conglomerate LVMH reported an increase in sales in 2021 over two years, meaning it was able not only to recover from the shocks caused by the pandemic in 2020, but also to grow, surpassing 2019 levels. This work aims to understand and explain the drivers of this trend: how could this luxury giant manage to increase its revenues despite the tremendous consequences of the COVID-19 pandemic? In this gamut, the Japanese market represents a peculiar player, which has maintained in the breakdown of revenues by region the same level for three consecutive years. How can this phenomenon be explained? Is it mainly a consequence of a shift in consumer behavior, the outcome of the pandemic-induced evolution of the fashion system, or the result of successful managerial practices?