Citizens of the world have endured weeks of living through the COVID-19 pandemic experience. When we are past the worst of the crisis, we will not be the same, but we know from history that there will be many major opportunities for economic prosperity. How can luxury business leaders take creative, effective steps right now to shift the growth curve to a higher plane, with a steeper growth trajectory? 

To help brands achieve their well-intentioned purpose and values, here are seven rules for reinventing the luxury business model for post pandemic success. 

Rule 1: From Disruption to Agility 

Disruption is an overused term that is used incorrectly in business. To disrupt means to throw into disorder, or destroy, a structure. According to the disruption experts, brands have to be in a relatively constant state of disruption or perish. Case studies such as the failure of Kodak to disrupt itself, and its failure to innovate the digital photo era, are in vogue. The fact is that Kodak invented the first digital camera in 1975. It failed to develop the digital business for fear of hurting its lucrative film business. Disruption is not the solution to lack of courage. There was nothing to tear down. There was something to build, in parallel. The same is true for Blockbuster. Blockbuster had video streaming technology, but not the courage and agility to execute. 

The pandemic has already achieved enough massive disruption. What all businesses really need now is to be agile. Agility is the ability of an organization to sense, anticipate, and respond efficiently and effectively to constant changes that are occurring, or are likely to occur. Film cameras and video stores did not disappear for years. Kodak and Blockbuster, had they been agile organizations, had ample time to set up competing entities and could have empowered and nurtured the agility of each to let the market determine the winner. Agility is often more evolutionary than revolutionary in nature.

However, just as with an elite athletic team, agility requires great courage, expertise, resources, coordination, and speedy, brilliant execution. As we will see from the rules below, agile business models continuously and rapidly evolve critical structures and attributes that help them to survive and thrive in rough terrain.

Rule 2: From Fixed Cost Pipelines to Variable Cost Ecosystems 

The year 2020 is a time of survival for many businesses. Unfortunately, even though we now live in a digital world, most luxury goods and services brands operate like Industrial Age pipelines with rigid linear processes and high fixed costs. In the pipeline model, profits come from scaling past high fixed brick-and- mortar costs. Today, many brands have learned that this dated model needs to evolve into a variable cost ecosystem. For example, executives should learn that unless it is essential, and profitable, businesses should not own, or rent, much real estate. It is expensive and drains cash. Brands are discovering that many people can optimize working from home and office (it is not an either/or proposition). Fixed office and other space, and their high annual maintenance costs, can be dramatically reduced. 

Further, while some luxury brands feel they require being fully vertically integrated to control quality and the client relationship, it is clear that there are many opportunities in today’s digital economy to fully outsource at least some processes to top-tier specialist partners and develop the will and skill to hold them accountable. Apple’s phone production is outsourced to an ecosystem of production partners who meet strict quality standards, and it outsources app development to an ecosystem of developer partners with strict standards. Apple currently prioritizes big retail stores to own the customer relationship. 

Let’s see if that element of the business model endures, or if Apple can combine stores with serving customers remotely, or in their homes, better, faster, with less friction, at a lower cost, with higher associate quality of work and life. 

Rule 3: From Clients-first to Associates-first 

Putting customers first was always a good slogan, but, is totally unrealistic in 2020. Legendary, top performing corporate cultures such as the Four Seasons and the Ritz-Carlton, when they operate at their peak, always take care of associates first. Any brand, to execute its purpose, must first build a shared high moral purpose and values as guiding posts for all associates, internal and external, and live them daily. Human beings, even in a digital environment, must feel cared for and valued. They must have access to education and continuous learning in critical skills that drive domain expertise. 

Most importantly, associates must learn, practice, and master the emotional intelligence life skills that promote deep empathy, trustworthiness and generosity. These skills, practiced toward all associates first, drive collaboration, innovation, and brilliant execution of the moral purpose and values. Consequently, associates hold each other accountable for treating all constituents, including customers, accordingly. Without the associates-first foundation, taking great care of customers can never be achieved. 

Rule 4: From Bureaucratic Silos to Collaborative Hybrid Teams 

Once the brand has created the right culture and gathered the right permanent internal and external experts, it is time to shatter the dysfunctional departmental silos. It has taken a pandemic to get production, technology, finance, e-commerce, human resources, sales and marketing departments to align and coordinate for survival. In order to be effective post pandemic, brands must reorganize into prioritized project teams of experts with the proven expertise to innovate and build agile solutions to the most critical issues confronting the business. 

Brands will need to optimize the work of internal experts with that of external experts. Creating and maintaining a network of top-tier, on-demand outside experts will be one critical task for the enterprise. 

Activating agile, courageous hybrid rapid-response teams of individuals who not only bring best-in-class domain expertise, but, also the emotional intelligence to cooperate effectively, and hold each other accountable, like Navy SEALS, will be a non-negotiable requirement to operate efficiently and effectively. When the loyalty of a team member is to a department silo, the probability for conflict of interest, and lowest common denominator performance, is certain. The Industrial Age’s linear, baton-hand-off departmental model is dead. Bureaucratic brands that fail to transform from departments into agile, emotionally intelligent expert hybrid teams will be at a major disadvantage in performance, and survival. 

Rule 5: From Big Data to Relevant, Rich and Real-Time (3Rs) Data 

Big Data has worked well for data generated by non-human entities such as the weather, plane engines, farming equipment, and inanimate sources. However, for the consumer and luxury goods and services brands that need to build humanistic, individual long-term customer relationships, Big Data is a failure. Peter Norvig, Director of Research at Google has stated, “We don’t have better algorithms. We just have more data. More data beats clever algorithms, but better data beats more data.” Studies show that at most brands, customer data is missing, dirty, incomplete, irrelevant, dated and obsolete. The opportunity is not Big Data. It is relevant, rich and real-time data (Luxury Institute’s 3Rs of personal data). 

The currency of the digital economy is not data. The real currency is trust. Trust with verification is what inspires and empowers the willingness of customers to share their personal relevant, rich and real-time data. In luxury, where the customer purchase decision involves high value, high risk, high investment and/or high emotion, brands have the unique opportunity to completely bypass data brokers and digital platforms. Luxury brands can engage their customers directly right now in an open, honest, dialogue regarding data sharing, and, with consent, test and learn their way to demonstrating the value they can generate with Advanced Personalization.

Without a new individual customer-controlled and led direct data sharing process, luxury brands will never have the opportunity to empower individual customer data and generate trillions of dollars of mutual value creation with their customers. 

Rule 6: From Transactions to Fiduciary Relationships 

It is clear from observing the evolution of many luxury and premium online and multi-channel business models that customer acquisition costs continue to rise rapidly while customer retention rates decline sharply. For example, in the deeply troubled luxury fashion world, most brands are transactional business models that fail to achieve high levels of customer loyalty. To grow in a transactional model, brands have no choice, even at the luxury level, but to discount aggressively. 

The antidote to transactional luxury fashion business models has been to do exactly as Hermes, Louis Vuitton, Gucci and Chanel do today. Even for the luxury leaders, however, current best practices will not be enough. Post pandemic these brands need to become fiduciaries and rise above their current customer experiences to protect, enhance and promote the best interests of their clients. 

For example, going forward, a luxury apparel and accessories brand must demonstrate that it is executing and innovating sustainability best practices to protect their clients. They must prove that they are protecting client data with military grade cybersecurity. They must protect the privacy of the client by not selling their data or insights to third parties. Beyond protection, they must enhance the client’s best interests by providing the client with custom-made or made-to- order, personalized garments, handbags and shoes based on insights from exclusive data that the customer provides on a by-consent, privileged basis because the brand has established a high level of trust. 

Further, the brand must promote the best interests of the client by generating individual value for the client far beyond products. Brands must use their new privileged access to client data with AI skills to generate insights and recommendations that continuously improve the client’s life. The brand can teach clients how to mix work clothes and accessories better and travel lighter. They can even suggest alternative living locations and habits, and holiday travel locations that fit the client based on her observed habits and unexpressed desires. 

Fiduciary client relationships require a duty of care and loyalty that brands must deliver far beyond even the best current luxury client experience. Recent Luxury Institute research across Asia, Europe and North America shows that in a post pandemic world full of fear, threats and predators, an upgrade to the fiduciary client relationship is the only way forward for brands that want to win in the rapidly evolving luxury space. 

Rule 7: From Omni-Channel to Omni-Personal 

Because of the Industrial Age pipeline processes and metaphors under which most luxury executives and their marketing agencies have developed, the mental models of the world have been focused first on products, and, then, the traditional distribution, marketing and selling channels. Despite the “customer-centric” hype, most brands and their agencies view customers, not as individual human beings, but as anonymous entities, residing in segments, represented by personas, from whom they capture data, to whom they endlessly target ads, products and services, and with whom they close transactions in channels that are most cost effective and convenient to the brand. Rinse and repeat. It may be efficient for toilet paper, but it is highly ineffective for luxury goods and services. 

Instead, brands should focus first on how they can engage with human beings in order to develop and deliver custom solutions and experiences within a mutually beneficial long- term relationship where they can exchange high value continuously. 

The accelerating digitization of the customer’s life is creating a new paradigm where customers are no longer willing to play nice in the linear, online/offline mechanical “multi-channel” world that brands have created for their own convenience. Today, the game is omni-personal. It transcends channels. This is accelerated by the current crisis. This means that the customer has discarded the “sales funnel” that has been imposed by the brand, and chooses whatever individual, non-linear combinations of contact points for brand discovery, engagement, purchase, return, service, after-sales service and long-term relationship building suits them

The only way to achieve omni-personal relationships is to rewire the mental models of customer engagement and understand that in an omni-personal world the sun (the customer) never revolves around the earth; the earth (the brand) revolves around the sun. Privileged personal data access, as we have demonstrated previously, is the gateway. Until luxury leaders internalize that customer-centricity is driven by the customer, not by the brand, luxury will fail to achieve its full potential. 

The COVID-19 pandemic is a human tragedy. A crisis of historic proportions, taking place in a digital world context, creates the unique opportunity to reinvent the business model in ways not previously available. Some experts talk about “future-proofing” the business model. That is unrealistic. However, luxury goods and services brands can exponentially increase their agility and probability of success. Right now, luxury executives need to gather the strong courage, drive and creativity to reinvent their business models in preparation for the massive opportunities of digital prosperity that will be created post pandemic.

The Luxury Institute is the world’s most trusted research, training, and elite business solutions partner for luxury and premium goods and services brands. With the largest global network of luxury executives and experts, Luxury Institute has the ability to provide its clients with high-performance, leading-edge business solutions developed by the best, most successful minds in the industry. 

When western fashion brands and retailers temporarily closed their brick-and-mortar outposts in early March in connection with the coronavirus, most thought that they would be re-open their doors again within a matter weeks. That has not happened … not even close. In fact, as shelter-in-place and non-essential business orders from local regulators and law enforcement remain in effect weeks after the initial “re-opening” dates, retailers are seeing seasonal inventory pile up en masse, as most consumers shun mon-essential goods, and prioritize entertainment-centric products – not fashion or luxury ones – when they do choose to indulge. 

While most brands and retailers have refocused their efforts entirely on e-commerce and introduced sweeping sales in no small number of cases in order to move merchandise, by most accounts, online shopping is not making up for brands’ current zero-foot-traffic reality, which not only impacts brands from an immediate revenue standpoint but also plagues them with garments and accessories that are swiftly deteriorating in retail value.

 “Much of the merchandise that was on the shelves and racks when stores first closed [due to COVID-19 concerns] is worth less than 50 percent of its original value and soon will drop to 10 percent of its original value,” retail expert Walter Loeb wrote for Forbes back on April 2. As stores continue to remain closed (and in certain cities, entirely boarded up to prevent looting), more merchandise will become “obsolete” from an initial point of retail perspective.

The result of the growing mound of unsold merchandise will be a field day for a select few: off-price retailers and resale entities. The T.J. Maxxes and Marshalls of the world and the growing number of digitally-native resale sites are being presented with what Credit Suisse analyst Michael Binetti has called “the greatest buying environment for off-price in a decade.”

With season-specific products in hand (paired with a pattern of brands quietly selling of wares into the gray market to boost their bottom lines, and growing legal treatment of and consumer discontentment with brands’ pattern of destroying certain types of luxury goods to avoid offering them at sale prices), brands and retailers are already looking to the likes of The RealReal to recoup some of their investments. The San Francisco-based luxury resale site revealed that for the first two weeks of April, it saw a spike in the number of brands seeking to join its B2B program. “Compared to an average two-week period before the coronavirus outbreak,” applications to join The RealReal’s business sellers program 10 times greater, with a representative for the company telling Glossy that “the majority of [these] brands are looking for alternative ways to sell product at a time when their stores are closed.” 

For existing business sellers, The RealReal previously confirmed that it has seen “a 30 percent increase in supply from brands in the six weeks to April 14, compared with the same period a year earlier,” a spokeswoman said. In furtherance of the B2B program, The RealReal sells garments and accessories for approximately “80 percent of the full retail price, on average,” with the resale giant keeping between 50 and 80 percent of the sale, and the seller getting the rest. 

Meanwhile, in a move that neatly coincides with the inevitable influx of unsold wares that will hit the market by way of alternate channels, Alibaba announced the launch of its own off-price venture this week. Called Luxury Soho, the Chinese largest e-commerce titan’s new platform, which will work in conjunction with its ever-growing Luxury Pavillion site, provides “various solutions for different scenarios,” Weixiong Hu, Vice President of Alibaba Group and General Manager of its TMall fashion division, said this week. This includes “maximizing the life cycle of luxury products,” while enabling brands to “protect their premium image on [Alibaba’s] Luxury Pavilion.” 

The new platform will also presumably allow Alibaba’s long list of luxury partners – which range from high fashion brands like Bottega Veneta, Valentino and Versace to skincare and beauty offerings from the likes of La Mer, Chanel, and Givenchy, among others – to off-load unsold products in the Asian market. 

Many luxury brands are traditionally hesitant to openly sell off goods via significant discounts (and in fact, have fought with department stores and other third-party stockists for years on this very point, which has prompted many to essentially revert to a direct-to-consumer model that includes almost exclusively selling at least certain types of products (i.e., non-licensed goods) by way of self-owned and operated channels). However, the luxury market is not immune to the talk of discounting in the wake of the global health pandemic, particularly as their revenues take a marked beating, with the effects of closed stores and diminishing consumer confidence in the market only expected to worsen in the second quarter of the year.

In an investor call on the heels of releasing its first quarter revenue report, Kering – the parent to Gucci, Balenciaga, Bottega Veneta, and Saint Laurent, among others – revealed that it will enact  “some discount activities” to improve sell- through for its inventory, in addition to extending the shelf-life for its brands’ Spring/Summer 2020 garments and accessories. Other, similarly-situated brands that want to sell off seasonal products, and that do not want to incur the expense of packing and storing goods to sell off at a later date, are expected to follow suit.

Around this time last year, after debuting a number of “smart” shoes, such as its re-introduced self-lacing sneakers and ones that can be tightened or loosened via a smart phone, Nike revealed that it was working on a clever new branding scheme in which its arsenal of futuristic offerings would not be called footwear but “footware.” This revelation came when Nike filed a trademark application with the U.S. Patent and Trademark Office (“USPTO”) in late March 2019, seeking a registration for the term for use in connection with various sneaker-specific hardware and software products and services. 

While Nike had not yet begun using the “footware” mark as of the time it filed its application (and still has not), it filed on an intent-to-use basis, meaning that it has “a good faith intention to” begin using it in the not too distant future in a number of classes of goods/services, namely, “electronic devices and downloadable computer software that allow users to remotely interact with other smart devices for monitoring and controlling automated systems,” among other things. 

By way of the trademark, which combines “footwear” and “software” (and maybe also “hardware,” too), Nike is seemingly aiming to brand a looming venture that marries its world-famous footwear with technological components. 

Almost from the outset, the Beaverton, Oregon-based sportwear giant’s trademark has been subject to pushback. In a preliminary response to its application, an examining attorney for the USPTO asked Nike to “explain whether the wording in the mark ‘Footware’ has any significance in the software, hardware, or telecommunications trade or industry or as applied to [Nike’s] goods and/or services, or if such wording is a “term of art” within [Nike’s] industry.” That question is particularly relevant because if the term “footware” were, in fact, a “term of art” within the footwear or sportswear industries, that might stand in the way of the word acting as an indicator of a single source in the same way as the Nike name and its instantly-recognizable swoosh logo. In other words, it might prevent the term from functioning as a trademark. 

Nike’s counsel responded to the USPTO’s Office Action, confirming that the “footware” does not have “significance nor is it a term of art in the relevant trade or industry.” 

With preliminary issue out of the way and given that Nike is not seeking to use the “footware” mark on shoes (i.e., footwear), which would have inevitably led to a much more significant back-and-forth between the USPTO and Nike’s legal team, the application moved ahead in the pre-registration process. 

However, a letter that the examining attorney added to Nike’s application documents in July, just three months after the nearly 60 year sporting goods behemoth filed its application, proved that Nike was not out of the woods in the registration process. As it turns out, a third-party had sent a “letter of protest” to the USPTO Commissioner, taking issue with Nike’s attempt to claim exclusive rights and a registration in the word “footware” for use in connection with the various goods/services at issue.

In the early-stage challenge to the Nike application (in which a party can point out potential issues in connection with a pending application before it reaches the opposition stage), the third-party at play asserted – and provided evidence – that “footware” is a “merely descriptive” term for technology-driven footwear designs (and not an indicator of a single source), and thus, is not eligible for registration by anyone, especially Nike. 

The third-party was Puma, and the evidence it provided to the USPTO in its letter consisted of examples of both its and Nike’s tech-centric efforts – from Nike’s self-tightening “smart shoe” to Puma’s RS-Computer shoe. 

The USPTO’s examining attorney revealed in a filing days later that he had reviewed the evidence provided with the protest letter, and yet, Nike’s application for the “footware” mark proceeded in the pre-registration process and was published for opposition, a routine practice that provides any party that believes it may be damaged by registration of the pending trademark with the opportunity to file either an opposition to the registration laying out the reasons why the trademark should not be registered or a request to extend the amount of time it has to file a formal notice of opposition. 

In February, Puma filed a request for a 90 day extension with the Trademark Trial and Appeal Board (“TTAB”), asserting that it needed “additional time to investigate the claim” and “to confer with counsel.” The sportswear company has until May 20 to either seek an additional extension or to file its opposition, or to abandon its ability to prevent the mark from potentially being registered. 

To date, Puma has not filed anything substantive with the TTAB. 

A Lawsuit-Ridden Market  

The budding battle between Nike and Puma is one the latest examples of legal squabbles that pit sportswear leaders against one another in the $58 billion-plus sneaker market, and in fact, it comes just months after Nike and Puma seemingly settled the unrelated design patent infringement lawsuit that Nike filed in 2018, in which it accused Puma of “forgoing independent innovation and instead, using Nike’s technologies without permission.”

While the fashion industry sees its fair share of lawsuits, the footwear and sportswear markets tend to be particularly rife with litigation and other legal conflicts (oftentimes much more so than its fashion counterparts) for a number of reasons. High on that list is the fact that footwear giants like Nike and adidas, among others, routinely invest large sums and years of time in the research and development that goes into the proprietary technologies boasted by their offerings – whether that be Nike’s Flyknit technology, for example, or adidas’ Boost foam tech

This level of investment gives rise to incentives for brands to “defend [those investments] in innovation” (and thereby, recoup their R&D expenditures), as Nike put it in the aforementioned design patent infringement lawsuit that it filed against Puma. It also motivates brands “to protect [their] technologies.” (Aside for brands’ very-valuable trademarks and luxury brands’ staple items, similar incentives arguably do not exist in the fast-paced and highly-seasonal fashion industry, which runs on a calendar that calls for the regular introduction of new products that have short shelf lives). 

In terms of protection, no shortage of the footwear products being sold by the likes of the industry’s biggest names are the subject of a mini-arsenal of rights. Design patents, for instance, protect the ornamental design of a functional item, such as a shoe, while a utility patent provides protection for the creation of a new or improved product, process, or machine, including the process for assembling elements of a technically-advanced sneaker. 

Patents – and a lot of them (Nike, for instance, secured 867 patents in 2018, alone, and even more, 1,212, the year before that) – give brands like Nike and adidas grounds to take legal action when their products or even just individual, protected elements of the products are copied. This differs quite a bit from the average fashion industry garment design, which largely lacks copyright protection and because it is seasonal in nature, the expense and pendency associated with design patents does not necessarily make such protection a worthwhile investment. 

Operating more like staple fashion industry products, which ate routinely protected, sportswear brands’ footwear tends to sell for longer periods of time and in significant quantities, which leads brands to build a collection of protections around each of their designs and the various branding and other trademark elements that come with them. In other words, there tends to be many more protections at play when it comes to a sneaker than even your average “it” bag and certainly more than even some of the industry’s most hot-selling seasonal garments.  

Finally, the resources of companies like Nike – which generated $39.1 billion in revenue in 2019 and maintains a market cap of more than $110 billion – and adidas – which brought in $26.5 billion in sales last year – mean that they have sizable litigation budgets and swamps of in-house and outside lawyers, thereby, making their efforts to enforce their rights not only mighty but also downright common practice. 

Fashion models and burgeoning young fashion brands are not the only ones landing on the receiving end of lawsuits for using others photos without permission, Fendi is, too. The LVMH Moët Hennessy Louis Vuitton-owned Italian luxury brand was named in a copyright infringement complaint this week after the brand published an image of Blake Lively in January wearing a mustard yellow look from its Spring/Summer 2020 collection on Facebook and Instagram that is “owned and registered by Eva’s Photography, a professional photography company” without the company’s authorization.  

According to the complaint that New York-based Eva’s Photography filed in a New York federal court on Thursday, its suit against Fendi “arises out of [the brand’s] unauthorized reproduction and public display of a copyrighted photograph of actress Blake Lively arriving at the Good Morning America show in New York” in January. 

Much like nearly all of the other paparazzi-filed infringement lawsuits, which have flooded court dockets with marked frequency in recent years, Eva’s alleges that while it is “the sole owner of all right, title and interest in and to the Photograph, including the copyright,”  Fendi, nonetheless, “posted the photograph on [social media] as tool to promote its brand and clothing” without licensing it from Eva’s or otherwise “receiving permission or consent to publish it.” 

As such, Eva’s claims that Fendi ran afoul of its exclusive right as the copyright holder to “reproduce, publicly display, distribute and/or use the photograph,” and asserts that the “foregoing acts of infringement by Fendi, [which] have been willful, intentional, and purposeful, in disregard of and indifference to [Eva’s] rights,” entitle the photo company to “statutory damages up to $150,000 per [infringed] work” or the actual damages that Eva’s suffered as a result of such alleged infringement. 

image via complaint

Not exactly the first time that a high fashion brand has been called out for co-opting another’s photo(s) in order to promote its pricey products, fellow LVMH Moët Hennessy Louis Vuitton-owned brand Christian Dior is currently facing litigation for “knowingly copying” two photos from an influencer Instagram account, which it allegedly “featured in one or more of its lookbooks, including on the cover of at least one lookbook … for its own commercial gain.” That is what Swedishandstylish LLC claims in the copyright infringement lawsuit that it filed against the Paris-based brand – whose parent company LVMH Moët Hennessy Louis Vuitton generated nearly $60 billion in revenue in 2019 – in a New York federal court in March. 

The allegations set forth by both Eva’s and Swedishandstylish LLC mirror some of the claims that many street style photographers have set forth over the years in connection with some of the fashion industry’s well-established entities. According to no shortage of reports in recent years, many big-name brands have a long-standing practice of using influencer-centric imagery taken during the various fashion weeks, in particular, on their own social media pages and website, albeit without licensing the images from the respective photographers and/or their agencies. 

The lawsuits at hand also come against a growing background of paparazzi lawsuits that are being waged against celebrities, brands, and models, alike. 

*The case is  Eva’s Photography, Inc. v. Fendi North America, Inc., 1:20-cv-03331 (SDNY). 

In times of severe economic downturn, certain companies routinely fare better than others. While luxury brands tend to suffer significantly, off-price retailers often thrive during recessionary times, as consumers look to cut costs. In the same vein, some types of goods and services remain popular during fiscal slumps, and hair and other beauty-centric services are among them. History shows that even during the Great Depression, when GDP fell by 30 percent in the U.S., and unemployment spiked to more than 20 percent, “people continued to pay for salon visits, opting to forgo other essentials” in order to keep up appearances. 

“The length of time between salon visits appears to grow during times of downturn, thereby, giving rise to an alternative metric to gauge consumer confidence in the market (what has been coined the ‘haircut index’),” according to Hannah McCann, a lecturer in Cultural Studies at the University of Melbourne. As John Paul Dejoria, the founder of hair care company Paul Mitchell, asserted on the heels of the Great Recession of the late 2000s, “Beauty salons are the best economic indicator. Typically, customers will visit every six weeks; in downturns, that drops to every eight weeks. When it goes up again, things are on the mend.”

On the flip side, McCann says that “some argue that consumers tend to buy more small luxury beauty items, such as lipstick during recessions,” thereby giving rise to an another alternative market indicator: the so-called “lipstick index,” a term that Leonard Lauder – then-chairman of Estee Lauder – came up with during the 2001 recession in response to lipstick sales, which indicated, in his mind, “that women facing an uncertain environment turn to beauty products as an affordable indulgence while they cut back on more-expensive items.” 

“We have long observed the concept of small luxuries, things that can get you through hard times and good ones. And they become more important during harder times,” he revealed, explaining why sales of lipstick, nail polish, and other beauty products were up despite a falling market. 

Fast forward from the 2001 recession to the outbreak of COVID-19 and the ensuing market decline, and demand for salon services has not dimmed. In fact, such demand prompted local regulators and law enforcement to act, with the Governor of New York, for instance, ordering all hair and nail salons to close as of March. Similar provisions have been put in place across the U.S. and beyond. Just this past week, after all, Beaumont, Texas Mayor Becky Ames broke her own city-wide lockdown order when she visited a nail salon, subsequently making national headlines. 

The takeaway, according to McCann, “Even in difficult economic periods and even as social distancing complicates the situation for the beauty industry, people still care about keeping up appearances.” Or, as Eric Delapenha, the founder and CEO of Strands Hair Care, a direct-to-consumer custom shampoo and conditioner brand, told Entrepreneur this month, “Customers still want to look and feel good.” 

With such enduring demand in mind, and given that many beauty-related business are closed, at least from a brick-and-mortar perspective, companies – from hair and nail salons and spas to experience-driven beauty stores – are shifting to online services, finding creative ways to maintain connections with existing clients and to reach new ones. 

Many salons, for instance, “have begun selling ‘lockdown’ product packs online, producing short ‘home maintenance’ videos, and some are even offering one-on-one live digital consultations,” McCann says. WWD echoed this recently, stating that “aestheticians and dermatologists are pivoting to Instagram and virtual consultations.” While “revenue from digital consultations doesn’t offset the cost of staying in business, but it does help,” Joanna Vargas, celebrity facialist and founder of Joanna Vargas Salons and her eponymous skin-care line, told the trade publication. “Vargas is offering virtual consultations for $70, gifting each client $100 in credit for future treatments, purchases or gifts,” per WWD. “She has also opened a text line for clients seeking skin advice.”

Meanwhile, beauty brands and retailers are looking online, as well, with YSL Beauty “has boosted its beauty tutorial content in the face of COVID-19,” according to Jing Daily, “working with the Dutch makeup artist Celine Bernaerts [to] offer short tutorials, beauty tips, and make-up practice skills using YSL Beauty products.” LVMH-owned Sephora has similarly increased its social media content, relying on Q&A’s and tutorials, and prompting consumers make use of its instant-chat customer service system.

image via USPTO

Not to be outdone, millennial beauty unicorn Glossier launched a new product amid the COVID-19 crisis: a hand cream. The consumer-facing launch coincided with the announcement that the New York-based brand would donate the first 10,000 units available to healthcare professionals in the U.S., noting that over the past month, it had been “donating thousands of Glossier balms, face mists, and moisturizers to support these teams.”

And still yet, a newly-filed trademark application sheds light on something else that the 5-year old beauty startup is doing. Looking to add a new registration to its arsenal of trademarks, counsel for Glossier asserts in an application for registration filed on April 10 that Glossier has recently (i.e., as of April 7, 2020) begun offering “online makeup consultation services beauty consultancy services; beauty consultation services in the selection, use, and application and use of cosmetics, fragrances, beauty aids, personal care products, and bath, body, and beauty products” in connection with the “Live Edit” trademark.

Given that its brick-and-mortar outposts – which largely serve as tools for the brand to further facilitate the Instagram photo-sharing and community-focused model that has been central to its success – are closed, Glossier is seemingly looking to connect with consumers online in the wake of the health pandemic.

As a whole, sales for beauty and personal care brands and retailers were up for the week ending April 2, compared with the 5-week period from January 3 to February 6, according to online retail and marketplace consultancy Forter. And citing a report from Nielsen, CNN recently reported that hair products and tools “are flying off shelves,” as well, as sales of hair clippers increased 166 percent and hair coloring products rose 23 percent, from the same period a year earlier. 

As McCann notes, “while it may seem ludicrous to care about makeup and hair products during a public health crisis, there are multiple reasons why this may be the case,” including the fact that “many entrenched beauty norms will persist.” Beyond that, traditional forms of work and socializing may be down, but Zoom calls still come with expectations as to grooming and etiquette, and no small number of consumers with more time on their hands, are looking to self-care by way of skincare.

“There is also an important ritual element to maintaining one’s appearance. In Western culture, one’s outer presentation is seen as intimately connected to one’s sense of identity and well-being,” McCann asserts. And “maintaining a daily routine, including skin care, putting on makeup and styling one’s hair, might give some people a sense they are looking after themselves – especially when other things around them are much harder to control.”