By Martica Mirabal | July 29, 2024
The luxury retail sector continues to feel the impact of post pandemic sales slumps following the immense boom in luxury spending in China, the US and Europe over the last three years. The recent quarterly reports from luxury brands such as Kering, the owner of Gucci, and LVMH, parent company of Louis Vuitton and Christian Dior, signal significant changes ahead for the luxury retail labor market. Kering has forecasted a 30% fall in operating profit for the second half of 2024, primarily due to sluggish demand in China, which has historically been a key growth driver for luxury goods (Reuters). LVMH’s quarterly sales rose only 1%, which fell short of the 2% projections and operating profits were down 6% in the first half. LVMH stock shares dropped 4.7% on Wednesday after the quarterly reporting was released. This trend is echoed by other luxury brands facing similar challenges, contributing to a broader industry impact. Europe’s top 10 luxury companies have lost $250 billion in market value since March, Reuters reported Thursday.
Impact on the Luxury Retail Labor Market
As profits decline, luxury retailers may adopt more conservative hiring strategies. Existing expansion plans might be scaled back, and there could be a wave of layoffs or reduced hours for current employees to manage costs better. With a tighter labor market, luxury brands may shift their recruitment focus towards roles that are critical for maintaining and enhancing customer experience. Positions in customer relationship management, digital marketing, and e-commerce could see sustained or increased demand as brands seek to optimize sales channels and customer engagement.
Companies may also place a greater emphasis on retaining high-performing employees who can drive sales and deliver exceptional customer service. Performance metrics might become more stringent, and incentives could be geared towards boosting productivity and sales effectiveness. There could be a stronger push towards upskilling existing employees to handle multiple roles or adapt to new sales strategies, particularly in digital and omnichannel retailing. Training programs focused on enhancing digital literacy and customer engagement skills will likely be prioritized. Operational efficiencies will be scrutinized, leading to potential restructuring of store management and operations. Retail employees may need to adapt to new roles that support a more streamlined and customer-centric approach.
The current downturn in profits for luxury brands is likely to reshape the luxury retail labor market. Luxury brands will need to balance cost management with strategic investments in key areas to navigate these challenging times effectively. The current market landscape has of course raised concerns about the stability of the luxury retail labor market. However, there are strategies that current associates and potential candidates can adopt to secure their positions and enhance their appeal to luxury brands.
Job Security Strategies for Current Employees
In a challenging market, demonstrating value to employers is crucial for maintaining job security and advancing one’s career. Employees who consistently showcase their ability to drive sales, enhance customer experiences, and adapt to evolving industry trends become indispensable assets to their organizations. This means going beyond routine responsibilities to proactively identify and solve problems, innovate within one’s role, and continually develop new skills that align with the company’s strategic goals. By clearly communicating their contributions and aligning their efforts with the company’s objectives, employees can reinforce their worth and secure their positions even in tough economic times. The following are some strategic actions that will help to ensure job security and growth.
Upskill and Diversify: Associates should focus on expanding their skill sets, particularly in areas such as digital literacy, e-commerce, and customer relationship management. This can involve taking online courses and attending workshops. The ability to leverage online sales platforms and digital tools for customer engagement will be highly valued.
Demonstrate Flexibility and Adaptability: Showing a willingness to take on new roles and responsibilities can make associates more valuable to their employers. This might include cross-training in different departments or learning new technologies that the company adopts. This may require forgoing a pay increase to perform these additional responsibilities.
Focus on Customer Experience: Excellence in customer service remains a cornerstone of the luxury retail industry. Associates who consistently deliver exceptional customer experiences and build strong client relationships will be indispensable. Collecting and acting on customer feedback can also highlight an associate’s commitment to service improvement.
Network Within the Industry: Building a professional network can provide valuable support and opportunities. Engaging with industry events, joining luxury retail forums, and maintaining strong relationships with colleagues and supervisors can help associates stay informed about job openings.
Stay Informed and Proactive: Keeping up-to-date with industry news and trends enables associates to anticipate changes and adapt accordingly. This can involve reading industry publications, following key influencers on social media, and participating in relevant webinars and conferences.
Tips for Aspiring Candidates
In the face of a potentially shrinking labor market, increasing marketability and desirability is essential for candidates to stand out and secure positions. With the industry facing slowdowns and shifting consumer behaviors, candidates must demonstrate their ability to drive sales and enhance customer experiences through innovative approaches and digital proficiency. Building a strong personal brand that showcases expertise in high-end retail, customer relationship management, and e-commerce can make a significant difference. Additionally, staying informed about industry trends and acquiring relevant certifications or education in luxury brand management can signal a commitment to excellence and a readiness to adapt to evolving market needs. By strategically aligning their skills and experiences with the demands of luxury brands, candidates can improve their prospects in a competitive job market.
Tailor Resumes to Highlight Relevant Skills: Candidates should ensure their resumes emphasize skills and experiences that align with the needs of luxury brands. Highlighting achievements in sales, customer service, and digital competencies will make resumes stand out.
Showcase Digital Proficiency: As luxury brands continue to invest in digital transformation, candidates with experience in e-commerce, social media marketing, and data analytics will be highly attractive. Including specific examples of how one has used these skills to drive sales or improve customer engagement can be beneficial.
Gain Experience in High-End Retail: Experience with other high-end or luxury brands can be a significant advantage. If direct experience is lacking, candidates might consider part time and/or temporary roles in high-end retail environments to build relevant experience. Connecting with a recruiting firm and staying abreast of available opportunities will prove extremely helpful.
Develop a Strong Personal Brand: Building a personal brand that reflects an understanding of luxury retail values can be compelling. This might involve creating a professional online presence, sharing insights on luxury trends, and demonstrating a passion for the industry through social media or a personal blog.
Pursue Relevant Education and Certifications: Formal education in fashion merchandising, luxury brand management, or related fields can set candidates apart. Additionally, certifications from recognized institutions that focus on luxury retail can demonstrate a commitment to the industry. These institutions may also assist with job placement.
Prepare for Interviews with Industry Knowledge: In interviews, demonstrating an in-depth understanding of the brand, its products, and its market position is crucial. Candidates should be ready to discuss recent industry trends, the brand’s challenges, and how they can contribute to overcoming these challenges.
The luxury retail market is facing significant challenges, but by adopting proactive strategies, both current associates and aspiring candidates can enhance their job security and appeal to luxury brands. Emphasizing digital skills, customer service excellence, and industry knowledge will be key differentiators in a competitive job market. As the industry evolves, those who can adapt and align themselves with the strategic priorities of luxury brands will find the most success.
Spencer, Mimosa. “Gucci-owner Kering forecasts 30% fall in H2 operating profit on sluggish China demand”, 24 July 2024 https://www.reuters.com/business/retail-consumer/kering-posts-11-drop-q2-sales-sees-weak-second-half-2024-07-24/
CNN, Cooban, Anna. “The world’s biggest luxury brands are hurting as Chinese shoppers rein in spending”, 26 July 2024 https://www.cnn.com/2024/07/26/business/lvmh-luxury-firms-china-slowdown/index.html
