The luxury retail industry has been impacted by the COVID-19 pandemic and economic slowdown, leading to uncertainty and a dimming outlook for the next few years. Luxury retailers need to shift gears and define new business priorities to minimize the impact of the recessionary environment without losing sight of the long-term luxury value proposition. In the short term, luxury retailers should take steps to make the most of holiday buying and set the stage for longer-term shifts in strategy. Optimizing working capital is crucial, as there will be less revenue available due to pandemic-related shutdowns and ongoing restrictions on store openings. Luxury retailers should consider extending payment terms with non-core vendors to free up significant working capital, which is one of the easier strategies.
