Luxury Companies' Pandemic Lessons

Covid lockdowns and the growth of e-commerce are changing merchants’ playbooks

- Jeannette Neumann

When the chief executive officer of Swiss luxury brand Bally looked at online revenue during the depths of the pandemic, he noticed something curious. Internet sales were robust in U.S. cities that hadn’t been on his radar. “These are cities that naturally a European brand will not think of first,” Nicolas Girotto says. “You will think about New York, Los Angeles, Miami. But there are big opportunities in Austin and Houston.”

Bally, known for its hand-crafted leather shoes, is looking at opening stores soon in Houston and Charlotte. The expansion is part of Girotto’s two-year plan to increase the number of stores Bally has in the U.S. to as many as 25, from 15, while also investing in its online platform.

After surprisingly solid sales during the pandemic, European and U.S. luxury brands are feeling bullish heading into 2022. Sales of luxury goods are expected to grow as much as 25% next year compared with 2019, according to McKinsey & Co. That’s more than the flat to 5% increase the firm projects for the broader nonluxury fashion sector. While most of luxury’s expected expansion is powered by Chinese consumers, U.S. shoppers are also crucial.

The industry is noticing “the strength of luxury in the United States, where a few years ago people were only pointing at China and Asia as the growth trajectory,” John Idol, CEO of Versace and Jimmy Choo parent Capri Holdings Ltd., said recently.