On the face of it, the news could not be better. The luxury clothes and accessories market grew to $24 billion before Covid, and even with the pandemic has been forecast to reach $51 billion by 2023.
A note of caution is in order, however. This growth is being driven largely by millennials and Gen Z, the most affluent luxury brand consumers who live and breathe digital. They are the tech-savvy generation forcing luxury brands to dramatically digitise their operations, and with this comes a higher level of supply-chain risk.
New technologies and AI allow companies to learn more about their customers than ever before, target specific segments and build an exceptional relationship through personalised experiences. Digitalisation has helped optimise resources and made each step of the value chain more efficient and cost effective. In the words of Open Access Government: “The digitalisation of the luxury sector has been growing steadily in recent years, and due to the health crisis in 2020, this has only been intensified.”
Make digital your priority
This is reinforced by research from McKinsey, which lists enhanced digital engagement as one of the ”immediate priorities” for luxury brands wanting to navigate the post-Covid world. The paper highlights how “e-commerce is a crucial channel for keeping sales up, communicating with customers, and forging a sense of community around a brand.” Significantly, digital is also top of McKinsey’s list of “longer-term considerations” CEOs should act on. It advises: “Put digital at the centre of your operating model and digitise the end-to-end supply chain.”
With investment in innovative, leading-edge technologies, luxury brands may be able to improve productivity for good. But the boom in e-commerce and digitalisation puts brands at greater risk of cyberattacks. Supply chains and vendors are a frequent target: 70% of cyber security data breaches involve a third party supplier.
So brands also need to invest in expert cyber security and vendor risk management. With C2 Cyber’s proprietary COBRA platform, our clients can identify the supply chain risks that pose the greatest threat to their brand, then focus their limited resources on collaborating with supply partners to reduce them.
Make the most of opportunities
Your supply chain underpins the entire future success of your business yet it is changing rapidly. While you may be successfully digitalising your company and your customer experience, your supply chain may not be so quick. You need a way of rapidly and flexibly changing your supply chain if necessary.
If, however, you do not take steps to improve your supply chain’s cyber resilience, the negative impact on your business can also be exponential.
This may be the most business-critical decision on your desk today.