India’s luxury industry, known for tight supply chain management and inventory management systems, is bearing the brunt of the coronavirus pandemic. As it moves into the second wave of the pandemic in the country, the luxury brand industry is reeling under its influence and is finding it difficult to fight it. With a growth rate of 18-20% per year since 2013, the pandemic has caused it to come to a standstill, as basic needs outweigh the need to satisfy one’s wants. Let’s dig deeper to understand what is causing this recession.

Production facilities

A well-known fact is that the vast majority of luxury brands work under contract and do not have their own production facilities. As a result, they source their materials from all over the world and assemble them in a facility before shipping them for sale. This movement has been interrupted due to the covid-19 pandemic.

‘Utthan Pact’

The aim of this pact was to improve the art and embroidery of India, signed by quite famous luxury brands that exist in the country. This pact was established for a duration of 3 years but had no legal connection. However, when journalists went to the factories where the Karigars worked, they found that these Karigars were expected to fill orders at facilities that were not regulated and in no way complied with India’s factory safety laws. As they were unaware of labor laws, there was no fuss. However, these issues were not addressed by the signatory brands of the pact and the focus was on the issues that constituted the big picture. This also caused dissatisfaction and fallacies in the processes that went into manufacturing luxury products.

Supply chain fallacies

80% of companies that fall into supply chain processes have closed and do not appear to open in the near future. Given that they have been operating under financial constraints, their survival looks bleak, and the luxury industry has been seeing a declining graph as a result.

Although the labor available in the country is cheap, the pandemic has erased all company processes and the workforce has chosen to return to their cities of origin. The pandemic has created a domino effect and the aftermath of it has been felt far and wide, across borders. The luxury industry is sure to witness a pause before picking up momentum once the pandemic subsides. However, there is no precedent time frame that can be determined for it.

Leave a Reply

Your email address will not be published. Required fields are marked *