During what is proving to be the worst economic crash of our times, the luxury and modern fashion market is probably bearing the hardest brunt since the very beginning of it all. Fashion houses across the world being forced to indefinitely shut their manufacturing centers and stores, even their most loyal customers sticking to purchasing only essentials and the ban on international travel have only catalyzed the worsening of the situation for these luxury brands. Research shows that the high-end fashion market has already seen a revenue loss of USD 32 - USD 43 billion, hardly 4 months into 2020, solely because of the COVID-19 outbreak. Overall, the industry is expected to be hit by a loss of USD 450-600 billion in 2020, which is even more staggering than the figures of the 2008-2009 recession. Even in the fashion capitals of the world, global-spanning fashion giants are increasingly facing a setback and feeling the growing impact of the pandemic.
Economists and financial analysts across the world have estimated that the luxury fashion market will continue to face the effects of the imminent global recession till at least the fag end of 2021. In regard to the same, we looked at a few of the main deep-rooted causes of this continued damage to the international fashion market:
Siege of airports, duty-free shops and international travel: Back in 2018, Chinese consumers made up 40% of the total revenue earned by the luxury fashion market across the world, who collectively took at least 150 million international trips, and the numbers have only increased with time. Asian shoppers are known to splurge in European countries, especially on products of luxury brands, which are much cheaper there. Even though the Chinese economy is recuperating, that does not have a bearing on the present international travel restrictions and the consequential damage these brands are dealing with. A tied down luxury spending of consumers of other nationalities is also foreseeable, considering that people's priorities are now shifting. Industry leaders like Birkin, Burberry, Gucci, Louis Vuitton and Tiffany and Co., have themselves voiced their concern over the falling airport and travel retail and eventual reduction in international tourists;
Cancelled fashion weeks, trade shows and galas: Right after the conclusion of the Milan Fashion Week in February this year, a host of events such as the Met Gala, Hyeres Festival, Parisian HauteCouture Week, Indian Fashion Week and London Men's Fashion Week have either been cancelled or postponed indefinitely. Further, several ready to wear trade shows and exhibitions for perfumes and jewellery have been put on hold. Cancellation of such large-scale events has resulted in huge set-backs and losses for the organizers as well as designers, leading to the 'restructuring of the wholesale dynamic'. Considering that the fashion industry is a seasonal one, fashion week dates are often not 'compressible', as expressed by the heads of the most common luxury names such as Valentino and Prada;
Counterfeit products: With the in-store retail at an all-time low and the high demand for essential products, counterfeiting is increasing exponentially. Of late, many cases of counterfeit face masks with unauthorized use of luxury brands has been witnessed in many countries across the globe. By using the logos of fashion brands on essential goods, the counterfeiters and infringers are trying to ride on the reputation and goodwill of the rights holders and extract undue benefit. Battling a recession struck industry along with counterfeit products doing the rounds in the market is the unfortunate reality at present.
Given the difficult situation at present, these brands are now coming up with various ways of battling the irreparable economic damage, a few of which we have mentioned below:
Back in 2009, when the world was hit by the recession, one of the iconic questions asked by Bloomberg was "How do you sell luxury in a recession?" and we are once again finding ourselves asking the same. The target consumers, in times of a recession, will most likely not want to spend on products that would fall 'out of style' the next season. Thus, fashion brands are contemplating switching from fast fashion and trend specific goods to evergreen products naturally associated with the brands. For instance, Hermes is now focusing on their classic perfumes and leather bags and so is Louis Vuitton Moet Hennessy. Gucci is discussing the potential market impact of dropping their iconic 'GG' metallic logo and 'convince customers that a handbag isn't just an accessory but an investment'. Gucci has already experimented with such an approach when they came up with the 'New Jackie Bag' inspired by the taste and fashion statements made by the late Jacqueline Kennedy Onassis.
Even though most luxury brands have a strong Instagram following, customers enjoy the in-store experience of the fashion houses the most. However, with the present restrictions, brands are now looking at the vast possibility of international and regional e-commerce services. Brands such as Jimmy Choo, Bulgari and Chanel are already devising strategies to boost the growth of their e-commerce presence. Indian designers such as Sabyasachi Mukherjee, Manish Malhotra and Tarun Tahiliani are also aiming to follow the same course of action.
Multiple luxury brands are now using their manufacturing facilities to provide aid to the public at large, which in turn is also helping the brands sustain themselves during this period. Louis Vuitton Moet Hennessy (LVMH) is now manufacturing hydroalcoholic gels (hand sanitizers) to help cope with the shortage of the same in countries such as France and Italy. LVMH is also manufacturing surgical masks under the brand names Dior, Givenchy and Celine. This is not only helping the society, but also the brand value and the employees. Other fashion giants like Chanel, Balenciaga, Prada and Hermes are working towards mass production and distribution of masks and sanitizers. In India, designers such as Anita Dongre, Manish Malhotra and Tarun Tahiliani are hosting online auctions, in association with Fashion Design Council of India, of their couture.
Currently, all fashion houses are aiming at the well-being and safety of their employees and production workers along with maintaining their brand value. Indian brands are specifically struggling to take care of their local craftsmen and factory workers along with taking steps which are crisisresponsive in nature. At the moment, all luxury brands across the world are trying their best to handle the effects of the pandemic. Given the increasing demand of cheaper alternatives of luxury products, we can expect a spike in counterfeit products especially in the South Asian countries - but here's hoping that the fashion industry comes out of the struggle, unscathed.