The luxury industry faces a bleak 2020 as shop and manufacturing closures increase in Europe and the US.
- The luxury sector is anticipating a prolonged downturn as the coronavirus pandemic continues to challenge the world economy and hit new markets.
- Many luxury groups and brands are seeking new ways to support the fight against Covid-19, including LVMH, which is producing hand sanitiser at three of its factories for free distribution to hospitals in France.
- The luxury sector in China is showing signs of cautious optimism as stores reopen and consumers indulge in ‘revenge spending’.
Europe and North America are now bearing the brunt of the coronavirus crisis, with brands, retailers and manufacturers in the luxury sector and the broader fashion industry all hit. Bigger companies are making donations to support hospitals and health workers. Only in China is there cautious optimism as shops reopen and consumers are expected to start spending again.
Here, Vogue Business highlights the latest news from the luxury industry and related sectors.
Companies rally to support health efforts. French luxury group LVMH is to produce hydroalcoholic gel (hand sanitiser) at three of its perfume and cosmetic factories in France. Twelve tonnes will be produced this week for free distribution to French hospitals fighting the coronavirus pandemic. LVMH and Kering have donated a total of $3.2 million to the Red Cross Society of China and the Hubei Red Cross Foundation. Other luxury groups and fashion houses that have made donations to support the medical front line both in China and Europe include Richemont, Bulgari, Prada, Versace, Giorgio Armani and Hermès.
To reinforce governments’ efforts to prevent the spread of Covid-19, remote working has been introduced by many companies in the fashion industry, including Inditex, owner of Zara, and Condé Nast, which has closed offices in China, Japan and Europe (Condé Nast owns Vogue Business). Parsons and FIT, New York’s leading fashion design schools, are transitioning to remote learning this week.
Retailers in Europe and North America close down for March. All retailers considered ‘non-essential’ have been ordered to close in Italy and France. In America, New Jersey supermall American Dream has closed, while Mall of America is still trading, although events have been cancelled. Designers continue to cancel resort events, ranging from a Hermès show in London in April to Max Mara’s show in St Petersburg, Russia, in May.
Fashion and beauty retailers throughout Europe and North America have closed stores, typically through until at least 28 March, while keeping open stores in the Asia Pacific region. Companies closing stores from this week include Nike, H&M, Urban Outfitters, Lululemon, Patagonia, Abercrombie & Fitch, Anthropologie, Under Armour, Lush and Glossier. Tech giant Apple is closing all its stores outside Asia Pacific. Gap Inc has forecast a $100 million hit to first-quarter sales in Europe and Asia.
In China, consumers ‘revenge spend’, but luxury searches for meaning. Most luxury brands have reopened stores in China as the spread of Covid-19 has slowed across the country. “China seems to have turned the corner, and bigger cities are showing cautious optimism,” Amrita Banta, managing director of Agility Research & Strategy, said, citing ‘revenge spending’ where consumers are eager to spend after being constrained for several weeks.
Per a Vogue China reader survey conducted by Vogue Business in China, 65.3 per cent say their luxury consumption won’t be affected by coronavirus. Compared with purchases made in 2019, intention to purchase bags has fallen while apparel and footwear have risen 10.4 and 6.5 percentage points, respectively.
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