After receiving a bunch of newsletters, daily digests and reading all sorts of sources… The Classy Time has decided to make a brainstorming to its readers and give them the opportunity to stay informed on COVID-19 ’s undermining of fashion and luxury markets. The virus has exhibited economic problematics due to the store closures, a decline in tourism and a traveling ban in order to prevent from the virus spreading but for how long? Will this forced marriage between the luxury market and the pandemic have an end?
The seriously taken regulations have not stopped the virus from expanding. From forced quarantine, to travel restrictions and air companies locked down, the COVID-19 is putting pressures on officials on how to maintain a stability. Even if Governments will inject resources on financial markets (without finding a solution by the way), they will also have huge implications and play an essential role in our society. However, uncertainty is probably the major concern of markets and brands as none of the solutions can be applied on a long-term basis.
The review is bringing new topics of thinking and highlighting the new stakes of companies against a possible collapse. As firms are trying to adapt and readapt to this exceptional situation, all the departments are accommodating their strategies and definitely struggling on keeping their heads above water.
From the seriousness of the outbreak, as all the health, economics and politics consequences our World is facing, COVID-19 is therefore a pandemic that is troubling populations, health care systems and governments. By being unconscious about the virus consequences and acting too late, countries are only now facing the sole of a long-lasting issue and the possible economic outburst it will have.
“COVID-19 has killed 0,00004% of the world population and has depleted shareholders of 2.500 billion $ in one single day (according to March 12th 2020’s reviews), this way cancelling more than 1.000 billion $ of 2020 GDP’s estimated growth, highlighted in a conference held by the UN Trade and Development department. COVID-19 is empoisoning the economy and therefore the finance market: production, supply, demand, fundraising are all slowing down, generating a situation of uncertainty among all the systems.”
This situation will actually impact business for all 2020. Consultancies were expecting a recovery plan by the companies after the outbreak, by doping production and permitting a creation of jobs and value. However, now that European markets have been “infected” and implied in the outbreak, governmental restrictions have for the moment put retail plans on hold. As pointed out by Jing Daily, the most impacted businesses on luxury market will be the small and growing brands that have mainly staked on Chinese market. They are on the forefront of the economic measures taken by international institutions and national governments.
As well, even if the behemoths such as Kering and LVMH are donating millions of euros to save their industries, mainly based in Italy and China, they cannot expect a turnover of the market.
Due to the global pandemic, the stores have to remain closed, leading to a sales decline. Moreover, the Fashion sphere is not the only one to suffer from COVID-19 restrictions; beauty brands and wellness centers are on closure too, for an undetermined period. International groups such as L’Oréal, Shiseido or Estée Lauder are regulating their activities and changing their strategies. In China for instance, L’Oréal and LVMH have decided to shift offline advertisings to online advertisings exclusively in order to maximize their impacts on consumers staying at home due to the quarantine. As well, companies are changing the way they work to minimize damages COVID-19 could cause. Events, exhibitions and people gatherings are cancelled. The first negative impacts are all faced by the communication departments that postpone all the events to prevent from any contamination. Unfortunately, these measures will have a repercussion in two to three months, considering that the effects are not immediately felt.
As all the luxury good markets are impacted, conglomerates and brands are trying to be transparent regarding the consequences and repercussions of the pandemic. But as mentioned by Vogue Business and McKinsey Insights, a rebound cannot be expected immediately. Indeed, Altagamma is expecting a 6-month-suffering of the luxury sales before a rebounding to a pre-crisis level. For the moment, backers and executives cannot forecast about the lasting of the virus, nor a back to normality.
Despite all the negative impacts this pandemic has on our world, brands have to face a new challenge: virtual shopping has become a full-blown trend as people are held in quarantine. The distraction is clustered on shopping sites and apps. However, Jing Daily is pointing out that the consumer’s behaviour is changing as they are escaping excessive consumption and refocusing on themselves and family gatherings. As well, all the retail and marketing launches have been postponed, leading to a general indifference of the consumer’s demand.
Even if today’s Fashion stocks rebound and proceed to get constant, COVID-19 still keeps an unstable situation. China’s stores are perhaps re-opening, and commerce is starting to recover and slowly stabilize, the virus has disrupted the fashion and luxury industries, conducting to lives and habits adjustments of consumers, workers and marketers around the world.
Considering the whole situation, COVID-19 has exceeded the expectations, putting on the bench all the previsions held by institutions and marketers. The “after the virus” forecasts are plentiful and measures taken by the companies endeavour to achieve the stated objective of no downfall. As well, taking into account Asiatic countries slow recovery, it took three months of intense efforts to finally have a stabilising situation.
However, the divorce between the luxury industry and the virus will not yet be pronounced; patience and thinking will be the general themes of 2020.