Fashion News | Covid-19’s Impact on Luxury Fashion

How has the luxury industry been affected by Coronavirus?

2020 has been engulfed with news about Covid-19. It’s the single biggest factor to affect all business industries this year. But how has the global pandemic impacted the luxury fashion industry? What are brands doing to counteract the impact? And how is the fashion industry adjusting to the world’s new normal?

Vogue Business’ new Insight Report delved into the details. Here, I thought I’d pick out a couple of key factors that I found most interesting within the report. 

Download the full copy of the Insight Report over on VogueBusiness.com.

With Millennial and Gen Z incomes being reduced by as much as 50 per cent by the Covid-19 crisis, having a clearly defined brand value will be critical as purchase decisions of both generations are increasingly moved by what brands stand for. 

The report discussed the increased importance of fashion business’ brand voice. Consumers want to know what you have been doing throughout the health crisis. They are being more selective when it comes to how they’re spending their money. And the brand value behind your business is important to them when they choose whether to become a customer with you. 

This is all about creating that clear brand voice and allowing it to speak out through your website and social channels. Having the right tone of voice with brand values that authentically back it up has never been more important. 

E-commerce may no longer be optional. Brands with online sales channels are mitigating some of the impacts of the Covid-19 crisis. 

Something that I’ve spoken about before, if you’re not e-commerce, you’re at risk. The brands without focused e-commerce have, without a doubt, been hit the hardest during this crisis. And, as we continue to see how shopping evolves into the rest of the year and beyond, I’m sure we’ll continue to see this trend. 

If you haven’t yet invested into taking your fashion or beauty brand online in a major way, now is absolutely the time to do it. 

Ramping up e-commerce in China is a strategic goal for many luxury brands without an extensive store network in the country. The growing digitisation is fostering purchase likelihood from digital channels, especially in digitally advanced markets such as China. 

Luxury brands are seeing most sales and growth for 2020 in China and with Chinese consumers saying they are now just as likely to buy luxury fashion and accessories online as they are in-store, it’s important to make sure your brand is out there, ready for them to shop. 

The report notes that ‘over 50 per cent of luxury goods sales worldwide are expected to take place in China within the next few years’.

Bottega Veneta managed to find pockets of growth through its wholesale channels in the US and EMEA. The brand’s 9 per cent revenue growth shows that there is no one recipe for success.

We’ve seen some financial reporting for the luxury brands for Q1 – 2020, so far. With the exception of Hermes, most brands are reporting a declined revenue for this year when compared to 2019 – but not drastic where we’d expect a collapse. For example, Kering reported a drop of 15%, Capri Holdings reports a drop of 11% with more expected into Q2 and Burberry reported a drop of 45% with growth now being seen. 

But Bottega Veneta has managed to see a growth of 9% through the crisis in 2020 Q1. Why? The brand managed to experience cult status this year with iconic pieces, such as the Padded Sandals and Pouch clutches becoming must-have items for the fashion pack. 

79 per cent of companies surveyed by Vogue Business in April were either in a hiring freeze or hiring fewer people. Further to this, 76 per cent expected cutbacks that could hit up to 30 per cent of the workforce. 

Pretty much all business has felt the impact of the UK’s furlough scheme. Retail staff were the first to lose positions as stores were unable to open but many in HQ jobs also saw losses. Staff in e-commerce and digital teams are the least likely to suffer job loss – only 11% of businesses stated hiring restrictions within these teams. 

In fact, with many brands seeing huge increases in their e-commerce sales, finding good digital talent has become their top priority. If you’ve experienced job loss because of the pandemic and aren’t sure what to pursue next, it could certainly be worth discovering how you might add to your skillset within the digital world.  

As the year progresses, we’ll keep tabs on the fashion world and its continuous changes. Keep checking back to the LC blog for fashion news snippets as well as content marketing and copywriting news and advice. 

Until then…