The novel coronavirus or COVID-19 has affected thousands of people all over the world. According to The Guardian, there are over 160,000 confirmed cases and approximately 6,400 deaths. In the Philippines, there are currently 140 cases as of writing, according to the Department of Health.
Governments have taken the necessary measures to curb the spread of the virus, such as community quarantines and strict curfews, as our own country is experiencing at present. Citizens are discouraged from stepping out of their homes to engage in non-essential activities. Some companies have implemented work-from-home setups for their employees’ health and safety.
But aside from the health risks that COVID-19 poses, there are the looming economic effects. In fact, the global impact is estimated to be $156 billion in losses. The travel industry has evidently been hit hard by the pandemic, with travel bans implemented by various countries left and right.
The fashion industry is not excluded from such economic troubles. While it is well known that the pandemic resulted in the delicately handled Milan Fashion Week and Paris Fashion Week (fewer attendees, no more double-cheek kissing), the economic impacts are more complicated than you think. Here are all the ways fashion has been affected by the COVID-19 outbreak:
1. Postponement of runway shows and store openings
The recently concluded Milan Fashion Week and Paris Fashion Week coincided with the onset of the coronavirus, which led to fewer attendees—from buyers, editors, to influencers. Europe has now become the epicenter of the virus, according to the World Health Organization. From the 200+ reported cases during the time of Milan Fashion Week (February 18 to February 24), there are now more than 24,000 cases, according to Al Jazeera. On the other hand, France currently has over 5,000 cases.
Numerous Resort runway shows, mostly slated for April to May, were either postponed or canceled. These included Prada, Ralph Lauren, and Versace.
Tokyo Fashion Week, Shanghai and Beijing Fashion Weeks, and Sao Paolo Fashion Week were also canceled. However, it was recently reported that Tokyo Fashion Week will be livestreaming through the official website.
Store openings and major events like the much-anticipated Met Gala were also postponed in light of the pandemic. This is the third time in history that the Costume Institute event has been cancelled.
2. Injured supply chain
With lockdowns and quarantines, people have taken to staying at home. Zero foot traffic in malls and boutiques are expected to bring sales down, but how the pandemic is affecting the back-end of operations is something overlooked.
Some production houses have been ordered to halt operations as a precautionary measure. Gucci is one such brand. The Italian fashion house announced last March 12 that it will temporarily shut down six of its production houses until March 20. All of its stores in Italy are also closed until April 3. Italy has been in a nationwide lockdown since March 10.
Most of the COVID-19 cases are found in the Lombardy region, which includes the fashion capital of Milan as well as major shoe manufacturing districts. This has paralyzed their business operations.
Aside from hard-hit Italy, the origin of the novel coronavirus, China, where many fashion companies manufacture products, has evidently been affected. Although factories have reopened since the required shutdown during Lunar New Year, many are struggling to regain their momentum. This has caused delays in the supply chains of various fashion brands.
3. Dip in sales
Luxury boutiques in China, Italy, and the United States have temporarily closed to protect their employees as well as their customers. While this will seriously slow down cashflow and dent total revenue, one big factor that will cause major damage in the industry is the Chinese market. With China’s 16-city lockdown still ongoing, many of their monied customers have ceased visiting Europe to buy designer goods.
“There has definitely been a drop in buyers from all over the world, especially from China and Hong Kong,” says Ayse Ege, a founder of a luxury women’s wear label in Paris. According to The New York Times, Chinese tourists account for 40% of the $305 billion spent in luxury goods last 2019. They are the “fastest-growing” luxury consumer demographic.
4. Drop in stock prices
According to WWD, the industries major conglomerates experienced drops in stock prices, including Burberry Group PLC, Kering (Gucci, Bottega Veneta, Saint Laurent, among others), LVMH (Tag Heuer, Hublot, Tiffany & Co. among others), Moncler, Tod’s, and Nordstrom.
5. Revamped digital operations
Fashion week is not only a time for style mavens to catch their first glimpse of the latest trends, but it’s also a time when buyers from retailers place orders for items they wish to have in their stores. This is usually done through sales appointments or showroom appointments. Given the travel bans and constraints on public gatherings, buyers have canceled their appointments, posing as a big threat to brands’ growth.
However, according to Footwear News, this situation pushed brands to think out of the box and to take advantage of digital assets such as virtual showrooms, video calls with clients, and accelerating their e-commerce business.
“When the spread of the virus was announced, it was our first week of sales and we had about 100 appointments canceled. Buying from line sheets is not the same, so we are launching a full-on virtual showroom. Buyers and press will be able to log in with a password and see the whole LPJ universe, with models in the showroom trying on our shoes and bags and us talking about them. It will feel like you are there in real life,” says Mariasole Cecchi, of Italian shoe and bag brand Les Petits Joueurs.
“Something in the industry needed to change and even though I would never have wanted it to happen this way, we need to face the situation and use it as impetus for a reboot,” says Arianna Casadei of Italian shoe brand Casadei.
Despite the blow that slowed down industry growth, brands have taken extra steps to help mitigate the pandemic in whatever way they can.
Just recently, LVMH announced that it will be producing hand sanitizers to address the shortage of disinfectants. According to Business of Fashion, Versace Chief Creative Officer Donatella Versace and daughter Allegra Versace Beck personally donated €200,000 to a hospital in Milan. Giorgio Armani also made a donation of €1.25 million. Dolce & Gabbana is also supporting a study on the immune system against COVID-19 by Humanitas University, an Italian private university.
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