Brands cancel shows and close stores: More dangerous than it seemed! Coronavirus ,first detected at the end of December 2019 in Wuhan in the Chinese province of Hubei, shakes the luxury world by rapidly spreading around the world and posing a great threat to the fashion industry. According to The Business of Fashion, in 2020 losses of luxury during pandemic can range from $ 30 to 40 billion sector turnover.
Can you imagine how fast Pandemic shakes the luxury world?
Factories and shops are massively closed, stock markets are collapsing, borders are closed – all this affects consumer behavior and destabilizes the situation. The coronavirus epidemic, meanwhile, continues to gain momentum.

China, with more than 80,000 infected people, has been paralyzed. This creates serious problems for the global fashion industry since China and neighboring countries are the world’s largest sales markets for luxury brands and suppliers of their products to Europe and North America.
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In 2019, China’s share of the global luxury goods market grew to 34%. In addition, Chinese tourists spent around 260 billion euros on luxury goods around the world in 2019.
According to a study by the consulting company Boston Consulting Group (BCG), due to the pandemic, the luxury goods industry expects sales to fall by 30-40 billion euros.
According to the Hong Kong Retail Association (HKRMA), the retail sector in Hong Kong fell by 21% year on year in February and reached 4.37 billion euros. At the same time, losses in the fashion segment were above average. Earnings in the category of jewelry, watches, clocks, and other valuable gifts were hit the hardest. In this sector, HKRMA recorded a drop of 42%, and in the clothing, footwear and accessories industry – by 28%.

According to the HKRMA forecast, in the first half of the year revenues will decrease by 30-50%, and in some sectors, the decline will be even greater. Due to the massive stoppage of production and the closure of factories in China, concerns about the future of the entire textile chain are growing. The scale of the losses is not yet clear.
For instance, China is Germany’s largest fashion supplier country. According to the German Fashion Association, in the first half of 2019, goods from the fashion world were delivered to Germany for a total of 3 billion euros. The timing for restricting movement and resuming factory operations is still unclear. February in the business calendar is a critical time because it is this month that orders from Europe for the autumn-winter season are accepted. Production starts, as a rule, in April.
Experts suggest that under such conditions, the supply of goods will most likely be delayed until July, which will also affect the production and sale of autumn collections. The design and development processes for the upcoming spring-summer 2021 collection will also be affected. Fabric exhibitions are also actively being canceled, and those that are held have few visitors and there are no important exhibitors from China and neighboring countries.
According to a recent report by analytical firms Altagamma, BCG, and Bernstein, in 2020 the luxury goods market may fall to $ 335 billion, which is the lowest level in the last 5 years. Thus, the industry will receive less than $ 30 to 40 billion. Even the most successful companies can suffer losses of up to $ 10.8 billion.
The second half of 2020 will become especially difficult for luxury brands, says Mario Ortelli, managing partner of consulting firm Ortelli& Co. At the same time, he believes that brands will suffer losses in an unequal degree. Companies that sell clothes in China, such as Burberry, will be hit harder because they will “miss at least one season.” Meanwhile, brands like Louis Vuitton, which focus on selling leather accessories to the Chinese, will be less affected by the volatile situation. As much as they can lose about a quarter of the income, and it will be easier for them to recover.

Europe in the claws of Pandemic
Luxury during pandemic in Europe! Italy is the same large-scale retail and manufacturing fashion sector as China. There, the epidemic also suspended the work of global luxury brands and froze projects on cruise collections. Fashion houses cancel shows all over the world. The Chinese do not go to Italy for shopping, the Italians do not go to China for materials. Some areas near Milan are closed for visiting – those regions that are most actively involved in the industrial production of textiles and clothing.

The coronavirus outbreak coincided with the finale of high fashion week in Milan. Giorgio Armani, in particular, at the last minute decided to hold the show in closed mode – without viewers, the broadcast of the show was available on the brand’s website and on social networks. The press service of the fashion house Giorgio Armani said that this was done in order not to jeopardize the guests of the show.

Prada and Gucci, and Versace canceled their shows,too. The headquarters of the companies are closed, the factories in Lombardy, Veneto, Emilia-Romagna, Trento, and Piedmont – too.

Portugal and Spain are also important in European fashion locations. In Spain, the number of people infected with coronavirus is growing every day. The Spanish company Inditex, which owns many luxury brands, has long relied on European exporters to support the domestic market and strengthen the independence of the region. But the last two weeks have shown that Europe is not immune to the epidemic.
Wellness is The New Luxury; Change in shopping habits.
Although the share of purchases made directly in online stores of luxury brands is growing, according to analysts, it is unlikely that Chinese buyers are ready to dramatically shift their expenses online. The fact is that they, like many other consumers, especially appreciate the real emotions that they experience from going to the boutique.
Nevertheless, the transition to online now is the only hope for a bright future for some manufacturers.
However, in this story there is another important factor – the virus simply weakened the massive desire to shop. It makes no sense to buy another lipstick if you go out into the mask anyway. Yes, and now everyone’s health matters more.
Missed shopping? Don’t get into panic, shop online! Do not let pandemic shake your own world of luxury!

Remember, money can buy you a life of luxury, but health costs much more…
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