Fashion retailers across the West may be permitted to open through the month of May but face the possibility of renewed lockdowns if the second wave of Covid-19 infections emerges. Retailers are struggling with cash flow and huge volumes of stock, while many of their suppliers in Asia face huge challenges with hundreds of thousands of workers laid off or unpaid. Striking a more upbeat note, luxury group LVMH has seen signs of improvement in retail in China.
Here, Vogue Business highlights the latest news from the luxury industry and related sectors.
Consumers in the West are cautious about returning to shopping. Consumers are cautious, even as governments across Europe plan step-by-step reopenings. Austria has led the way with some shops opening on 16 April. Lisa Zirngast, a fashion journalist based in Graz, Austria’s second-largest city, told Vogue Business: “We are all looking forward to returning to our normal lives again, but we would rather have the measures for a little longer to make sure the situation doesn’t escalate.” Shopping centres and department stores in the country are scheduled to open from 1 May.
In Germany, stores with a retail space of up to 800 square metres will be permitted to reopen from 4 May in many states. French retailers are hopeful that stores will reopen from 11 May. The suggestion that some UK retail shops would be allowed to open in mid-May, first reported by BuzzFeed, was played down by the government.
In the US, reopening plans vary from state to state: Texas is the most advanced, with curbside pickups from retailers permitted from 24 April. Consumer insecurity is a significant concern: almost a quarter of American respondents to a Morning Consult survey (7-9 April) did not think they would be comfortable at a shopping mall for more than six months, while another 26 per cent said they weren’t sure when they would feel comfortable.
Even in Asia, the first region to emerge from lockdown, customer traffic is still far off normal levels. South Korea is a promising exception: as reported by Vogue Business, the country’s millennials are driving an uptick in duty-paid luxury spending, particularly on leather goods.
Retailers in the West struggle, suppliers desperate. Clothing sales in the US were down by an unprecedented 50.7 per cent in March, according to the US Census Bureau. Department store group Neiman Marcus is expected to file for bankruptcy protection this week.
Retailers in Europe are struggling with huge volumes of stock, and some are facing collapse. UK womenswear retailers Oasis and Warehouse appointed administrators on 15 April. The British Retail Consortium has appealed to the UK government for a rental support scheme, warning the survival of Britain’s high streets will be decided “in weeks rather than years”.
Central European retailers are also under heavy pressure. “It is unlike anything that has happened before. This is a war, and we want to survive,” said Marek Piechocki, CEO of LPP, the Polish fashion retailer best known for its flagship brand Reserved, with 1,700 stores in 20 countries.
Meanwhile, factories in Asia are reeling from a flood of cancelled orders. Protests erupted in Bangladesh, ranging from the capital Dhaka and the port city of Chittagong to industrial zones across the country, led by workers demanding wages. The Worker Rights Consortium, based in the UK, estimates that global brands have cancelled more than £20 billion of orders worldwide from suppliers in countries such as Bangladesh, Cambodia, Sri Lanka and Vietnam. The group is tracking which companies are acting responsibly towards suppliers.
LVMH and L’Oréal maintain an upbeat stance. French luxury group LVMH, reporting Q1 revenues down 15 per cent to €10.6 billion on 16 April, remained hopeful that a recovery could start soon. Sales in China are already improving, the company noted. “We can only hope that the rebound happens gradually from May or June after a second quarter that will still be very affected by the crisis, in particular in Europe and the US,” LVMH said.
Cosmetics giant L’Oréal reported like-for-like sales down by 4.8 per cent in the first quarter, with e-commerce accounting for close to 20 per cent of total sales of €7.2 billion. The company also reported clear signs of recovery in China.
Italy’s luxury manufacturing sector remains in shutdown, but a few signs of hope are emerging. Gucci said a small group of workers would resume making prototypes for leather goods and shoe designs at its ArtLab site near Florence from 20 April, following an agreement with unions on health and safety measures for workers.
Luxury travel supports health workers, hopes for better times. The luxury travel sector is hoping for a strong bounceback after the pandemic, noting increased bookings for cruises for 2021. International Luxury Travel Market (ILTM) released a report on 16 April highlighting the importance of the luxury travel sector to the global economy, building on research that estimates the luxury travel ecosystem to be worth $1.54 trillion. Meanwhile, hotels, such as the Four Seasons in New York, are providing complimentary or heavily discounted accommodation for doctors and health workers worldwide.
The travel picture for 2020 remains bleak. The global airline industry will lose $314 billion in 2020, according to the International Air Transport Association. The American hotel industry has lost almost 4 million jobs. The tourism industry across the Mediterranean is expected to be near standstill through this summer. Travel specialists say consumers will holiday much closer to home for the foreseeable future.
Source: By Vogue Business Team