Written by: Natalia Kokesova
The COVID-19 pandemic affected industries across the world, with the global luxury fashion industry being no exception. The USD 2.5 trillion luxury fashion industry faces considerable financial loses, a recessionary market, a crushed consumer demand, store closures, disrupted supply chains, and other “repercussions from the boardrooms of world class luxury brands to the textile workers in developing countries”. These repercussions have been predicted to cause the global luxury fashion industry to contract 30%.
The business halt caused by lockdowns has created an opportunity to question current business models and industry practices. The industry is undergoing what has been described as a “seismic change” , and certain industry shifts which are gaining momentum have the ability of reshaping the industry into a more sustainable, efficient, and consumer aware business. This article will explore three trends likely to grow within the luxury fashion industry post-pandemic.
Excess inventory as a result of decreased consumer demand is homogenously affecting the luxury fashion industry. It has been estimated that the number of luxury items in stock is up by 32% compared to last year. Brands usually opt to redistribute their stock to other regions, hold private sales, or allow staff to purchase at discount prices to address this issue. However, currently, the most efficient manner to clear such increased inventory might be discounting.
Selling items on discount has been consistently frowned upon by certain brands: Louis Vuitton has a policy of never selling at discount in stores, and last year Prada decided to end discounting in order to “enhance product value”. Ironically, however, discounting might in fact enhance product value since in-store and online discounts are an opportunity for brands to create their own sales channels while maintaining control of the customer’s shopping experience (Q). This would in turn allow brands to uphold their service reputation and further promote their brand.
A similar option to hold discounts might be redistributing excess stock to outlets. At the end of March, the luxury department store Harrods made headlines by opening its first outlet in an attempt to clear excess inventory built up during the lockdown. Harrods’ managing director Michael Ward notes that this will allow for “better social distancing… move towards the new season … confidently, and retail in a responsible way”. Nevertheless, it might be preferable for some customers to use contactless digital commerce services rather than complying with in-store hygienic measures and social distancing rules.
Hence, brands could opt for digitalizing sales through third-party retailers. This would require luxury fashion houses to collaborate with leading online retailers and resale third parties such as TheRealReal and Farfetch to clear excess inventory. Such collaboration would facilitate providing a flawless customer service while efficiently liberating stock. However, as this might option might be translated into ceding control of the brand’s service and image, whether brands will so easily accept to collaborate, is not certain.
In fact, some brands such as Chanel and Louis Vuitton, have opted to take the opposite approach to their post-pandemic business strategy by increasing prices – some brands did so twice in two months – on their handbags, small leather goods and shoes. Hence, discounting might not be the preferred option for luxury brands, and until notable names in the sector explicitly support discounting, this trend has the potential but is not yet crystallized.
Rethinking the Fashion Calendar
A movement initiated by the Belgian fashion designer, Dies van Noten, to challenge the status quo of the fashion calendar has been recently gaining momentum. Van Noten calls for other industry players to reassess the business model around the fashion calendar in a bid to “become more responsible for our impact on our customers, on the planet and on the fashion community… [while bringing] back the magic and creativity that has made fashion such an important part of our world”.
Some of the proposed changes – for womenswear and menswear – are to readjust calendar to present the collections according to the season (e.g. to put the Autumn/Winter season back in winter [August/January]) with discounting at the end of the season to allow for more full-price selling. Other proposes include; reassessing the supply chain to produce less waste in fabrics and inventory, digitalizing showrooms, making use of personal creative interactions, and travelling less.
The initiative has already been supported by brands such as Tory Burch, Chloé, Rodarte, Aquazzura, Carolina Herrera, The Missoni Group; and, retailers such as Nordstrom and Selfridges.
Notably, the Kering-owned brand, Yves Saint Laurent, announced in April that it has decided to reshape its schedule and cancel its four main runway shows. This was followed by, also Kering-owned brand, Gucci, whose creative director Alessandro Michele recently announced plans to stop adhering to the traditional fashion calendar and will rather meet only twice a year to present its collections. Nevertheless, as Chanel recently announced they will stick to the traditional fashion calendar, and many of the brands within the LVMH consortium have not publicly supported this movement, an industry departure from the fashion calendar is not yet set in stone.
Responsible Luxury: Resale Market
Another key post-Covid-19 trend is the movement towards “responsible luxury” which is environmentally sustainable. Means of achieving this include; a reduction in shopping tourism, ethical sourcing of materials, prohibiting the destruction of excess inventory, among other trends. But most notably however, is the growth of luxury resale.
Such market was already experiencing a boom at the beginning of the year, but this upward trend might be further accentuated post-pandemic. The most obvious reason for this may be accessibility of items: it is easier to buy items from a resale site, for example, than in-store, especially if the brand in question allows customers to obtain certain pieces only after multiple years on a waitlist – such as Hermes.
It has also been argued that the second hand market offers a “treasure-hunt experience” as previous limited edition items, capsule collections, and exclusive luxury may only be obtained through the second hand market. Further, second hand luxury offers a “point of entry” for younger consumers not yet flush enough with cash to buy … at retail”. And these young consumers may be more attracted to such circular economy as it is a more sustainable option. In fact, it has been suggested that millennials influenced by sustainability and a desire for more responsible consumption is “one trend that it is likely to intensify post-crisis”. Therefore, the luxury resale sector may continue to experience a steady economic growth. And, from the other trends above-mentioned, this might be the trend with the most prosperous future.
 https://www.thefashionlaw.com/five-key-trends-that-are-expected-to-shape-fashion-and-luxury-in-the-wake-of-covid-19/ OR ___ https://www.voguebusiness.com/companies/luxury-brands-gear-inventory-louis-vuitton-prada