Impact on all fronts
This health crisis had a strong impact on the fashion sector. Between the factories being shut down, part-time employees and the entire ecosystem of fashion independents. Photographers, hairdressers, makeup artists, on all the actors involved. As well as in the production of fashion shows, shootings, showrooms, etc. Then sellers in shops. Brands are afloat, and must resist the epidemic, counter it, and not cloud their prospects for the future.
Even if LVMH, Kering, and even Hermès, the three largest groups known and recognized in the luxury industry see their stock market prices drop. Estimates are not really visible regarding the actual economic impact on the luxury market. Estimates hover around 20% and 40%.
the Boson Consultancy Group (BCG) estimates that global sales could drop by $ 450 billion to $ 600 billion from 2019 levels.
“Three seasons are now threatened. Those in progress in the shops, orders expected in April after Paris Fashion Week. Then the pre-collections usually presented to buyers in May”. Worried about his side Pierre-François le Louet, president of the federation of women’s ready-to-wear. Beyond the brands, “it’s an entire ecosystem that is paralyzed, from independent stylists, to graphic designers, to event agencies”.
A small handbag producer for Gucci told Reuters that it normally produces up to 1,000 bags per month for the brand. The number fell to 450 in February and there have so far been no orders for April or May.
The fashion sector in decline
We will understand. Sales are dropping and estimates are at least 35% for luxury brands. The independents will face a more extreme fate.
According to Flur Roberts, head of luxury at Euromonitor International “Luxury firms like Burberry, Tapestry and Capri have already lowered their sales forecasts for 2020”.
Elsewhere, Honor Stachan, an analysis of retail at Global Data, says that even if brands can be isolated immediately. If the public health crisis continues, it could have negative effects on production levels. Then those of supply, and maintenance of product standards. This until the fall and during the holiday season. Especially for Italian brands that rely on Italian heritage and craftsmanship.
The latter are the most affected given the tourist appeal of their purchases. Prada, Armani, Valentino. As well as the Kering group which owns Italian heritage brands. Such as Gucci, Bottega Veneta, & Pomellato, already suffered a drop in sales in the first half of 2020.
LVMH is also vulnerable with brands such as Fendi & Pucci. The latter are likely to experience a drop in attendance. But what if the epidemic can be brought under control? demand for luxury travel and shopping will increase. To then fuel sales of luxury products for the rest of 2020;