Europe and North America are now bearing the brunt of the coronavirus crisis, with brands, retailers and manufacturers in the luxury sector and the broader fashion industry all hit. Bigger companies are making donations to support hospitals and health workers. Only in China is there cautious optimism as shops reopen and consumers are expected to start spending again.
Here, Vogue Business highlights the latest news from the luxury industry and related sectors.
Companies rally to support health efforts. French luxury group LVMH is to produce hydroalcoholic gel (hand sanitiser) at three of its perfume and cosmetic factories in France. Twelve tonnes will be produced this week for free distribution to French hospitals fighting the coronavirus pandemic. LVMH and Kering have donated a total of $3.2 million to the Red Cross Society of China and the Hubei Red Cross Foundation. Other luxury groups and fashion houses that have made donations to support the medical front line both in China and Europe include Richemont, Bulgari, Prada, Versace, Giorgio Armani and Hermès.
To reinforce governments’ efforts to prevent the spread of Covid-19, remote working has been introduced by many companies in the fashion industry, including Inditex, owner of Zara, and Condé Nast, which has closed offices in China, Japan and Europe (Condé Nast owns Vogue Business). Parsons and FIT, New York’s leading fashion design schools, are transitioning to remote learning this week.
Retailers in Europe and North America close down for March. All retailers considered ‘non-essential’ have been ordered to close in Italy and France. In America, New Jersey supermall American Dream has closed, while Mall of America is still trading, although events have been cancelled. Designers continue to cancel resort events, ranging from a Hermès show in London in April to Max Mara’s show in St Petersburg, Russia, in May.
Fashion and beauty retailers throughout Europe and North America have closed stores, typically through until at least 28 March, while keeping open stores in the Asia Pacific region. Companies closing stores from this week include Nike, H&M, Urban Outfitters, Lululemon, Patagonia, Abercrombie & Fitch, Anthropologie, Under Armour, Lush and Glossier. Tech giant Apple is closing all its stores outside Asia Pacific. Gap Inc has forecast a $100 million hit to first-quarter sales in Europe and Asia.
Factories close, inventory builds up. Kering-owned Gucci has closed all six of its production locations in Italy until at least 20 March. Many other factories in Italy, including LVMH’s 30 production sites, are continuing to operate but introducing new shift patterns and strict hygiene procedures. All luxury sectors in Italy have been affected: carmaker Ferrari has stopped production at its Maranello and Modena plants for two weeks until 27 March.
A report by Vogue Business highlights massive inventory buildup throughout the luxury sector. The number of goods in stock in the luxury market is up 32 per cent over last year, with discounted product up 29 per cent, according to retail data company Edited.
In China, consumers ‘revenge spend’, but luxury searches for meaning. Most luxury brands have reopened stores in China as the spread of Covid-19 has slowed across the country. “China seems to have turned the corner, and bigger cities are showing cautious optimism,” Amrita Banta, managing director of Agility Research & Strategy, said, citing ‘revenge spending’ where consumers are eager to spend after being constrained for several weeks.
Per a Vogue China reader survey conducted by Vogue Business in China, 65.3 per cent say their luxury consumption won’t be affected by coronavirus. Compared with purchases made in 2019, intention to purchase bags has fallen while apparel and footwear have risen 10.4 and 6.5 percentage points, respectively.
However, trend specialists warned that the luxury industry needs to speed up the transition to a new luxury paradigm, moving away from ostentation to more meaningful conversations. Martina Olbertova, founder of Meaning.Global, told Forbes: “[The impact of coronavirus] may open up a whole new conversation about luxury that will be more experiential, authentic and provide healing.”
Travel industry in crisis mode. As country after country closes its borders and prohibits flights, the travel industry faces unprecedented challenges. The World Travel & Tourism Council, which represents the industry’s private sector, estimates that up to 50 million jobs globally in the travel and tourism sector are at risk.
The American travel and tourism industry alone could lose at least $24 billion in foreign spending in 2020, according to data produced by Tourism Economics.