We are living during a chaotic and unusual time. The world continues to face the challenges of the Coronavirus and protests continue across the United States. How is the fashion industry being impacted?
The National Bureau of Economic Research officially declared an American recession.
Over 20 million are unemployed in America because of COVID-19. The good news is that the unemployment rate dropped to 13.3% from April’s stat of 14.7%
China and South Korea are coming out of long lockdown periods. The role of these Asian countries integrated to the success of the luxury sector is undeniable. As their economies begin to revive, Europe and the US will continue to make market predictions off of Asia’s reports.
The UK opened non-essential retail stores on June 15th and social media captured the long lines of shoppers.
During the COVID-19 crisis and the resulting recession, cautious investors are searching for new companies that are actually thriving and profitable. It is clear that consumer culture is changing, so companies and brands need to focus on creating a unique strategy for building a large customer base digitally and long-lasting innovation.
Some of the key aspects of companies that are predicted to become the hottest on the market:
Focus on sustainability
Instagram’s feature that allows business to sell through the app will be open to influencers and creators on July 9th. Brands with “at least one eligible product” will be able to sell once approved, further accelerating e-commerce dominance.
Subscription beauty and clothing box companies have seen outstanding growth during lockdowns. Brands including Beauty Pie, Ipsy, and Menlo Club are seeing record sales and subscription numbers, increasing by up to 300%. Will this niche market keep its momentum as US cities begin phase 2?
Chanel announced that they will continue following the traditional fashion calendar, having 6 shows per year unlike the majority of luxury brands. In early May, Chanel showed their cruise collection digitally- most likely the new norm for the industry. The brand also advocated for sustainability with 14 looks awarded with the Global Organic Textile Standard certification, being made with sustainable silk and cotton.
Luxury brand, Gucci, has implemented a 9% increase for handbag prices, which Louis Vuitton and Chanel are also doing to compensate for earlier COVID-19 losses.
Social Change & Fashion
It’s important to understand how retailers are adapting as the Black Lives Matter movement gains momentum, as many consumers are searching for diverse, inclusive, and vocal brands with a solid mission, post George Floyd’s death on May 25th. Consumers want to buy from brands that are driving social change.
Just as retail started to reopen throughout the country, many protests expanded into looting and vandalism, which directly impacted physical store fronts and future plans for re-engagement. Retailers, ranging from Target to Alexander McQueen, saw this play out in certain cities and boarded up their storefronts.
Here are a few examples of changes companies are making:
Condé Nast is investigating and evaluating their salaries, after rumors spread about a racial pay gap
Nike, who previously worked on a anti-racism campaign with Colin Kaepernick after he spearheaded kneeling during the National Anthem, will invest and support social justice organizations with $40 million.
Adidas stated that 30% of their next employees will be Black and Latino.
Speaking of Adidas, they are partnering with Allbirds to develop the lowest carbon footprint sports shoe. This partnership demonstrates the innovation that can come to life when companies take advantage of the changing industry during the global pandemic. This is one of the first concrete examples of fashion’s steps towards sustainability.
More company statuses…
The biggest deal in luxury LVMH made a deal to buy Tiffany for $16.2 billion.
After Sycamore Partners cancelled their acquisition of Victoria’s Secret for $525 million, rumors spread about the private equity firm buying JCPenney, who filed for bankruptcy last month.
Rumors arose that the historically significant American suit company Brooks Brothers will possibly file for bankruptcy later this summer, maybe even as soon as July.
Lululemon: Vancouver-based athleisure wear retailer
70% surge in online sales, doubling previous ecommerce stats, but store closures due to COVID-19 negatively impacted post Q1 revenue.
Analysts overestimated this company’s success during the global pandemic, as leisurewear is predicted to be the new normal.
489 total stores, 295 stores open as of June 10th from the US to China.
Loyal customers and staple items which prompted Chief Executive Officer, Calvin McDonald, to increase inventories to 41%
This leading global fast-fashion company closed a majority of its stores during the prime period of country lockdowns.
Q2 sales dropped 50%, which is significant but lower than analyst expectations.
Online sales rose 36%
5,058 total stores and around 900 stores still closed temporarily, but recovery could spark since the UK (one of their major markets) just began to reopen stores.
PVH Corp: American fashion and lifestyle company with brands including global brands Tommy Hilfiger & Calvin Klein
Lost $1 billion in Q1 with a majority of its stores closed
Predicted to lose even more in Q2, even though online sales grew 47%
Reopened stores have not seen strong enough revenue (decreased by 25% compared to the previous year) to bounce back after global lockdowns