As the world tries to find unity in crisis amidst the COVID-19 outbreak that has upended industries around the world, the fashion industry has been hit hard.
The fashion industry according to McKinsey is one of the world’s largest, generating over $2.5 trillion in global revenues, before the pandemic hit. The fashion industry—even before the crisis—has been battling with decreasing growth facing competition and shifting market dynamics. The onslaught of the pandemic has made the future look even more challenging.
The impact of the crisis for the fashion industry is not limited to lost revenue and sales but also entails unemployment and financial hardship for people across the value chain—from those harvesting the fibers to make textiles to shop assistants selling the finished products.
According to The State of Fashion 2020 Coronavirus Update by McKinsey, the global revenue for the fashion industry (apparel and footwear) is expected to drop by 27% to 30% this year.
Based on Insider’s Global COVID-19 Benchmarks, the fashion industry has witnessed a decline in overall sessions, conversion rate and revenue across regions.
From Luxury Products to Hand Sanitizers: The Agility of Fashion Brands
As the world grapples with this new reality, fashion powerhouses around the world are taking on the battle against the pandemic in a crucial pivot from producing clothes to manufacturing protective masks, gowns, and other supplies.
Bvlgari, for example, is manufacturing 6,000 bottles of hand sanitizers per day to assist the fight against the Coronavirus, L’oreal and LVMH are also producing hand sanitizers as a response to combat the shortage of supplies.
UNIQLO, Prada, Jockey, Dior, New Balance and many such fashion brands are dedicating their workshops to producing N95 masks and other medical supplies such as gowns and gloves in an effort to meet the growing demand for these essentials.
Levi’s has been hosting its virtual concert series live on Instagram with artists like Snoop Dogg, Sigrid, Kali Uchis, Burna Boy and donating $10,000 per performance to a charity picked by the artists—in addition to $3 million for communities that are vulnerable and at-risk.
How Are Shoppers Behaving Right Now?
The increasing trend to prioritize necessary items over discretionary items and with widespread store closures and social distancing—for an industry reliant on the offline store traffic—is bad news.
Online sales have also declined—almost 20% in Europe, 30% in the US, and 15-25 % in China.
This trend is expected to continue for the rest of 2020 due to the negatively impacted global economy and decreasing revenue trends as well as increased unemployment or reduced-pay affecting consumers.
The personal luxury goods segment is expected to pick up in 2021. Consumers are expected to return to paying full price for quality goods as was the case post 2008-09 financial crisis.
Overall, the fashion industry will take time to recover from the economic, financial and social impact of the pandemic.
What’s Next for Fashion Marketers?
For now, the consumer concerns around prioritizing essentials over discretionary spending will mean that, as a fashion marketer, you need to anticipate a drop in fashion spending. In the apparel segment, however, home-wear and sports-wear items will see moderate purchases—although lower than the pre-pandemic numbers—owing to the global work from home trend and rise in adoption of home-fitness trends.
While previous growth strategies for 2020 have been rendered redundant in the face of the pandemic, the new market dynamics also presents you with unexplored opportunities—which can be a foundation for robust growth—once this blows over.
You will also need to factor in the shift in consumer behavior such as purchase dynamics, spending trends and revised interest trends. There is also a new normal that will emerge after the pandemic and fashion brands need to be prepared for it. Once the dust settles, the immediate challenge will be a recessionary market where consumers will spend cautiously and the demand may continue to remain low.
On the bright side, this also presents the fashion industry with a chance to re-evaluate and reset previous strategies and start afresh. This period of quarantine also presents you with a chance to reshape the dynamics of how experiences are delivered, namely offline vs. online, and adopting a digital-first strategy. In recent years growing consumer awareness has also resulted in antipathy towards non-environment-friendly companies and wasteful practices, resulting in a decline of wholesale and offline sales and an accelerated shift to online behavior.
For the fashion industry, there are two options—emerge as a revived player post the COVID-19 era or fade away.
In this blog, we’ll talk about the immediate situation and the threats the fashion industry is facing along with proven and realistic steps you can adopt right away to tackle the anxious market.
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