As 2020 begins, COVID-19 swept the world, disrupting the annual strategy of fashion and luxury brands worldwide. According to data released by McKinsey in 2019, the fashion industry is one of the largest industries in the world, with annual revenue of approximately 2.5 trillion dollars. It is estimated that this year’s global fashion industry’s revenue in apparel and footwear will shrink by 27% to 30% compared with the same period last year.
The pandemic first hit brands and companies in terms of supply and demand. The shutdown of physical stores has brought the company the most direct revenue blow and has profoundly affected countless upstream supporting industries. However, COVID-19, as a black swan event, was incorporated into consumers’ lives as a new normal, business in some countries has gradually recovered. Among them, China as the first country to recover sent a positive signal to the market.
Market and consumer behavior: cautiously optimistic
According to the National Bureau of Statistics of China, the decline in total retail sales of consumer goods in March this year narrowed by 4.7% from January to February. Among them, beauty and personal care and sportswear are less affected sectors. Compared with the 32.3% and 37.7% decline of apparel and jewellery, beauty and personal care outperformed with a solely 13% drop.
In the luxury industry, sales from January to February suffered a decline of 80% to 90%. Since February, sales are recovering at a rate of 10% per week. The Hermès flagship store in Guangzhou recorded a turnover of 2.7 million dollars in one single day after its reopening. However, such “revenge consumption” may not be sustainable in the long term. Thus, how to better grasp this trend has become a key challenge.
This is also a highlight for products other than beauty and personal care after the pandemic: how to accelerate online deployment. China has always been at the forefront of e-commerce. New gimmicks such as live streaming and local KOLs are what international luxury brands need to promote. In the long run, how to ignite consumers’ desire for consumption and create new selling points and scenarios remain crucial.
Branding and new retail: new marketing logic under the “new normal”
COVID-19 pandemic has exposed more potential problems in the fashion and luxury industry. Recently, the news of British apparel brand Superdry’s withdrawal from the Chinese market has once again warned brands and companies that the positioning of the brand and the deployment of marketing channels are essential.
Amid the lockdown, companies that responded quickly have leveraged the “stay-home economy” as an integral part of the marketing strategies. Sportswear brands such as Lululemon and Nike have launched new initiatives to bring training scenarios into daily life. By live streaming “cloud fitness” sessions on WeChat and Weibo, sportswear brands directed the reduced traffic back online, creating more interaction with consumers.
Large luxury and fashion groups have large-scale and flexible supply chains, employees all over the world, and a solid foundation. Therefore, they have the ability to respond to crisis. However, such a large scale may also prevent them from adapting and transforming swiftly. Meanwhile, small and medium-sized companies or independent brands also face challenges – disrupted annual plans are more likely to cause shortages in the capital chain, which will be fatal at such moments.
The COVID-19 pandemic is a Darwinian game with a compressed timeline. Brands must strategically adapt the added value they offer, capture marketing opportunities driven by innovation, and establish stronger connection with consumers.