Global fashion and luxury sales to drop by more than S$600 billion because of virus
The hit to fashion and luxury sales from coronavirus is expected to be much harder than previously feared, as a decade of growth comes to a crushing halt.
Revenues are expected to plunge between 25 per cent and 35 per cent this year as a direct upshot of store closures attributable to coronavirus lockdowns, co-ordinate to the Boston Consulting Group.
The impact on fashion and luxury – a category that includes dress and accessories, watches and jewellery, and perfumes and cosmetics – is expected be more severe this year than the recession a decade ago, with total sales dropping betwixt The states$450 billion to US$650 billion (S$640 billion to S$925 billion) from 2022 levels.
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The outlook is far bleaker than the business firm suggested in late February, when it estimated sales for the year would pass up by about 15 per cent. That was earlier the virus took hold in Europe and the U.s.a. and was declared a pandemic.
"This is worse than 2008," said Sarah Willersdorf, head of luxury at BCG. "At that place's goose egg doubt nosotros're going to take a definite V curve. The question is whether it moves into a U or an L."
Like the 2008 recession, the pandemic has caused a fiscal daze that has hurt consumer sentiment and demand, she said. "To this you have this added dubiety in the market nearly the crisis, prolonged store closures which you didn't have in 2008, and disruptions to manufacturing."
Some regions will exist more heavily afflicted than others, depending on the strength of their economies, the severity of outbreaks, and how much they rely on tourist sales for fashion and luxury sales, the group said.
Southern Europe is expected to suffer the largest drop, with sales falling betwixt 85 to 95 per cent betwixt March and May. The region's economies are not equally robust as the US or Mainland china and persistent travel restrictions will place a further elevate on a recovery, BCG said.
Gucci parent company Kering said this calendar week that information technology was already "observing encouraging signs in mainland China", with declines in store traffic and sales "narrowing". The French conglomerate is expecting a similar-for-similar sales fall of xv per cent in the first quarter compared with last year.
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Sales in North America, the world's largest way and luxury market, are expected to fall somewhere betwixt 75 to 85 per cent compared with last year during March and April and recovering to sit downwards 10 per cent by end of year.
"Honestly, the jury is still out on that," said Willersdorf, noting that the U.s.a. regime's steps to cease the spread of the pandemic have been less ambitious than countries such as Communist china and Singapore, which were quick to implement social distancing and data-tracking measures. "The reason the US is expected to return to that level is because of the size and strength of its economy."
While some regions are expected to rebound rapidly, the touch on consumer habits are likely to be felt longer-term, Willersdorf said, with consumers shifting more of their spending online and embracing new technologies such as augmented reality, which let shoppers to try on apparel and accessories at dwelling.
By Lauren Indvik © 2022 The Financial Times
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Source: https://cnalifestyle.channelnewsasia.com/obsessions/virus-impact-fashion-luxury-industries-177486
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