Fashion Industry: Trend & Market Report 2020
Table of Contents
Before the end of 2019, fashion industry leaders around the world have a gloomy outlook for 2020. When the COVID-19 first hit China, the luxury fashion is one of the industries that got affected early due to their main supply line being in China. It did not take long until the effect of COVID-19 hit close to home and other supply lines in Asia. Along with the spread of COVID-19, stores were forced to close down, one after another.
Even though online stores are still "business as usual," their sales plummet nevertheless. As lockdown is being imposed, people turn on internal survival mode, and the last thing in consumers' shopping list is getting an article of new clothing. Instead, attention turns to more essential items such as grocery and hygiene products.
Despite the fact that sales are being hit unprecedentedly, it didn't take long for leaders for each industry to step up to contribute to the fight against the COVID-19. Brands have turned their supply lines to focus on manufacturing mask and medical essentials. They have also started donating millions to the cause. For example, LVMH has donated 2.2 million, Giorgio Armani 1.2 million, and Moncler 19 million. However, it has also been reported that fashion brands have canceled over $2.8 billion in orders from suppliers.
As lockdown continues, brands have changed their marketing strategy to center more indoor and fitness clothing. Brands like Nike also came out with a campaign that focuses on positivity, which avoided words like "COVID," "pandemic," and "coronavirus."
The New Challenges
Two months after the initial lockdown, some countries have begun easing lockdowns step-by-step. As brands begin to open their doors again, many challenges ahead await them.
Even before the COVID-19 incident, users are becoming social media fatigue. They are overstimulated and less engaged. With COVID-19, people are forced indoor, which leads them start consuming more social media. This will nevertheless bring the fatigue to a whole new level as few months after the lockdown has been eased, users will be less likely to spend their time indoors.
Due to this, Fashion brands will need to work harder to fight for audiences' attention by creating original storytelling content to captivate their interest. In addition, brands also have to start working with influencers who are genuinely interested in their products and compatible with their branding to maximize engagement.
As E-commerce becomes more global and with marketplace enabling cross-border selling easier, suppliers from other countries can directly sell to consumers without being in the country. Last year, a Chinese manufacturer made 5 million sales in a month by selling a $139 winter coat on Amazon. And they are not alone. It is reported Chinese sellers with more than $1million of revenues on Amazon rose from 23 percentage to 35 last year.
Brands have been experimenting with new textiles and fibers are more sustainable to the environment. For example, New Balance is experimenting with a leather alternative called the pineapple leaf fiber. Chanel has also launched a new strategic priority, which focuses on research and development of material - included leather made by agri-food industries.
Despite the positive images and benefits sustainability bring, going green is still a big challenge for the fashion industry. Research by brand watch has shown that despite the buzz behind sustainability, consumers are not backing it up monetary. Mckinsey has found that this contradictory behavior is exceptionally high among Generation Z.
As countries crawl back to its' footing after an economic downturn, consumers will be expecting huge discounts from brands. Loss jobs, pay cuts, and firing have cast a shadow of doubt on the population, making them more cautious about how they spend their money. 65 percent of consumers said that they would most likely decrease their spending on apparel as many are struggling even to make financial ends meet.
In addition, months of lost revenue and low consumer spending that follows will leave the warehouse filled with last seasons' items. This will, in turn, cause many brands to start offering a considerable discount to clear their warehouse.
Digital / E-commerce
Stores like Primark has been hit hard by during the COVID-19 lockdown due to the lack of online stores. This turns them from making $793 million a month to zero overnight. Although brand like Primark is rare, COVID-19 has nevertheless given brands an opportunity to see through their digital transformation, making digital escalation a priority.
The fight for survival
Despite stores being shut down and generating zero revenue, brands still have to continue to fork out big money to pay for their employees' salaries and rents. This will kill off businesses that are just scraping by. J Crew, True Religion, Neiman Marcus Group are some of the brands which have filed chapter 11 bankruptcy due to the pandemic. After pandemic is over, we are still expecting a long fight ahead, as brands start clearing their warehouse with heavy discounts, which bring little profitability.
Not all news is gloom and doom for the fashion industry. The good news is that a spike in purchasing is excepted before returning to a new normal, a phenomenon called "revenge buying," which is first observed in China. Fashion E-Commerce site in the USA has started witnessing such phenomena in Mid-April, with sales of apparel increased by 30%. The easing on lockdown in France also sees customers queuing in front of fashion stores, waiting to get their hands on the latest fashion item.