How Covid-19 can change mode and retail – Quartz | Instant News


Nobody really knows what the world looks like on the other side of the Covid-19 pandemic. The only certainty is that it must be different. The crisis has ushered in the global economy become a recession, and it seems ready to leave a mark on how consumers live, how they spend their money, and even how they dress.

Fashion, in fact, is one of the most vulnerable businesses to disruption from outbreaks because it relies heavily on discretionary spending. Experts may not always agree on how a pandemic will change various aspects of the industry. But the consensus is that this will happen, with many large-scale changes already taking place more quickly in upheaval.

Here are some of the major transformations predicted by fashion experts in the post-coronavirus world.

Buyers will reassess “value”

The plague, and the lockdowns of various countries used to stop it, have forced consumers to reprioritize their spending. Many tend to reconsider what they consider important. In China, for example, where life finally returned to normal after it was the first country to be locked up, many buyers still haven’t spent as they did before the crisis and continue to prioritize needs.

“I think there is little emotional ground,” said Javier Seara, leader of the fashion and luxury sector at Boston Consulting Group (BCG). “What do we need? What do we really do?”

For fashion, which is more discretionary than essence, he calls it a moment of “reconsidering and rethinking.” Buyers have won for years the volume of clothes is getting bigger at a cheaper price. Seara explained it was still too early to say with certainty whether that would change, but believed that in mature markets such as the US and Europe in particular we could see a shift towards buyers who buy less and potentially spend more per item.

Francesca Muston, fashion director of global trends forecasters WGSN, voiced a similar opinion. “One of the things that I talk about quite a lot is what ‘value’ really means,” he said. “I think often that value has become an abbreviation for something whose price is very low, but what we have built before coronavirus, with all the messages about sustainability, is that low prices are often not very good values.” He sees more buyers prioritizing uniqueness, expertise, and quality in the mode they buy.

The company will focus on fewer – and different – products

Muston said he saw indications that the changing trend of fashion could slow down, while the company would shift its focus to a different type of product. “Now what we see is far more emphasis on core products that never run out of stock, trans-season for them, because they can be far more profitable for retailers,” he said. He points to digital companies directly to consumers who sell only one or a number of products that develop under this approach.

Likewise, clothing that has traction all season can receive new attention. “From a practical point of view, I believe a more seasonless approach will make sense moving forward,” Maximiliano Nicolelli, managing director of Hydra Advisory mode consultancy in Milan, told the WWD fashion trade outlet (paywall). Runway Label like Armani (Paywall) has said they will use the crisis as an opportunity to rethink the time and frequency of their collections as well.

Looks like that enter the spotlight now is minimalist. In an April 2 note for clients, investment firm Bernstein predicted that, after the crisis, “Zeitgeist will change, the era of maximalism will end, because the pendulum will swing back to minimalism.”

Not everyone is so sure that changes from fashion trends will last long. Natalie Kotlyar, the national leader in retail practices and consumer products at BDO, an accounting and consulting firm, thinks companies and buyers can adopt it in the short term. But in the long run, he said, buyers will still “embrace trends” and there will “continue to be thirsty for fashionable merchandise in the future.”

E-commerce will grow, as will direct sales to consumers

The share of fashion sales that occur online grows before coronavirus. The current situation, with widespread store closures, should only spur e-commerce because consumers are accustomed to buying more online.

At the same time, there are questions about how eager buyers want to return to crowded malls and shops once they reopen unless health officials can develop a vaccine for the new corona virus. “I have difficulty thinking of scenarios when after this people will spend more time in the shops, which were previously quite empty,” said Seara BCG. “I don’t see a world where people come out of this and say, ‘Oh, let’s go to Macy’s.'”

Reuters / Eduardo Munoz

An empty shop in New York during the city’s coronavirus outbreak.

This is another attraction for e-commerce, and also for companies to drive more sales through their own channels. Over the years, the company from Nike for luxury seller has done more direct sales to buyers than through retail partners. The costs can be high because they have to handle all operations themselves, but they also get more control over their brand image and higher margins on each sale.

If their retail partners see a traffic jam in the store, that is even more reason for the company to take over more of their own sales. Both Seara and Bernstein, in their April 2 note, predicted the crisis would cause further shifts between companies from wholesalers and towards their own retail channels.

The gap between retail winners and losers will grow

Everyone will suffer from a pandemic, but not the same. “What I think is really going to happen is we will see further gaps between strong and weak retailers,” Kotlyar said.

Fashion is polarized business in terms of who makes a profit and who doesn’t. Many companies are unprofitable and others struggle to get simple income, like independent designer, is facing a nightmare scenario.

Smaller, privately owned companies may not have cash to continue for two months or longer without income while stores are closed to maintain social distance and buyers delay all but important purchases. A number of possibilities go out of business.

Large companies, including multi-brand models such as department stores and more middle market retailer more broadly, can survive but can shrink substantially. “We sold too much and saved too much, so part of this is the most suitable natural survival,” said Deborah Weinswig, founder of Coresight Research. He added many companies still did not get the government support they needed, exacerbating the problem.

Some business models will be better than others

The big luxury players are tough because rich people will continue to be rich, Seara said. Sports companies also have an advantage, he said, because they tend to be big and have buyers’ desires for comfort and versatile functional products on their side.

Reuters / Aly Song

In Wuhan, where the outbreak began, shoppers have already queued to return to luxury shops.

Off-price chains can also develop, although the situation is uncertain. In past economic crises, they have able to attract buyers looking for cheap goods while benefiting from a flood of inventory coming from retailers who don’t sell. But this time, according to Kotlyar, everyone will be left behind so many supplies that discounting is likely to expand, giving broad retail competition to price retailers. They also haven’t invested as much as other parts of the industry in building e-commerce, so unless they can move fast they will skip the uptick in online shopping.

Other models that can develop rapidly post-coronaviruses are digital, direct-to-consumer (DTC) digital companies and resold sites. DTC company not immune for problems faced by other retailers from Covid-19. But they have proven to be adept at promoting their unique value to buyers, said Muston WGSN. The resale-fashion site, meanwhile, has has grown steadily in recent years and can see an influx of customers looking for online offers and inventory, both from consumers cleaning their closets and corporate partners who want part of the market to be resold.

The company will reconfigure their supply chain

When the coronavirus killed industrial activity in most parts of China, it did freeze the fashion company too. The company has moved its production from China for years, first when costs rose and then more recently when the trade war between China and the US increased. But they quickly realized that they still relied on China for much of their raw materials.

However, due to the coronavirus crisis, over the next two years companies have tended to re-evaluate their supply chains and try to ensure they don’t depend entirely on one country, said Kotlyar from BDO.

It is not entirely clear what the new supply chain is like. That can involve a mix of nearshoring production to low-cost countries near major markets plus more investment advanced manufacturing and automation.

Francisco Betti, an expert in advanced manufacturing and production at the World Economic Forum, a non-partisan foundation based in Switzerland, said in an earlier interview with Quartz that he thought Covid-19 “would massively accelerate” the change that was already taking place in advanced manufacturing and reshaping the supply chain. More companies, he said, will likely incorporate more risk management and scenario planning into their supply chains, and diversify them as much as possible in the event of a future crisis. Fashion companies are likely to be part of the movement.

The lifestyle of new consumers will need comfortable new clothes

Before coronavirus, WGSN had planned to highlight work from home as one of the top trends this year, due to improvements in technology, changes in which young people in particular chose to live, and other factors. The corona virus has now forced even workers and employers who may have been reluctant to embrace remote work.

“The reason why this is important for fashion is that people wear different things when they work from home,” Muston said. “What you are starting to see fundamentally is there is a step away from anything that feels somewhat uncomfortable.”

Even something like denim that feels comfortable enough to walk and move regularly can feel restrictive if you sit at home all day. Retailers who have increased the level of comfort they offer after years athleisure domination tend to encourage comfort even further. Many women skip bras too, says Muston, or go with options like bralettes or sports bras.

This situation also changes what we consider to be office clothes and what buyers may or may not need to buy to work, as noted by retail futurist Doug Stephens in a interview with WWD (paywall). Likely to spur more clothes at work.

Of course not all of these predictions can occur, especially given how much uncertainty remains about how the coronavirus crisis will occur. Other changes that are not predicted by experts can also turn out to be more impactful. But with the drastic global effect of the virus on the economy and buyers around the world, the change that followed seemed inevitable.



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