This article is a brief review of the special Coronavirus edition of the State of Fashion Report with a critical analysis, that discusses how Covid19 impacted the fashion industry, done by Natalija Jovasevic for Fix that Shirt. Natalija is also a collaborator at Hecho por Nosotros and Animaná (an NGO working in the domain of sustainable development).
The State of Fashion 2020: Coronavirus Update Report focuses on three main topics: Global Economy, Consumer Shifts, and Fashion System. The report provides an understanding of how the coronavirus has impacted the fashion industry regarding both financial and social matters. This includes the consumers, going all the way through to those involved in the supply chain. The Report was produced in collaboration between The Business Of Fashion and McKinsey & Company. This article addresses the second section of the report, which focuses on the issues of ‘Discount Mindset’ and ‘Digital Escalation.’
Discounts are a core feature of our shopping habits and culture over the last decade. However, with the coronavirus leaving the world in lockdown it seems like our ‘bargain shopping culture’ may have come to an end. With people across the globe being hit by financial turmoil, consumers are re-evaluating their priorities. McKinsey projects that over 65% of consumers across both Europe and the US will reduce the amount they spend on clothing. This has left fashion brands with masses of unsold stock.
Many brands are known to incinerate unsold stock over the years. However, with consumers, especially Gen Z and Millennials, being so environmentally conscious, brands cannot afford the financial and social cost of unethical or unsustainable practices. (check out our detailed post Who are the Future Consumers of Luxury)
For example, throughout the global pandemic businesses have been increasingly criticised for exposing their staff by keeping shops open, withdrawing payment and cancelling orders of finished clothes.
“The pandemic will bring values around sustainability into sharp focus, intensifying discussions and further polarising views around materialism, over-consumption and irresponsible business practices.” (Know more about Sustainable Fashion)
In contrast to mid-market brands, the luxury market is experiencing more short-term effects due to the pandemic. People’s attitudes are expected to change in terms of being more willing to invest in more expensive, quality goods that will last longer. Yet, the issue that the luxury market faces in terms of discounting is that they must maintain their longstanding reputation. Thus, discounts need to be offered in other ways, including working with wholesalers and e-tailers such as Farfetch.
“The virus, I think, can be seen as a representation of our conscience…it brings to light what is so terribly wrong with society and every day that becomes more clear…It teaches us to slow down and to change our ways,” said Trend Forecaster Li Edelkoort
While we may be seeing the end of “extreme consumerism”, it appears that the way forward lies in the hands of sustainable fashion. McKinsey’s survey reveals that 15% of American and European consumers are expected to purchase more ethical and sustainable garments. Therefore, fashion brands need to shift their focus on implementing sustainable practices. Rather than focusing on mid-season sales and discounts as a means of drawing in consumers. Such practices include reusing leftover stock and also shifting away from the rapid fashion calendar we have been experiencing, where a new collection is released weekly or monthly, rather than following the seasons.
The pandemic is exposing the cracks of the fashion industry and bringing these issues to light. Our favourite brands really have to work hard to gain back the trust of their consumers.
Online shopping has become increasingly popular over the last few years and there has been a surge in fashion brands whose sole presence is online. However, for brands who are reliant on their physical shops across the globe, the implementation of national lockdowns has resulted in shops and high streets being closed and their products considered non-essential. This has left consumers with online shopping as the only alternative.
While the majority of the fashion industry has adapted over the years, offering both online and in-store experiences, those who have not adapted face the potential of financial collapse.
“Since digital channels can be less profitable than physical retail, players need to establish a balanced model that prioritises digital growth in an integrated way with cutting edge customer experience.”
For example, amidst the crisis of the coronavirus Nike saw its online sales increase by 36% across China. In addition to simply offering online shopping, local businesses such as Peacebird have adapted by providing services such as virtual customer engagement, which includes live sessions on social media.
“It’s a completely different way of doing business for us but we have been able to reach every corner of China and we have been able to make some business…everything we are learning in this moment…will be an added weapon we can use to increase and grow…when things get back to normal,” said Giovanni Pungetti, Greater China and APAC chief executive of OTB Group
This digital era is not just new for fashion businesses, but also consumers. McKinsey’s survey reveals that a quarter of Americans and Europeans will increase their online purchases. While 13% of consumers across Europe have used online shopping for the first time due to the coronavirus.
However, it is hard to predict how things will evolve. Despite the changing needs of consumers and the potential for businesses to adapt to the concept of digital fashion, it has been suggested that 44% of US and European consumers will reduce their levels of online buying. While a further 49% will reduce their offline buying habits.
It is clear that the fashion industry, amongst many other industries, is experiencing a great deal of change in these unprecedented times. With social interaction limited by the pandemic, we all have to adapt to the use of various digital channels. It appears that the fashion industries ability to provide consumers with digital means of shopping is crucial to its survival during the COVID-19 era.
Given the financial stresses that people are experiencing due to COVID-19 I think that people will reduce their shopping habits and seek quality products over discounted goods. Furthermore, I believe that sustainability will become increasingly important to consumers and their purchasing habits, overriding discounts.
Doug Stevens, Retail Industry Futurist has similarly expressed that consumers will be increasingly focused on which fashion brands are abiding by “social, political and spiritual world views” (Roberts-Islam, 2020). Katie Baron-Cox, Director of Brand Engagement at retail intelligence agency stylus also states that “access, connection, insights and rarity, in place of discounts” will be the focus of consumers. Whilst value will also shift towards the principles of sustainability (Roberts-Islam, 2020).
Contrastingly, Matthew Drinkwater, Head of the Fashion Innovation Agency (FIA) at the London College of Fashion emphasises the importance of technology. Stating that “COVID-19 is forcing brands to engage and experiment with immersive technologies. We’ve been inundated with requests on how to create virtual clothing, virtual catwalks and virtual showrooms” (Roberts-Islam, 2020). However, he too recognises the importance of sustainability, stating that “This is an opportunity to redefine business models and build a more sustainable, progressive future” (Roberts-Islam, 2020).
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