Published Thursday 17th September 2020
On Thursday 17th September, London Fashion Week will start under unique circumstances. Often one of the world’s most popular and visited fashion events, this year’s offering will be mostly online.
A new schedule, with 50 digital-only events, is designed to keep the show running in this year of uncertainty. However, analysts from both the events and fashion sectors are already planning for a drastically reduced return. No significant boost in sales is expected.
The story of London Fashion Week is synonymous with the world of luxury retail. Hit as hard as almost any industry, business leaders are having to reduce retail operating costs and consider their proposition in a new way to meet changes in consumer intention.
The Unique Challenges of Luxury Retail During COVID-19
The significant margins and high-end clientele that are commonly associated with luxury retail tend to give an air of untouchability to certain brands. However, as many businesses have found out, even the strongest loyalties can be shaken during this unprecedented time.
Burberry has announced that it will cut 150 office jobs in the UK and 350 overseas as it seeks to cut costs. Harrods has also announced 700 redundancies.
The most obvious impact for the luxury sector is on consumer confidence, which has decreased across the board. With so much uncertainty, even affluent consumers are becoming more consolidatory with their disposable income.
There are also some fears that people are wary of the public image that luxury goods can portray at a time of economic crisis and growing unemployment.
It is also worth considering the key markets that have been impacted by COVID-19. China has long-since been a core part of the global luxury market but is experiencing some of the toughest economic conditions in many decades. Other major countries, such as the UK, USA and India, have also been particularly hard hit.
Beyond the macro-economic picture, the physical impact of coronavirus and its subsequent lockdowns are also huge contributors. For generations, luxury retail has relied on the in-store experience, providing a service alongside the final product that they can look at, hold and understand before purchase.
With coronavirus lockdowns and subsequent social distancing restrictions, the personal experience that many of their customers seek is no longer an option. The double-jeopardy of this practice means that the sector is also far behind in terms of e-commerce.
At a time when online sales are growing, e-commerce accounts for less than 30% of the luxury retail sector. Not only are there unprecedented challenges to be faced in stores, but the industry is also unequipped and unprepared to perform online.
A New Approach to Luxury Retail
Global companies across a vast range of industries have had to try new ways of thinking to adapt to the current – and potentially future – expectations of their potential consumers. It is no different in luxury retail, as classic innovators and trendsetters seek to get ahead of the curve.
One of the most significant transitions seen over the last few months has been a more decisive pivot towards sustainability and equality. ‘Positive Fashion’ is one of the themes of London Fashion Week, while struggling Selfridges launched Project Earth, a campaign designed to promote ethical and environmental concerns.
At a time when consumers are more conscious of their purchases than ever before, luxury retail seeks to meet their growing environmental aspirations.
Another issue that luxury retailers are seeking to tackle is exclusivity, a cornerstone of the sector but also a financial anchor. One of the reasons for a low e-commerce performance is the standard industry strategy of making some items unavailable online, to promote the exclusive aesthetic.
Some luxury retailers are already challenging what ‘exclusivity’ means for the industry. Seeing the growth of the loungewear sector, Dior partnered with Nike to create a limited collection of sports clothing. Marketed as first-come-first-served, the goods generated a high amount of online interest and could prove to be a money-spinning move at a time of doubt for luxury retail.
The recent pandemic has forced all industries to reconsider their proposition. While many companies are forced to consolidate, everyone should be considering their exit strategy and how they can bring customers back to their business.
Here at Expense Reduction Analysts, we’ve supported many major UK businesses during this time. Our industry specialists are experts when it comes to streamlining supply chains and consolidating business expenses. By unlocking more investment capital, you can begin to plan the next stage of recovery for your company.
If you’re interested in discovering what we could do for your business, why not get in contact with us today? Alternatively, discover our retail case studies to see our team in action.