Is The Coronavirus Crumbling The Retail Sector?


Nobody could have predicted the outbreak of the Coronavirus not least its impact on our retail sector. Covid 19 has already dramatically impacted Fashion Week with designers cancelling their Fall/Winter 21 shows as well as many upcoming shows later this year in April and May. Even those designers who didn't cancel, still missed out on Chinese spectators and considering the Chinese market makes up around 40% of the luxury retail sector, this is the first sector of retail to take a hit due to the virus. The US communications team for both Louis Vuitton and Chanel were told to stay at home and so didn't make it to Fashion Week and the penultimate show during PFW which was Lacoste had around 30% of their media guests cancel.


Outside of Fashion Week, the luxury retail sector is struggling. Burberry have closed 24 of their 64 stores in mainland China and of those that have remained open, they are operating under reduced opening hours and have noticed a significant decline in footfall. Victoria's Secret have stated that China is an integral source of raw materials for them and are now expecting a delay of up to four weeks for their Spring collection.



Of course, the fear of the spreading virus has only added to a sentiment about Fashion Week that has been circulating for a number of years; that it's too expensive, too much hard work and harmful to the environment to continue in the same manner. But the effect on Fashion Week and the empty seats during the shows is just the tip of the iceberg. The real problem is the hold up in the supply chain and there's no telling just how long that will last.


Production In China


China still holds a claim on being one of the world's biggest garment producers for brands world over. Not only was there a decline in showroom appointments from fashion buyers during Fashion Week but it has been and will continue to be detrimental to brands who produce in China, even only partially. Production from garment manufacturers in China has all but stopped and the post services and couriers for many countries are refusing to send or receive any good from China, neighboring countries and even beyond. If garment manufacturers can't fulfil orders in time for the demand on the shop-floor, that brand or designer could be in real trouble. And it's not just future orders that have been affected. Due to budget cuts and the looming fear of what might happen next, some buyers have even cancelled existing orders that were placed before the outbreak or have requested a discounted rate. Yet another hit for the retail sector to absorb. Of course, this isn't likely to affect the power houses of the luxury sector quite so much as it will the smaller independent design houses and new comers, the fresh blood and the future of the industry. Bankruptcy and going out of business before they've even hit the ground running is a very real fear for many.


Thankfully, we have technology now that allows buyers to continue working remotely and to make negotiations through video chat, even though they are unable to see and feel the products in person. This is being utilized, allowing buying to continue, at best at a declined rate. But buying at a wholesale level is only the first step, those big stores now need to sell to the customer. According to EuropeanCeo, last year only 9% of luxury goods were bought virtually over the internet which means shows a trend that customers want to feel and touch and see their goods in person before handing over the big bucks.


Preventatives Suffer A Rupture In Stock


On the opposite end of the scale, suppliers of face masks, surgical masks, latex gloves and hand sanitizer are in extremely high demand, many of which have gone indefinitely out of stock due to people stock piling. Other suppliers have significantly upped their prices knowing these products are currently in high demand, with mini bottles of hand sanitizer selling for nearly €5 Euros in Paris for a pocket sized portion of the coveted liquid.


Basics and household goods could be facing a similar situation in Europe as fears are escalating that a lock down situation could be on the horizon. Fear mongering has encouraged people to stock pile basic goods such as toilet paper, dried and canned goods as well as non perishables, creating a hyped up atmosphere that says it is every man for themselves which is never good but retailers of these goods are laughing all the way to the bank.


Tourism


It's not just those that work in the fashion industry that are contributing to the decline however. It's the regular Joe Public that have cancelled flights, postponed trips or simply decided not to take any holidays right now that is also affecting the situation. Without tourists, the retail sector could collapse and with countries closing their borders and airlines refusing to travel to certain countries for an indiscriminate period of time, who knows how long the retail sector can survive without crumbling.


Further Than Retail


Outside of retail, other sales have taken a hit too. Many concerts and upcoming shows in the entertainment industry have been cancelled too including Stormzy, Khalid, A-Ha, Green Day and BTS all whom have pulled out of Asia. Tokyo Disneyland has shut up shop for at least two weeks as Japan battles the virus, joining the list of two other Disney theme parks in Hong Kong and Shanghai which have remained shut since the end of January.


Article Commissioned by Mod'Art University of Shanghai


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