How Big Is The Impact Of The Epidemic On Luxury Clothing Brands? Press The Pause Button To Travel.

It is understood that the luxury Research Department of the Bank of Paris, France, issued a report 5 years ago, entitled "the ten major crises in the luxury goods industry". In order to show the profound influence of China's consumer market on the world, the global luxury market has acquired pneumonia as described as "sneezing in China". "5 years later, global luxury goods manufacturers are suffering from the impact of the new coronavirus. With the outbreak of the new crown virus pneumonia, some luxury stores temporarily shut down Chinese stores, even though some stores are operating, but the number of visitors is also greatly reduced.

French luxury goods group (Kering)'s GUCCI brand fashion has always been famous for its high quality, luxury and sexy. With the outbreak of the epidemic, Gucci suspended production activities in Italy and closed factories for eight days to March 20th. However, the work required for the operation continued to be maintained without affecting the supply of products to customers. It also postponed the 2021 early spring conference, which was scheduled to be held in San Francisco, USA in May 18th. The supplier of Kai Yun group also revealed that the Gucci handbag orders in February were only about half of that in January, and there was no order in March.

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Burberry is a very traditional British luxury brand. It is understood that about 2/5 of Burberry group's sales come from Chinese consumers. The company has issued an official statement that it has suspended operation of about 1/3 of Burberry stores in China, and some of its stores still have a 80% year-on-year decline in the number of stores opened. Therefore, Burberry also withdrew its annual performance forecast for 2020. Meanwhile, the 2020 autumn winter Burberry fashion show for Burberry, which was originally scheduled for April 23rd in Shanghai, was cancelled. The Shenzhen social retail store, which has exclusive cooperation with Tencent, will also be postponed. It is understood that Burberry, Ralph Lauren and Coach parent company Tapestry all agree: "in view of the current trend in the Chinese market, we expect the performance in the second half of this year to be affected by about $2-2.5 billion."

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Canada Goose (Canada goose) is popular among Chinese people for its excellent functionality and fashion and good reputation. Due to the outbreak of a new epidemic of coronae pneumonia, Canada goose said in February 14th that the epidemic had a substantial negative impact on the company's performance. The volume and purchase rate of retail outlets and online businesses in China were also dropping sharply. As the epidemic spread to the world gradually, international shopping centers and retail stores such as North America and Europe were also affected.

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Fashion products and fabrics are among the most important industries in Italy, with annual sales amounting to 90 billion euros. At the same time, Italy is currently the most serious new type of severe acute coronary disease. By the end of March 17th, according to the real-time epidemic map, a total of 27980 confirmed cases were diagnosed in Italy, and 23073 confirmed diagnoses were serious.

Salvatore Ferragamo, from Italy, is one of the world's best designers of leather shoes, leather goods, accessories, clothing and fragrances. It is understood that as of last December 31st fiscal year, Salvatore Ferragamo sales grew 2.3% to 1 billion 370 million euros, of which Asia Pacific region driven by the Chinese market sales increased by 1.1% to 510 million euros. However, in the first quarter of this year, revenue will be reduced by 1/3 over the same period last year. It is obviously affected by the closure of some stores and the delayed release of new products in some areas.

Prada has more than 20% of China's revenue in the past (and Burberry 23%, Herm s 25%). These world's top luxury brands are increasingly inseparable from China's fertile soil. But with a sudden outbreak of uncertainty, Prada can only temporarily shut down its brands in some stores in the mainland and Macao, and will postpone the first holiday series scheduled to be held in Japan in May 21st. To add insult to injury, the government of Italy has implemented the nationwide closure of the new crown pneumonia since 10. The location of many luxury brands and suppliers such as Prada, Armani and Versace is also suffering.

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According to Reuters's interview with some suppliers of fabric and leather goods in Italy, many people said that many brands had begun to reduce the number of orders before the government issued a ban on the city due to the impact of the epidemic in China. The outbreak of Italy's local epidemic is even worse.

According to the Boston consulting firm and Bernstein, the valuation of Italy's luxury goods industry has fallen to 309 billion euros, a 5 year low. This year, the industry may face 300 to 40 billion euros of sales loss.

According to Flavio Cereda, an analyst at Jefferies (Jie Furui), Italy is the most important supplier to the luxury industry. Because of the epidemic, Italy's luxury industry has to face the situation of cancellation or reduction of orders. His second sales forecast for the luxury goods industry in 2020 was down from the previous "growth of 1%" to "down 3%". He added: "if the business of the supplier is affected by the epidemic for a long time, the supply chain of the major brands will be further affected in the future." Recently, he also said that the epidemic will undoubtedly alarm the excessive dependence of luxury fashion industry on Chinese consumers, and it is expected to cause about 12 billion euros loss to the industry. Chinese consumers' desire has been reduced, and the number of tourists has been reduced. These are urgent problems for the luxury fashion industry.

Why the luxury market can easily be knocked down by the outbreak of new crown pneumonia? Some investors believe that the main reason is that luxury brands will invest most of their investment in the Chinese inland market. According to Bain consultancy data, 1/3 of the world's luxury goods sales come from China. Last year, the growth rate of the Chinese market reached 30%, and the growth of 90% in the world was driven by Chinese consumers. Since the outbreak of the outbreak, luxury brand stocks have been plummeting, and some have had to adjust their financial forecasts for the quarter or even the whole year, and have announced earnings warning. Some people have pointed out that due to the unresolved epidemic situation, many places will choose to extend the rework time. Usually the product will be put into operation in February and the delivery order will be postponed to May or June in April. Bernstein, a global luxury market analyst at Bernstein, pointed out: "China's luxury consumption suddenly hit a pause button, and sales of most brands are either zero or at least 80% lower." Luca Solca

For luxury brands to try online e-commerce, according to the China business daily, Prada has been on the line in February 24th and opened flagship stores at Tmall. At present, it is at trial stage, but there are only more than 10 thousand fans (now about 20 thousand people are surveyed). Consumer Miss Wang told reporters that for luxury goods with a price of over 10000 yuan, even the online flagship store of the brand itself will have some concerns before buying, and will feel more realistic when seeing the real thing. It shows that the characteristics of luxury goods still decide that it is more suitable for physical retailing.

After the end of the epidemic, can the luxury consumption be warmed up?

Although the epidemic is sweeping the globe or has an irresistible trend, most people in the industry are still optimistic about the future situation. They believe that the luxury business will achieve retaliatory rebound next year and reach the goal before the outbreak. According to Agility Research, a consultancy research firm, China's Luxury Retailing seems to be turning around as the epidemic is effectively curbed, and retail sales are slowly rebounding. Only 2 of the 11 stores previously closed by Herm s have not yet resumed business. To sum up, the epidemic can only suppress consumption in the short and medium term. After the havoc, the retaliatory revelry consumption can be released, as the posters released by Louis Vuitton on the official social media platform in February 7th said: "the journey to press the pause button will eventually start again."