Image: Carmen González for FashionUnited
The global fashion industry faces a bumpy road ahead. Not only they
have to figure out their own logistics conundrums but to reinvent the
supply chain, re-connect with consumers and make up for double-digit
decline in revenues.
At a global level, the fashion industry posted a 20 percent decline in
revenues in the 2019–20 period, with margins for earnings before
interest, taxes, and amortization (EBITA) dropping almost 4 percent to
6.8 percent, as indicated in the latest edition of McKinsey State of
the Fashion Report.
Fashion Weeks around the world transitioned from traditional runways
to virtual shows, leaving the cities that host the ‘Big Four’ (London,
New York, Paris, and Milan) of these week-long fashion shows reeling
with more than 600 million dollars lost in economic activity.
Covid’s millionaire financial loss for mayor fashion weeks
Burberry was one of the four brands that were able to go ahead and
show at the London Fashion Week in September 2020. Back then, Caroline
Rush, the chief executive of the British Fashion Council, said
designers were using the limits imposed by the virus to think of
alternative ways to show off their work. That translated into hundreds
of brands switching their shows and catwalks online, with the
resulting slash to local businesses across hospitality, travel,
retail, and related industries, which would have otherwise welcomed
millions of customers.
FashionUnited’s Business Intelligence estimated LFW to generate over
300 million dollars for the city. Furthermore, Oxford Economics
calculated that over 240,000 direct jobs were lost due to fashion week
being hosted online. This number goes up to 350,000 if including
indirect job losses. Delivered by the British Fashion Council, the
London Fashion Week (LFW) is the UK’s major trade event. Right before
the pandemic, from 2018 to 2019, London Fashion Week generated 110
million pounds in new orders, investment and trade, as highlighted by
the Mayor of London Office.
New York, once dubbed the world’s capital of fashion, remains focused
on bouncing back from the financial fallout brought on by the
pandemic. Eric Adams, the city mayor since early 2021, refered to the
New York Fashion Week as a “600 million dollars juggernaut” that
brings the city “twice the amount that we’d make if we had the Super
Bowl here”. Experts in the field point out that before the pandemic
hit, the two biannual fashion weeks added about 900 million dollars to
the city economy. Indeed, the annual economic contribution of New York
Fashion Week upon New York City was estimated at 887 million dollars
in 2016 by the CFDA.
Similarly, the Fédération de la Haute Couture et de la Mode (FHCM)
calculates that the Paris Fashion Week, another of the ‘Big Four’
fashion shows, generates 1.2 billion euros in economic spinoffs yearly
(about 440 million euros of fashion shows and events combined and
another 725 million euros worth of trade fairs and related events.)
But this is not the full extent to it, as the French fashion used to
prompt an estimated 10.3 billion euros in total sales.
In Milan, the economy thrives the months that fashion shows happen, as
summer and spring fashion weeks bring an aggregated 30 million euros
in spending in hotels and restaurants alone, per the Italian Fashion
Chamber’s calculations. In 2021, the Milan Fashion Week moved to a
fully digital structure, with the odd, very limited, socially
distanced shows for buyers and media. As a result, the city’s related
income fell by approximately 80 percent, according to the chamber.
The power of more democratic fashion
Before Covid, access to fashion weeks was very exclusive and certainly
pricey. Admission to runway shows used to be by invitation only, often
reserved for wealthy consumers able to pay hundreds – or even
thousands – of dollars to enjoy the front row. But as Anita
Balchandani from McKinsey put it in a podcast assessing the value
destruction caused since early 2020 across the fashion world, “This
pandemic has forced a demand rethink, certainly in the earlier part of
the crisis.” She alludes to different factors driving this needed
rethink, highlighting that “A lot of the channels that a number of
brands would rely on—for example, wholesale channels, independent
retailers, et cetera—have actually been at the sharp end of and seen
the pain from the crisis.”
Open to try new ways to connect with consumers, Milan Fashion Week
turned to social media in February 2021, hosting their opening night
as an Instagram Live party with a DJ set instead of an in-person
soiree. They also wanted to keep the city involved, despite the dire
circumstances. In a “symbolic gesture,” Carlo Capasa, the Italian
Fashion Chamber’s chairman and chief executive, explained that people
in the streets could watch live shows by iconic brands including
Armani, Prada, Fendi and Dolce & Gabbana on big screens in strategic
locations across central Milan. The initiative wanted to be “A
reminder for the people of Milan that fashion is still part of
everybody’s life, resilient despite the Covid crisis, still able to
incarnate the city’s values: creativity and efficiency.” The welcome
was so positive that following after-pandemic fashion weeks have kept
that element.
Similarly, last year, Shanghai Fashion Week increased its exposure on
social media by partnering with Tiktok to launch a China Independent
Designer Support Program, which resulted into a new event called
"Shanghai Fashion & Lifestyle Carnival". The Chinese fashion show also
increased the number of participating brands (a 2.3 percent lift
compared to 2020.) It was the only larger fashion week which increased
the level of brands participation, exceeding the pre-pandemic levels
of 2019, per China Economic Information Service (CEIS) data.
For Balchandani the pivot to digital has been huge: “If you were a
player that wasn’t fully able to capitalize on that, then we’ve
typically seen a deflection; brands and consumers absolutely have
shown to us during the crisis that they’re open for change. They’re
open to trying new brands.”
This democratization of fashion is also opening the doors to smaller
businesses and newer designers who wouldn’t traditionally be able to
afford participating in the top fashion weeks’ circuit. A good example
of this approach is the multi-year partnership entered by Afterpay and
the Fashion Weeks in London and New York. The buy-now-pay-later
company looks to part ways the traditional top-down approach of these
shows and shifting the focus from fashion editors and buyers to
consumers. In New York, this deal has translated into fashion brands
like Altuzarra streaming their runways digitally across the US via the
Afterpay hub, allowing consumers to buy select looks from the catwalk.
Immersive pop-up stores, digital activations at Time Square and
Metaverse-first collections are being organized to bring together
consumers and brands. “We’re giving small businesses exposure in a
block-style shopping activation that they wouldn’t have been able to
have in a traditional NYFW schedule,” says Molnar. “We’re really
thinking about the whole gamete and all ends of the retail spectrum…it
gives me goosebumps just thinking about it,” Afterpay co-founder Nick
Molnar explained in a recent interview with ‘Grazia US’. The end game?
Helping recover NYFW’s place at the helm of the international fashion
circuit whilst aiding the city’s economy.
That renewed interest in alternative channels, formats, and more
importantly, brands, was made even clearer in the Global Fashion
Industry Index - Fashion Week Vitality Index Report 2021 published by
CEIS. This report pointed out that while the global fashion industry
is gradually recovering in a post-pandemic world, the digitalization
of the fashion industry has been accelerated in these past couple of
years, boosting omni-channel fashion weeks that combine online and
offline shows to attract new consumer needs and desires. The latest
edition of this report, released in September 2021, shows how Paris
Fashion Week, Milan Fashion Week, London Fashion Week and Shanghai
Fashion Week ranked the top four respectively, while New York Fashion
Week moved backward to the fifth compared with its ranking in 2020 and
China Fashion Week, Tokyo Fashion Week and Seoul Fashion Week ranked
the sixth to eighth.
http://dlvr.it/SZPpt1
No comments:
Post a Comment