Not long after BOF launched The State of Fashion 2020, COVID-19 has hit the world with unprecedented collateral damage across all sectors, with the fashion industry hit the hardest, due to its discretionary nature. As the pandemic shifted from China to Europe, the US, and the rest of the world at the rate faster than anyone anticipated, BOF revised and published the report with Coronavirus Update. Here are some key takeaways.
The situation and impact of COVID-19 are evaluated at three layers: Global Economy, Consumer Shifts and Fashion System.
Global Economy The combination of macroeconomic headwinds and the coronavirus force companies to make existential decisions. The dark cloud casts over many industries, fashion in particular, leads to“lacklustre consumer confidence, foregone revenues and stores on lockdown.”
Consumer Shifts With the rise of Gen-Z, topics like radical transparency and anti-consumerism are starting to gain attention. But now these are crucial across the industry. Consumers are described as “frugal” and “disillusioned” in the report, indicating difficulties faced by brands in restoring value. However, there is a silver lining emerging in Aisa, where digital solutions were proven to be a way out. Nike and peacebird not only survived but grew in this downturn, utilizing platforms like Taobao and WeChat Mini Program (what is mini program?).
“Nike- digital sales in the region grew 36 percent in the third quarter ended February 29; Peacebird grew retail sales as a result of innovative customer engagement on their WeChat channel”.
While almost all brick-and-mortar stores facing losses and closures, WeChat saw a 159 percent boost in transaction volume for fashion brand mini-program between January and February 2020 during the peak of China’s outbreak.
Fashion System Unlike the global economy, the keyword here is instead, acceleration. Acceleration of the polarizing process of the already “winner-takes-all” situation in the fashion industry. Middle size companies measure by revenue profit will suffer the most, with the shift of consumer’s preference to value segments and off-price timeless luxury designs. Amid this huge industry-wide reshuffle, in which massive waves of consolidation, M&A and insolvencies will be seen, winning factors lie on capturing the emerging whitespace and strengthening core business via innovative business models. According to Mckinsey & Company Covid-19 apparel and fashion survey 27-29 March 2020, consumers expect to spend more via online and social channels than through offline channels during the outbreak. Based on WeChat performance, we can expect stronger preference for social channel in China.