Fashion and luxury foot the Coronavirus bill. But clothing promises a strong recovery
High-ranking fashion and luxury goods will suffer a serious reduction in the volume of business in the most acute phase of Covid19. The most widespread opinion among CEOs and financial directors estimates that the loss in turnover will be around 30%, for a total value of 100 billion. Up to the two weeks preceding the epidemic, the forecasts were in any case negative, but not so drastic, indicating a possible loss of 10%, equal to 30 billion.
When will the sector recover? The same company leadersbelieved that the end of the lockdown was to be expected in the last months of 2020. Many of the same men at the top of these companies, however, are now reviewing their estimates and are beginning to speak of 2021 as the time horizon for recovery and getting back on top.
There are two main obstacles facing luxury companies. The first concerns the reduction in liquidity, which is estimatedwill be around 77 billion. The second, no less serious, concerns unsold stock. If in past years many brands have burned excess clothes, the controversies that ensued do not indicate this as the ideal solution to theproblem. On the other hand, distribution through lower positioning channels could negatively affect brand image. For these reasons, many are placing their trust in the enhancement of e-commerce, which, if supported by timely and targeted actions, could resolve the dilemma.
Thanks to online shopping, clothing is indicated as one of those sectors that will more quickly make up for the economic shock caused by the emergency. Consumers, according to analysts, will in fact focus on affordable goods such as fashion and entertainment, delaying large expenses such as those for cars and homes. Nonetheless, the return to the pre-crisis threshold will undoubtedly come about through the relaunch of our economy. Right after a recession that is expected to be intense but short-lived.
