Brand Finance Apparel 50 index revealed Nike has retained its spot as the world’s most valuable apparel brand but the brand value of the sector could fall by 20 per cent due to the COVID-19 pandemic. The US sportswear brand’s value jumped 7 per cent to $34.8 billion as of January 1. Sporting goods rival Adidas stayed in third place as its brand value dropped 1 per cent to $16.5 billion, behind Gucci in second, which rose 20 per cent to $17.6 billion.

Jeans brand Levi’s was the fastest growing brand, rising 38 per cent to $4.1 billion, while Valentino and Gap suffered the sharpest falls in value. However, the report warned the brand value of the world’s biggest 500 companies could fall by up to $1 trillion, with the apparel sector one of the worst affected falling 20 per cent.

Nike and Adidas have both been forced to close stores around the world, with sales expected to be severely hit in the first half. Brand Finance also ranked sectors in terms of how severely they would be impacted by Coronavirus, with the brand value of apparel, airlines, restaurants, retail and auto parts industries all falling 20 per cent.

LVMH, which is largest luxury goods conglomerate in the world, plans to cut dividends by 30 per cent to €4.80 per given the current financial landscape. Chairman and CEO Bernard Arnault and the members of LVMH’s executive committee have already waived their salaries for the months of April and May, and will forgo their bonus compensation for the whole year.

LVMH generated revenue of €10.6 billion ($11.48 billion) for the first quarter of 2020. A 15 per cent drop for the three-month period ending March 31, with sales falling across all of its business segments – from its fashion and leather Goods group and perfumes and cosmetics division, where sales decreased 18 per cent, to watches and jewelry, and selective retailing, which saw sales sink by 24 and 25 per cent, respectively.

Responsible for 5 per cent of the country’s gross domestic product and employing more than 500,000 individuals, Italian luxury goods might face irreparable damage due to the prolonged lockdown. Carlo Capasa, Chairman of Italy’s National Fashion Chamber, stated in an online interview that Italy has been among the hardest countries hit by COVID-19, with death toll surpassing 20,000. He suggested, April 20 as a date to gradually reopen manufacturing activities in order to deliver fall/winter collections on time to shops around the world, and start production of spring/summer collections.

His sentiment was echoed by Claudio Marenzi, head of the fashion division at Rome-headquartered lobbying firm Confindustria, who feels while fashion factories have closed throughout Italy as a result of their status as non-essential businesses, “countries like France, Spain, Portugal, and Turkey” are gradually reopening manufacturing facilities.

Meanwhile, fashion giants like Gucci’s parent company Kering have put forth slashed outlooks for the year. Paris-based conglomerate Kering, whose brand Gucci sales consist of the bulk of annual revenues said last month it expects consolidated revenue for the first quarter of 2020, ending March 31, will be down by between 13 to 14 per cent in reported terms compared to the first quarter of 2019. The group expects sharp impacts for the second quarter, as well, as consumer opt out of luxury spending amidst the global health crisis.

At the conclusion of 2022, the top five luxury brand values indicate that even though most of the world is in a fix with never-ending inflation, luxury just carries on as if all is well with the world. The top five luxury brands closed 2022 with brand values of: Louis Vuitton $124,273 million, Hermès $80,323 million, Chanel $53, 021 million, Gucci $37,887 million and Dior $10,534 million. Year 2023 is turning out be quite similar as the first quarter 0f 2023 shows Louis Vuitton’s sales growing 17 per cent and Hermès sales grew 23 per cent compared to the same period last year.

The buoyant lifestyle of ultra-high wealthy is clearly keeping the luxury sector in the black. Compared to the ultra-high net worth individuals, income-groups lower down the ladder are actually slashing spends on designer items by half. The return of Chinese consumers after nearly three-years of self-imposed lockdown has added to the buoyancy of luxury goods as witnessed by the LMVH collective of Louis Vuitton, Christian Dior and Celine whose sales increased 30 per cent in mainland China in the first quarter of 2023 compared to the first quarter of 2022. European luxury stocks have been on a jubilant run, gaining 23 per cent on average this year compared to 14 per cent rise in the MSCI Europe index.

Luxury goods could be the best to invest in

The flush of the luxury sector continuous success has been noted by wealth managers as they have now begun advising investing in the sector. Luxury is actually an interesting market to secure money. Beyond representing history, know-how, prestige and scarcity, it is an industry that resists crises, since luxury customers, due to their financial wealth, recover very quickly or even do not suffer when they arrive. Luxury goods might become to best assets to invest on in the coming years.

Almost recession-proof, the flourishing luxury goods market is still one of the most successful industries worldwide and has a very bright future ahead. With a high profitability in a short period of time, it is going to be the biggest rival of real estate or stock market investments for wealthy people. However, in terms of investing in stocks, the investor has to be careful in choosing. Last year, three companies — LVMH, Hermès and Richemont — took home 75 per cent of the industry's incremental revenue, revealed a Bank of America analysis.

When rivals report their results, it will become clearer who is winning or losing market share. It’s even more interesting for people living in emerging countries where financial markets and domestic currencies are not stable. The reason to believe in luxury is because the industry has been surprisingly resilient in previous economic downturns. In the global financial crisis, the sector had two quarters of lower sales before it began to grow again, while global gross domestic product contracted for four.

Experts question if this growth is sustainable in the long run? It looks like it really is. This year, bullish analysts expect luxury industry sales to increase by 8 to 10 per cent compared with the International Monetary Fund's 2.8 per cent forecast for global growth.

Luxury’s big new playground India

India, the world’s fifth largest economy now supports a 105 per cent rise in millionaires by 2026 and living in India will be the single largest consumer group of all things luxury. In India though, luxury real estate and automobiles top the list of luxurious acquisitions with experiential luxury coming in a close third with holidays, staycations, F&B and of course lavish destination weddings. Luxury fashion and accessories such as watches and exclusive jewellery have been around but now they are full on as brand after luxury brand make Indian metros their must have destinations.

Pitti Immagine, owner of the Pitti Filati yarn show, has delayed making any decision about this summer’s fair. The direction taken by Pitti Immagine was welcomed with satisfaction by the Technical Committee – composed of representatives of various components involved in Pitti Filati: exhibiting yarn manufacturers, knitwear factories, buyers – which started a wide-ranging discussion on the main issues currently under discussion.

Along with an evaluation on extension of containment measures and forecasts for recovery of production activities in the textile-clothing sector, the owner also discussed operatively on different issues: timing schedule (presentation of the color chart, sending of samples, collection of orders), new formulas for a setting up of stands, with the aim to reduce the production costs for the exhibitors and the ideal position of Pitti Filati in the events calendar.

Given the complexity of the situation, where many elements are still in progress the Technical Committee asked for three more weeks to decide on the format and dates of the show and the next meeting was convened in the first week of May.

Data from BGMEA indicates, garment export fell drastically, by 83.74 per cent to $194 million in the first 15 days of April compared to the same period last year. In the first 15 days in 2019, the earning from garment shipment was $1.19 billion. The pandemic affected shipment of garments significantly as a majority of Western retailers and brands shut down their stores in Europe and the US.

Apart from the steep fall in shipment, international retailers and brands have already cancelled work orders from different local factories worth more than $3.11 billion as of this week due to the COVID-19 pandemic. The receipts from garment shipment also declined significantly in March this year. Garment export declined by 26.70 per cent to $1.97 billion in March this year compared to the corresponding month in 2019, when export netted $2.69 billion.

Canada has registered a massive fall of 13.54 per cent in its apparel import values during January-February ’20. The country imported apparels worth $1.40 billion during this period as against $1.62 billion in the corresponding period of the prior year.

India, China, Bangladesh and Vietnam dwindled significantly and that’s one of the rarest occasions when all top four apparel exporting destinations fell in value-wise RMG exports to Canada. Shipment from China to Canada was worth $440 million, marking 26.79 per cent downfall on Y-o-Y basis. Bangladesh shipments fell 13.10 per cent to. On the other hand, Vietnam’s shipment value of $148.43 million. India’s shipment to Canada valued at $48.38 million, reduced by 17.45 per cent on a yearly basis. Exports to Canada did not pick even in March as India and Bangladesh were facing industry closures to stop COVID-19 spread.

While China recovered in early March, there are no buyers from any part of the world coming forward to place orders for now.

Bestseller, the Denmark-based clothing company with over 20 brands, and French multinational corporation LVMH are in communication with suppliers, working in close cooperation with them and even supporting them during the Covid-19 crisis.

During this period, Bestseller reached out to suppliers to spark a dialogue on current and future orders. LVMH is also committed to maintaining responsible and fair relationships with its partners. The brand has given special instructions to accelerate payments to suppliers. Furthermore, several of its Maisons have provided guidance and concrete support for the sanitary crisis by giving gels, masks, etc. to our suppliers.

Assuring suppliers of support, Bestseller will do its utmost to live up to its commitments and take delivery of garments already made and those in production. The brand emphasizes on collaborating with its suppliers and placing orders for the coming seasons.

Apparel retail sales in the US by dropped 4.4 per cent in March compared to last year, after a 7.8 percent increase in February. Department stores were hit hard with a drop of 25.3 per cent and apparel/accessories stores dropped 52.0 per cent year-over-year. A large portion of department store sales come from fashion businesses like clothing, shoes and accessories.

Revenue loss comes at the most pivotal time in the spring season, precisely when regular price selling takes place across most categories. The missed Easter sales and warmer weather selling will significantly impact the margins, especially in fashion apparel goods. As former Macy’s senior executive stated, basic commodities will likely be taken in since they have little to no margin risk. However, it is most likely that buyers and wholesalers have been in negotiation as the pandemic has escalated to reduce or cancel orders where possible.

The impact of digital disruption can be seen everywhere in the fashion industry, right from production and supply chain to marketing and sales. Digital devices, platforms, and technologies such as smart phones, social media, advanced data analytics, artificial intelligence, and e-commerce are re-shuffling the dynamics of the fashion market.

A platform for retailers to enhance shopping experience

The rise of online-only retailers provides a platform for selling fashion products, besides enhancing customer experience. Retailers use different means, such as social media, advanced data analytics tools, and artificial intelligence. These digital tools enable customers to react quickly to consumer insights and incorporate them into their decision-making process.

The trend of using digital tools and platforms to buy fashion products will continue to increase rapidly over coming years. To survive, traditional fashionplayers will have to integrate new technologies, invest in adopting innovative business models, and engage consumers through different digital channels to provide an excellent shopping experience online.

Artificial Intelligence to be more common

Many fashion retailers and brands are already using AI in their operations. This trend will increase in functions ranging from production to supply chain management to customer service. Fashion retailers can personalize their offerings using digital data and trend analysis tools. Since consumers interact with digital tools and platforms more, they also give away a lot more data about themselves. A clever use of this data can be made through advanced data and analytic tools.

Rise of smart fashion

Established brands are moving away from the traditional fashion calendar and imitating the “drop” approach commonly used by street wear labels to release smaller and more frequent collections that create rarity value and elevate anticipation. This has given rise to a broader range of holiday offerings as well as the introduction of micro-seasons.

From connected jackets to smart sports apparel, clothing is quickly becoming connected to the Internet of Things (IoT). Soon, clothing will incorporate devices like heart rate monitors.

Fashion companies are embracing wearable technology as a component of their products. One example is the “data dress,” which is a dress that is customized based on personal information gathered about the customer.

Challenges faced by retailers

As consumer demands keep changing retailers face several challenges such as:

Faltering brand loyalty: Consumers have numerous options to choose from, it is difficult for them to be loyal to a particular brand. In addition, consumers today can avail of a variety of brands easily.

Rise of multi-channel shopping: Most consumers still prefer to try their clothes before buying them. Hence, finding a garment that not only looks good but also fits well can be a time-consuming chore. When consumers know they can quickly jump online and order it right while they are standing in the store, however, they are more likely to frequent stores that offer this option.

Lack of Data Analyses: Online data gives retailers a competitive advantage over brick and mortar stores just don’t have. Smart tech is certainly moving the fashion world forward, but this may also cause some retailers to get left behind.

In future, technology will continue to blur the line between digital experiences and reality. 5G will finally be rolled out commercially, enabling technological advancements across the board. On-demand product customisation and 3D printing will lead a boom in personalised offers.