Though COVID-19 has led to a surge in fashion ecommerce activities, few segments continue to rely on physical shopping experiences, luxury fashion being one of them. As Euromonitor International notes, global luxury fashion sales are set to decline 22 per cent by 2020-end as stores remain closed and consumers are devoid of personalized shopping experiences. The pandemic has also hit consumer confidence badly. Though high net worth individuals may not be feeling as squeezed as those in the lower-income categories, they too have curtailed spending on discretionary items. This has caused a massive shock to the luxury fashion industry across the globe.

Luxury fashion sales to decline

Since long, the personal luxury goods industry has heavily dependent on physical store experiences for consumers. However, the pandemic has accelerated the industry’s digital transformation and forced brands to shift their marketing budgets to digital platforms and social media. Closure of physical stores is expected to hit designer fashion sales harder than sales of lower-priced fashion items. As the Euromonitor report states, sales of designer clothing and footwear are predicted to decline 22 per cent in 2020, compared to 16 per cent for non-designer fashion and 20 per cent for personal accessories.

However, designer fashion category is also expected rebound faster than other categories. As more consumers return to stores, sales in this category may surge across all major FMCG markets.

Omnichannel retail to boost consumer connect

E-commerce sales of apparel, footwear and personal accessories across both designer and affordable categories are expected to surge to 28 per cent, 20 per cent and 16 per cent respectively in 2020. The most rapid increase will be witnessed in South Korea, where e-sales will surge to 36 per cent of total sales by 2020-end. This will be followed by China, which too will witness a rapid surge in both physical and online sales.

COVID-19 has encouraged brands to explore the complete potential of omnichannel retail. Though it has spurred online sales from 12 per cent in 2019 to 20 per cent in 2020, there has been a reinforcement of the importance of physical stores, especially for personal luxury goods sale. Hence, it has become important for luxury brands and retailers to establish a connection with customers and build brand loyalty amongst them.