Luxury: Managing Newness Amidst the COVID-19 Crisis

The retail downturn caused by the Covid-19 pandemic has left major impacts on product demand and newness, especially within the luxury sector. In this report, we analyse luxury category demand shifts, promotion cycles, retail channels, pricing and more.

Written by Atiqah KamarudinMay 8, 2020

Introduction

Key Insights

  • New Demand: Non-apparel categories saw huge growth in sell-outs, especially on summer products despite most countries still on lockdown restrictions.
  • Curated Promotions: Luxury retailers don’t have to resort to deep discounting to entice consumers – discounts of up to 25% off on new arrivals managed to drive the highest sell-out.
  • The Right Channel: While discounts do not have to be drastic, items in the lower priced bands remained the biggest growth drivers. Therefore, increasing a significant amount of items in the higher price range will not work for all.

 

The coronavirus pandemic has shaken the luxury industry. The entire clothing supply chain is now disrupted, impacting everyone, from manufacturers through to consumers. With Italian factories and many countries still on lockdown, the luxury sector is predicted to lose up to USD45 billion in 2020. The pandemic has also affected consumer confidence with the luxury market being the most discretionary business in nature. Luxury e-tailer The Modist has closed its virtual doors amidst the outbreak, while luxury department store Neiman Marcus has just became another COVID-19 retail casualty.

With continued retail store closures and travel restrictions, this creates as an opportunity for online retailers to flourish in spite of the outbreak. However, as production and deliveries are halted, how are these retailers managing their newness, or the lack thereof?

In this report, we will uncover the strategies adopted by 5 luxury multilabel retailers in the UK – Net-a-Porter, Farfetch, Selfridges, MatchesFashion and Moda Operandi. Analysis was also drawn from Shopbop (China) and Lane Crawford (Hong Kong) to better understand the current state in the Eastern market.

More than 600,000 data points were screened from January to April 2020 against the same period in 2019 across womenswear categories.

 

All data used in this report comes from products retailing online as tracked by Omnilytics, unless otherwise mentioned.

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Disruption in Seasonality

The luxury fashion industry continues to suffer amidst the coronavirus outbreak. The virus, which overshadowed the Fall/Winter 2020 shows back in February, has also caused the upcoming fashion shows to either be cancelled or postponed.

Fashion houses including Gucci, Burberry and Prada have also cancelled their cruise shows. These shows, although less directional than on-season collections, are still a major resource for brands to revive their stock in-between seasons. With brands skipping the cruise season, some tried to push their pre-fall deliveries to October and November. Kering will also delay its fall deliveries so the current Spring/Summer 2020 collections will have more time to sell.

Furthermore, Saint Laurent’s recent announcement on skipping Paris Fashion Week and not adhering to any fashion calendar for the rest of 2020 has left many questioning on the status of fashion seasonality.

To uncover how this pandemic has impacted newness, we have looked at the new-in movement across luxury multilabel retailers and how they are managed in the current climate.

 

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A Slump in Newness

Overall, new product arrivals saw a downward trend in 2020. In the UK, newness looked set to outpace 2019. However, arrivals started to slow down in March as the government imposed a nationwide lockdown at the end of the month. The total new styles in March was down by 20% YoY before plunging further in April, by 60% YoY.

Farfetch experienced the biggest decline in total new-in with nearly 30% fewer new arrivals compared to the same period last year. The retailer’s new arrivals in April was at its lowest, accounting for a mere 6% of the total assortment. Net-a-Porter, which has resumed taking orders after temporarily suspending its services due to the COVID-19 outbreak, also experienced a dip in its total new-in – down 20% YoY.

Meanwhile, new arrivals in the Eastern market were on a much lower base from the start of the year compared to 2019. Total new-in were down by 40% YoY, with the lowest number also recorded in April.

New-in, which would have peaked in March to welcome the summer assortments did not happen in 2020 across all markets. This signifies the severity of the supply chain disruptions faced by brands. Among brands which saw reduction in new arrivals included Chloé and Balenciaga. Bottega Veneta, Jil Sander, Joseph and Jacquemus however still managed to drive consistent newness.

 

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New Demand: Summer Essentials

In the UK, apparel categories contributed to nearly 70% of new arrivals. However, non-apparel categories dominated newness in China & Hong Kong with 52% contribution.

Categories with the Most Sell-Outs

In terms of sell-out, non-apparel summer essentials took centre stage in both markets, recording high sell-out growth YoY.

In the UK, consumers stocked up on their summer essentials despite being confined to their homes. Eyewear saw the biggest surge for non-apparel with a 183% increase in sell-out YoY, followed by Accessories. As the weather started to heat up, Swimwear was in high demand too as it recorded a 128% jump in sell-out YoY. Moda Operandi also reported a surprising swimwear spike among its luxury shoppers amidst the outbreak.

As the lockdown restrictions continue in the UK and consumers adjust to the new normal, apparel categories such as Intimates including Sleepwear and Underwear – saw more than 200% growth YoY in the market. Scarves in Accessories also experienced high sell-out activity as consumers look for an alternative to cover their faces.

In the Eastern market, Accessories, which mostly consisted of Hats and Scarves, contributed to a notable increase in sell-outs. As pubic services have resumed and travel restrictions were easing in the region at the time of writing, summery items such as Shorts, Eyewear and Swimwear were also popular.

 

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New Demand: Opposing Styles

With many countries still on lockdown due to the pandemic, differences in tastes and trends were evident across the markets:

United Kingdom

In the UK, simplicity and comfort was key. Relaxed and simple Sleepwear that could also function as Loungewear were particularly popular. Cat-eye Sunglasses with minimal detailing were in high demand, as the style took up nearly 30% of total Eyewear sell-outs. Among notable brands included Dior, Prada and Saint Laurent. As for Swimwear, minimal and classic One-Piece Swimsuits also saw an uptick, as seen at Matteau, Onia and Hunza G.

China & Hong Kong

While sell-outs have yet to surpass the levels of 2019, the demand for progressive and trend-led pieces suggested an improvement in consumer confidence in this region.

For accessories, wide-brimmed and bucket hats were particularly popular, especially by Eugenia Kim and Maison Michel. ‘More is more’ was evident in Shorts, as products with ruffles and paperbag waist styles gained traction. Printed bike shorts also showed no signs of slowing down. In eyewear, ‘70s style gold trim sunglasses were highly demanded, as seen from Gucci, Linda Farrow and Bottega Veneta.

 

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Meet the Author

Atiqah Kamarudin

Nur Atiqah Kamarudin is a Senior Business Intelligence Analyst at Omnilytics. With past experience at Nielsen and Euromonitor, she has spent years analysing data and unearthing insights to help brands and retailers make informed decisions. She currently produces reports on the fashion industry and its changing retail scene across the United States, United Kingdom, Australia and Southeast Asia.

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