How COVID-19 is Changing the Business of Luxury and Fashion
While what we see on the surface of the fashion and luxury industry may be all glitz and glam, behind the scenes it is anything but that, especially in the wake of the COVID-19 pandemic.
27 Apr 2021
5 mins read
If you're equally astonished that manufacturing a face mask costing upwards of US$100 has actually become a regular occurrence, imagine the surprise fashion and luxury businesses face as they have been forced to change their way of operations overnight, in line with the shifting economic climate. For a better understanding, let's explore the latest trends in the luxury and fashion sectors from a business management perspective.
Digital is in Fashion
With travel restrictions and social distancing measures in place, digital engagement has become more important than ever in drawing potential customers. Case in point: Dior's virtual recreation of its Champs-Élysées store in Paris, launched in early 2020 to allow users around the world to explore the company's signature boutique and place direct orders for the products on display.3 The virtual store's decor even alternates according to the seasons, giving its online audience a feel of Paris without actually being there.
The trend of digitalisation even extends to the use of analytics and big data. German high-end label Montblanc, for one, had previously collaborated with RetailNext to make use of data-driven personalisation and improve customer experience. This was achieved by deploying video analytics in their offline retail spaces to generate maps that show where customers spent most of their time in store, enabling more optimal placement of product lines and sales staff. As a result, sales soared by 20%.4
Reuse, Reduce, Recycle
Digital technology is also being used in a big way, especially when it comes to pre-owned clothing. Tech-focused fashion retailer ThredUp has recirculated over 100 million items, and can process more than one item per second through the use of pricing algorithms, as claimed by president Anthony Marino.5
Also, as brick-and-mortar came to a standstill, secondhand retail sites such as The RealReal gave consumers easy access to virtual appointments, connecting with them and breathing new life into both, in-season and out-of-season pieces. Interest in resale fashion items increased 22x during COVID-196, highlighting the rise of accessible luxury, which can be attributed to reduced purchasing power, as well as heightened environmental consciousness.
In fact, younger people are more aware of environmental and social issues, and are becoming increasingly important global consumers with the willingness to spend on sustainably sourced and produced fashion. It's no wonder then that substitute materials such as fake fur and laboratory-grown diamonds have seen a boost in demand, along with some consumers expecting lower premiums due to the usage of synthetic materials.7
Making a Living Out of Luxury
Clearly, the luxury and fashion sectors have been transformed in ways we might never have expected. What we can expect, however, is that more suitably trained professionals will be required in the industry's long-term reboot. Public relations specialists will need to field questions about their brand's sustainability policies, while product development and management experts must work within tighter cost controls, alongside store retail managers and purchasers.
To that end, SIM GE, in collaboration with Triple Crown-accredited Grenoble Ecole de Management (GEM), offers a full-time masters degree in Singapore that can provide the requisite business and managerial skills, industry exposure and employability profile for a career within the fashion and luxury sector. Being of the same standing as the one awarded in France, the course also features a specialised study trip to a European fashion capital for firsthand insights, while the inclusion of Professional Development workshops complements the core curriculum to enhance your chances of being hired by reputed recruiters like Gucci, Hugo Boss and many others. Visit our website to understand how our MSc in fashion design and luxury management programme can help you choose a career in purchasing, product development, store retail management and more!
1 Boston Consulting Group, 4 Sep 2020: A Three-Season Strategy for Fashion and Luxury Retailers (https://www.bcg.com/publications/2020/three-season-management-strategy-for-fashion-and-luxury-retailers)
2 The Conversation, 14 May 2020: How the Covid-19 crisis could remodel the luxury industry (https://theconversation.com/how-the-covid-19-crisis-could-remodel-the-luxury-industry-138137)
3 CNA, 18 Jun 2020: Commentary: The COVID-19 crisis has put luxury brands in a fix (https://www.channelnewsasia.com/news/commentary/commentary-the-covid-19-crisis-has-put-luxury-brands-in-a-fix-12844422)
4 Luxe Digital: Big Data Drives Luxury Brands Growth Beyond Digital (https://luxe.digital/business/digital-luxury-reports/big-data-drives-luxury-brands-growth-beyond-digital/)
5 CNBC, 19 Sep 2020: Coronavirus and luxury retail: Shopping for used Hermes, Cartier in Covid era (https://www.cnbc.com/2020/09/19/coronavirus-how-the-pandemic-has-impacted-luxury-retail.html)
6 The RealReal, 25 Aug 2020: The RealReal's Annual Resale Report Reveals Top Trends in Luxury Resale (https://investor.therealreal.com/news-releases/news-release-details/realreals-annual-resale-report-reveals-top-trends-luxury-resale)
7 HSBC, 16 Apr 2020: Conscience key to luxury buying after COVID-19 (https://www.gbm.hsbc.com/insights/global-research/conscience-luxury-buying-covid-19)
Posted online, 27 Apr 2021