The fashion/luxury retail industry is also badly hit by the Covid-19 pandemic in the first half of 2020 but the outlook is bright especially for the Southeast Asia region.
LVMH Moët Hennessy Louis Vuitton, the world’s leading high-quality products group, recorded revenue of 18.4 billion euros in the first half of 2020, down 27%. On an organic* basis, revenue declined 28% compared to the same period in 2019. LVMH has proven its ability to be resilient in an economic environment severely disrupted by the serious health crisis that has led to the suspension of international travel and the closure of the Group’s stores and manufacturing sites in most countries over a period of several months.
In the second quarter, revenue was down 38% on an organic basis compared to the same period in 2019. Although there were encouraging signs of recovery in June across several of the Group’s activities, revenue was notably down in the United States and Europe during the quarter. Asia, however, has seen a marked improvement in trends, with a strong rebound in China in particular.
A study by iPrice Group claims that Southeast Asians are looking for luxury brands online even more so after the pandemic struck. Since consumers are restricted to visit physical stores, there is an increase in Google impressions on the top luxury and sports fashion brands in iPrice’s platform.
Comparing January and February’s impressions versus May and June’s, iPrice concludes that French luxury retail brands garnered the most interest. Louis Vuitton’s searches increased by a shocking 555%, with their clothing and bags spearheading the increase of search interests by 1,395% and 146% respectively. This is followed by another French luxury fashion house, Yves Saint Laurent, with an increase of 306%. YSL’s shoes and perfume saw an increased interest of 931% and 392% respectively. Lastly, Chanel comes in third place, as its Google search impressions increased by 274%. Interestingly enough, people were most interested in their skincare products (which increased by 1,205%) and their bags (877%).
Bernard Arnault, Chairman and CEO of LVMH, said: “Our Maisons have shown remarkable agility in implementing measures to adapt their costs and accelerate the growth of online sales. While we have observed strong signs of an upturn in activity since June, we remain very vigilant for the rest of the year. We continue to be driven by a long-term vision, a deep sense of responsibility and a strong commitment to environmental protection, inclusion and solidarity. In the current context, we remain even more firmly dedicated to showing continuous progress in these areas. Thanks to the strength of our brands and the responsiveness of our organization, we are confident that LVMH is in an excellent position to take advantage of the recovery, which we hope will be confirmed in the second half of the year, and to strengthen our lead in the global luxury market in 2020.”
Impact of Black Lives Matter Movement
All of the luxury brands iPrice Group recorded saw an increase in Google search impressions after the coronavirus spread. It is important to note, however, that even though Prada (27%) and Gucci (70%) saw a rise in search impressions, these brands recorded two of the lowest increase percentage. This could potentially be an effect of the backlashes these brands received from the recent #BlackLivesMatter movement. After all, a recent by GlobalWebIndex showed that 4 in 5 people believe that brands shout take action with regards to this movement. The survey also showed that Filipinos had a higher than average support for the brands that take action. Meanwhile, #BLM has spurred movements across Southeast Asian countries, such as Indonesia’s “Papuan’s Lives Matter” movement, Malaysia’s numerous online discussions on police violence against Indians, and local events in Vietnam that support BLM.
Southeast Asians are also still looking into investing in luxury watches. Swiss luxury watch brand, Rolex, received an increase of 160% during this period. Additionally, Tudor increased by 51%. A New York Times article mentioned that both of these Swiss brands put their product news indefinitely on hold due to the disruption caused by the pandemic. But with SEA’s increased interest, the future of these Swiss watches, albeit uncertain, might not be so bleak.
SEA consumers are still searching for luxury and fashion items despite the worldwide pandemic. It’s just a matter of where the interest is located; in this case, the interest moved from physical to online platforms. If anything, there is a bigger demand for online stores these days due to the new normal. That said, if fashion brands learn to adapt to the situation and invest in their online assets, there is great potential that they can keep up with the new normal.
