Fashion stores closed until May? Rebound in consumption in June and with summer everything will go back to normal. According to Deloitte, fashion retail has 3 perspectives. The most catastrophic involves stores closed for 6 months (or more). But it is not said it has to be so bad.
According to Deloitte, fashion retail has 3 perspectives
According to Deloitte, fashion is the third sector most affected by the Covid-19 pandemic, after tourism and catering. If before the virus the average spending for fashion was 12% of per capita income, in recent weeks it has fallen to 2%, with 84% drop in fashion sales. If fashion stores are closed from 8 to 10 weeks (which for Italy means to reopen in the second half of May), Modaes reports, Deloitte predicts that consumption will rebound in June. Stabilisation would come during the summer. Brands will be forced to make promotions and discounts to get rid of the unsold, while the online channel would be strengthened. Ultimately, most companies, thanks to the precautions already taken, would be able to absorb losses.
If lockdown goes on till July
If the closure continues until July, 2020 will be a lost year. The rebound and the subsequent recovery, then, will be slower. Demand would remain influenced until 2021, says Deloitte, because discounts would not be enough to eliminate the unsold. Small shops will close and investments will be frozen until the second half of 2021, with the exception of the online channel.
Worst case scenario
In the worst case scenario, that is, with the closure of the stores lasting 6 months or more, the country would enter a war economy. The only fashion acquisitions made during the year would be clothes for staying home. The recession will last until 2021, concludes Deloitte, with structural changes in demand. Losses would cause most small and medium-sized businesses to fail.