From luxury stores in Italy to the stock performances of luxury brands and groups in Europe, and even the supplies of made in China goods: the red alert continues to grow, the Coronavirus disease concerns and infects the fashion industry as well.
The first to react to the Chinese virus were the financial markets. During a phase in which it’s still unsure what the entity and risks of the epidemic are, investors appear gravely concerned and focus their efforts in safer options, such as bonds and metals. After all, we shouldn’t forget that Chinese buyers account for 35% of global luxury items’ sales, according to Bain & Co. The brands with the highest exposure to China’s market were the ones most hit during the last few days, sums up Reuters. Specifically, the problems were more severe for those that counted on the Chinese market to make up the losses recorded in Hong Kong.
Coronavirus infects the luxury industry as well
Equita points out that Chinese nationals could reduce their travel due to concerns over contagion, with a consequent reduction in consumption. Credit Suisse, on the other hand, highlights the fact that the combination of the Coronavirus and the Hong Kong protests have further aggravated the area’s situation. The possibility that the market is to grow as forecasted is at grave risk. The only stronghold is e-commerce, which should somewhat mitigate the foreseen decrease of physical in-store purchases. “We think the shocks on retail sales – comment Barclay’s analysts to IlSole24Ore -, could be less than that of Sars’s outbreak, considering that online sales today make up a large amount of total sales, and most importantly won’t encounter issues, comparing to physical stores”.
What about travel?
Concerns over the decrease number of trips from Chinese nationals is already spreading in Italy. According to Global Blue, the citizens of the People’s Republic accounted for 28% of total tax-free purchases in 2019. “In truth we have already perceived a slight decrease in visits”, stated Maria Letizia Rapetti, president of Nuova Associazione Babuino in Rome, to IlSole24Ore.
Debate over supplies
The situation is also causing concern to companies buying materials and products from China. Footwear importers are expecting longer delivery times in comparison to the usual. Karen Giberson, president and CEO of Accessories Council highlighted via a statement made to Footwear News, the importance of a diversified supply chain model: “a supply chain with only one country of origin for its goods is very vulnerable to a number of risks. Working with new plants can be very time consuming and require great effort. We recommend companies explore alternative options before a crisis hits the market”.