fashion weeks’ winning formula to offset $600 million in pandemic losses

The fashion industry worldwide is facing a bumpy road. Not only does it have to solve its own logistical problems, but it also has to reinvent the supply chain, reconnect with consumers and make up for double-digit sales declines.

Globally, the fashion industry saw sales fall 20 percent in 2019-20, with earnings before interest, taxes, depreciation and amortization (EBITA) margins falling nearly 4 percent to 6.8 percent, according to the latest McKinsey State of the Fashion report.

Fashion weeks around the world have transitioned from traditional catwalks to virtual runway shows, resulting in a loss of more than US$600 million in the cities hosting the “Big Four” (London, New York, Paris and Milan) of these week-long fashion shows. dollars in economic activity.

Corona caused millions in losses of the most important fashion weeks

Burberry was one of the four brands honored to showcase at London Fashion Week in September 2020. At the time, Caroline Rush, the chief executive of the British Fashion Council, said designers were using the restrictions imposed by the virus to think about alternative ways to show their work. This has resulted in hundreds of brands moving their fashion shows and catwalks online, costing local businesses in hospitality, travel, retail and related industries that would otherwise have welcomed millions of customers.

FashionUnited Business Intelligence estimates that London Fashion Week (LFW) generates over $300 million for the city. In addition, Oxford Economics calculated that more than 240,000 direct jobs were lost because fashion week took place online. That number increases to 350,000 when indirect job losses are included. Organized by the British Fashion Council, fashion week is the UK’s premier trade event. Just before the pandemic, from 2018-2019, it generated £110m in new orders, investment and trade, the London Mayor’s Office has highlighted.

New York, once dubbed the fashion capital of the world, remains busy recovering from the financial fallout from the pandemic. Eric Adams, the city’s mayor since early 2021, has called New York Fashion Week a “$600 million juggernaut” that will bring the city “double what we would earn if the Super Bowl were held here.” . Experts point out that the two biannual fashion weeks before the pandemic contributed around $900 million to the city’s economy. In fact, the annual economic contribution of New York Fashion Week to New York City was estimated by the Council of Fashion Designers of America (CFDA) in 2016 at $887 million.

Similarly, the Fédération de la Haute Couture et de la Mode (FHCM) calculates that Paris Fashion Week, another of the “Big Four” fashion shows, generates €1.2 billion in economic spin-offs annually (about €440 million for fashion shows and events together and a further 725 million euros for trade fairs and related events). However, this is not the full extent, as French fashion generated an estimated total turnover of 10.3 billion euros.

In Milan, the economy thrives in the months when the fashion shows take place, as the summer and spring fashion weeks bring in a total of 30 million euros in spending in hotels and restaurants alone, according to calculations by the Italian Chamber of Fashion. In 2021, Milan Fashion Week transitioned to a fully digital structure, with only sporadic, very limited, socially distanced runway shows for buyers and media. As a result, the city’s related revenue fell by about 80 percent, the chamber said.

The power of more democratic fashion

Before Corona, access to fashion weeks was very exclusive and certainly expensive. Access to runway shows used to be invitation-only and often reserved for wealthy consumers who could pay hundreds or even thousands of dollars for a front-row seat. But as McKinsey’s Anita Balchandani said in a podcast about the value destruction that has erupted in the fashion world since early 2020, “This pandemic has forced a rethink of demand, at least in the early stages of the crisis.” She alludes to various factors driving this necessary rethinking, highlighting that “many of the channels that a range of brands rely on – for example wholesale channels, independent retailers, etc. – have actually been at the thick end of the crisis and these felt painful.”

Open to new ways to engage with consumers, Milan Fashion Week turned to social media in February 2021 by staging its opening night as an Instagram live party with a DJ set instead of an on-site soiree hosted. The city should also be involved despite the difficult circumstances. As a “symbolic gesture”, Carlo Capasa, President and CEO of the Italian Chamber of Fashion, explained that people in the streets could see the live shows of iconic brands such as Armani, Prada, Fendi and Dolce & Gabbana on large screens in strategic locations in central Milan. The initiative was intended to “remind Milanese that fashion is still part of everyone’s life, resilient despite the Corona crisis and still able to embody the city’s values: creativity and efficiency”. The reception has been so positive that subsequent post-pandemic fashion weeks have retained this element.

Similarly, last year Shanghai Fashion Week increased its social media presence by partnering with Tiktok to launch a support program for independent Chinese designers, leading to a new event called the “Shanghai Fashion & Lifestyle Carnival.” led. The Chinese fashion fair also increased the number of participating brands (an increase of 2.3 percent compared to 2020). It was the only major fashion week to increase the number of participating brands, surpassing pre-pandemic 2019 levels (according to data from China Economic Information Service (CEIS)).

For Balchandani, the move to digital was significant: “When a company hasn’t been able to capitalize on it, we’ve typically seen a red herring; Brands and consumers have clearly shown us during the crisis that they are open to change. They are open to trying new brands.”

This democratization of fashion also opens doors for smaller companies and new designers who traditionally cannot afford to attend the big fashion weeks. A good example of this approach is the multi-year partnership between Afterpay and fashion weeks in London and New York. The “buy-now-pay-later” company wants to break up the traditional top-down approach of these shows and shift the focus from fashion editors and buyers to consumers.

In New York, this agreement has resulted in fashion brands like Altuzarra digitally streaming their US catwalks via the Afterpay hub, and allowing consumers to purchase select looks from the runway. Thrilling pop-up stores, digital promotions in Times Square and the first Metaverse collections were organized to bring consumers and brands together.

“We’re giving small businesses the opportunity to showcase themselves in a type of block shopping activation that they couldn’t have had in a traditional NYFW program. We’re really thinking across the board and all ends of the retail spectrum… it gives me chills just thinking about it,” Afterpay co-founder Nick Molnar explained in a recent interview with Grazia US. The goal? NYFW aims to reclaim its place at the forefront of the international fashion world while supporting the city’s economy.

This renewed interest in alternative channels, formats and most importantly brands became even more evident in the Global Fashion Industry Index – Fashion Week Vitality Index Report 2021 published by CEIS. This report notes that the global fashion industry is gradually recovering from the pandemic and that its digitization has accelerated in recent years, creating omni-channel fashion weeks that combine online and offline shows to address new consumer needs and -to address desires, to be encouraged. The latest edition of this report, released in September 2021, shows that Paris Fashion Week, Milan Fashion Week, London Fashion Week and Shanghai Fashion Week each occupy the top four spots, while New York Fashion Week compares to its ranking in the year 2020 has dropped to fifth place, with China Fashion Week, Tokyo Fashion Week and Seoul Fashion Week ranking sixth through eighth.

This article originally appeared on FashionUnited.uk. Translated and edited by Simone Preuss.

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