What The Fashion Industry Can Learn From The COVID-19 Crisis

BY Khemena Ahmad / Apr 22 2020 / 09:00 AM

From investing in marketing to building a community with consumers Abdullah Abo Milhim shares his thoughts on what the industry needs to do, in order to ‘weather’ the coronavirus storm

What The Fashion Industry Can Learn From The COVID-19 Crisis

Bazaar spoke to Abdullah Abo Milhim, programme leader of the postgraduate fashion business course at Istituto Marangoni in London and former lecturer at the Fashion Business School at the University of the Arts, London) about the future of the fashion industry in the wake of COVID-19, along with the effects the pandemic is currently having on both the luxury retail industry and how it is changing consumers' shopping behaviors.

What are some of the biggest challenges the fashion industry is currently facing with the current global climate?

Obviously it is a very challenging time for the fashion industry. We are adjusting to a new reality and just like other industries, fashion brands have been trying to understand how long this is going to continue on for.

One of the biggest challenges for the industry is that the national supply chains have been disrupted. This affects the relationship with both suppliers and consumers. On one side there is the supply chains factor and, on the other side, there is the consumer confidence factor – and, obviously, the closures of stores in different countries will affect the growth and revenue of brands.

At the moment most companies are still trying to estimate the damage they will encounter financially.

In the UK, we have already started to see store closures. At the beginning of the COVID-19 pandemic it was particularly challenging for some brands – such as Burberry – that do a lot of business in China. Now, the damage has been done across various markets around the world.

Burberry A/W2020

Are there any fashion brands that are more likely to be affected than others? How do you recommend they manage this situation?

Every brand will face some kind of repercussion. The question is how to manage the situation regardless of whether they are a high street brand or luxury label. Companies will need to go back and adjust their business models and strategies, and then they’ll need to focus on how to weather the crisis.  

One thing every company needs to do is start looking at how to reconnect and engage with their consumers. This will serve them now until the pandemic is over. Keep in mind it’s not just about being financially affected; consumers have also been psychologically affected, in terms of their relationships and the way they connect with one another.

The fashion industry will not be the same after COVID-19. While companies are under different types of pressure consumers will likely change their shopping behaviors, especially after being at home for long periods of time and shopping online. They might even cut back on non-essential purchases all together for a period of time after the pandemic is over.

What are the mistakes fashion brands are currently making?

Companies shouldn’t be cutting marketing budgets, because marketing is very important during situations like this pandemic. When it is over, brands will need to reconnect with their consumers.

When we look back at the crisis in 2008, we saw that many luxury brands grew afterwards. This was the result of taking advantages of opportunities for growth during a crisis. Now is the time to closely monitor consumer’s behavior.

For example in Hong Kong right now consumers have started to sell their used luxury items. This in turn creates a new market for re-sale and now the second-hand market is booming within the city.

Chanel A/W 2020

What lessons can we learn from the coronavirus pandemic?

Whenever there’s a crisis, fashion industries around the world are always affected in some manner. The good news is new opportunities will arise, both during a crisis and once it's over.

In 2008 we saw the recession hit the UK, Europe, and US especially hard, but the Asian market was still thrived. There was a lot of liquidity and a shift from the affected regions to Asia and other emerging markets. We started seeing a new group of luxury fashion consumers, growing in new locations across the globe.

The question, in regards to the COVID-19 crisis, is how do we look for new opportunities within the market. I believe all fashion brands, regardless of the regions where they’re based, need to think of their consumers first.

How do you think the fashion and luxury brand industry will be affected in the Middle East?

Every region in the world is different. In the Middle East we started seeing that the power of influencers is quite strong, while the power of logo is fading away in other countries, but we still have conspicuous consumption where people like to pay more for expensive items.

In terms of the current situation, the Middle East has already started feeling the pain of the current situation via the downturn in oil prices, the slashing of government budgets and the effects of COVID-19, which has caused the furlough and redundancies of hundreds of workers.

Many of the fashion brands have entered the UAE through franchise. They don’t directly operate on their own, so their international supply chains are becoming disrupted. This means that these brands will need to put more pressure on their cost structure; they might have to review their pricing strategy by using certain tactics; however, at the present moment, many brands don’t yet know where they stand.

In general, the price oil will be a determining factor and the financial situation of these brands operating in the Middle East will determine the next stage of fashion for the region.

Dolce & Gabbana, A/W2020

Will this empower the e-commerce and online shopping?

Now people have no option but to buy online. Psychology and consumer mentality will play a big part in shaping the fashion industry in the future.

We saw in the financial crisis of 2008 some luxury brands did very well, capitalizing on those consumers who could afford to spend during the crisis. This recession will be different and it is too early to predict the direction of consumer shifts. It’s too early to determine whether some consumers (driven by specific cultural and social factors) will engage in 'revenge buying', something we're already starting to see in China.

Sustainability will be a big factor, especially as consumers have seen the news about the lowered pollution level during the lockdown, and this will increasely pressure on the fashion industry to be social responsible and sustainable going forward.

This interview has been edited for clarity.

Lead image courtesy of Jason Lloyd-Evans (Chanel SS20)

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