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Why Covid 19 is an opportunity to bring positive change in fashion and luxury

Luxury sector has been one of the most hit by the Covid-19 outbreak with a projection from Bain of a consumption’s decrease up to -35%.

It is with no surprise that luxury and aspirational luxury consumers have reduced their consumption, for both a practical reason, related to Retail physical shops closed, and a high level of pessimism across the countries, accompanied by a radical change on the customers’ needs.

I decided to talk with an insider, Oriana Cirocco, a professional with more than 20 years of collaboration with the most outstanding luxury brands, like Lanvin, Givenchy and Burberry. Oriana built her own consulting in the field of Product Strategy, Collection Development and Supply Chain.

Eva: Hi Oriana, thank you so much for your time! I really appreciate you sharing your wealth of wisdom with me and my followers! Today you are consultant for luxury brand. Can you give me your vision of the transition we are living?

Oriana: Across my assignments I strongly noticed the impact Covid19 on the operations: for example remote working in product operations, is not obvious and implies a drastic shift of mentality and ways of working. The fact that the fashion industry is not very digitally organised has caused a lot of disruption, especially on how to manage the design process, product development and further steps along the supply chain. We had to find new ways to organise prototyping, product approvals. It has been a real challenge.

Many other aspects of the way fashion works are still up for discussion, for example seasonality of collections, fashion calendars, etc. I think the industry, is still in the process of figuring out a new paradigm and this soul searching will

last for a while.

Eva: What did change in the Brand’s organisation and what changed in the luxury customer’s purchasing intention?

Oriana: In terms of consumer trends, we all know about huge shift to online channels. Some brands, which had shifted to digital D2C even before the pandemic, had the opportunity to pursue this strategy with good, sometimes great results. The brands that were not prepared did suffer the most. We also assisted to shift of sales towards categories such as lifestyle, home and casualwear, which are the real winners of 2020.

Eva: Many Brands with less focus in this area decided to put these collections in forefront. The fact that casualwear was already a big trend before the pandemic did help, I guess. What about the average bucket?

Oriana: price sensitivity, in a stressful macro-scenario, did obviously grew. The most touched by the crisis is certainly the luxury “aspirational” client in western countries and the US. Some super-luxury Brands decided to increase prices in order to protect margins, considering the ultra HNWI steady consumption as an opportunity. Let’s not also forget that for Luxury Brands the key markets are in Asia and those have recovered quickly. Chinese consumers are back to shopping conspicuously, while Europe and the US have been battling wave after wave of Covid. And I believe this trend will continue in 2021.

Eva: Sustainability was already a key topic before the pandemic, how this awareness was transformed in action and how much will it be in the future in your view?

Oriana: Certainly, the topic of Sustainability, particularly carbon emissions, overproduction, waste management, recycling, use of recycled fabrics, etc., are top of the mind for many consumers. And therefore, for most brands. And we have seen many players, not only in the Luxury sector, make interesting steps and pledges in various relevant areas related to production processes and waste, pledges about emissions reduction, management of the end of life of the product, circular economy, raw materials R&D and Innovation. Some companies like Patagonia and a few others, are going further and have sustainability enshrined in governance and operating model. However, I don’t think as of today anybody has yet in hands a decisive the final solution that truly moves the needle.

Eva: is there any desire from the fashion system to integrate the professional know-how on demand planning that is so typical from FMCG companies, for example?

Oriana: The Luxury and Fashion companies are becoming much more sensitive to the topic of analysing data and optimising forecasting, in order to better manage inventory and at the same protect the environment by curbing overproduction and waste.

The biggest challenge for the fashion system is demand planning, that I believe, especially in small fashion led businesses, is more complex than it is in FMCGs, due to the particular emotional nature of the product, seasonal changes of the collections, and impact of communication and endorsements.

Eva: Would be the “bespoke” or “made to order” an option to reduce waste?

Oriana: Bespoke is an opportunity, but there is also something to be said about a Limited-Edition approach, because creating scarcity heightens interest.

Eva: What do you think will be the future for fashion luxury? Will luxury brands winning, or do you see some risks around the corner?

Oriana: I definitely see many challenges on the horizon and I think Luxury Fashion will be successful in the measure that it reviews its ways of working, embraces innovation and rethinks its values. Customers are demanding this, especially in the West, and leaders have woken up to the necessity to change, while preserving the undeniably valuable craftmanship and product expertise the industry is based on.

The work of each of us in this process matters.

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