Wish: The future of fashion
Recent events have accelerated the rise of conscious consumer whose luxury fashion choices are driven by a new set of values.
It is a Thursday afternoon and you are between video calls when you buy a pair of shoes online that you’ve been eyeing for a long time. You have been chatting to the sales assistant via social media for months, and shown the shoes via a group shopping app to friends for their approval . You made the conscious decision to buy them – it’s a significant investment – because you trust the brand; you know where the leather came from, the artisans who crafted them and their entire environmental footprint. This is only one of a handful of purchases you have made in the past 12 months. You chose carefully, thoughtfully and responsibly.
This is what the consumer could look like post COVID-19. This is what retail experts believe could be the “next normal” after we get through the global pandemic that has upended life as we know it. Coronavirus has taken lives, felled economies, shut down international travel, decimated businesses and even deprived us of human touch. WISH has spoken to trend forecasters in England, Germany, China and Australia about what happens next and they believe the pandemic will transform luxury into an industry that is driven by an increasingly conscious consumer who plays in the digital world.
“I don’t think COVID-19 has changed the course of consumer behaviour, I think it has accelerated many consumers on a path on which they were already travelling,” says Chris Sanderson, founder of The Future Laboratory in London. “That is a shift towards thinking very carefully about purchasing and being more considerate in their shopping habits. There were underlying concerns around the levels of expenditure, the depth of material consumption, the environmental impact, a lack of engagement with society. So the consumer was already pushing towards a deceleration of consumption, a re-engagement of community and a rethink on personal value structures.”
Sanderson believes these concerns translate into a consumer who will be more interested in the “true cost” of something – from design to production, sales and delivery – and what impact that supply chain has on those who make the product, the communities where factories or workshops are located, and the environmental impact of the manufacturing process. “All these things were starting to have an impact on what we regarded as our right to shop without any real concern when COVID-19 hit,” he says. “Suddenly we have become aware of the fragility of global infrastructure, and maybe we have become more interested in looking at products that are locally made and not shipped halfway around the world.”
The idea of the post COVID-19 “conscious consumer” in luxury has been highlighted by a number of research reports. Global consulting firm McKinsey & Co believes people are becoming more interested in knowing exactly what they are buying. “In our recent conversations with CEOs, one trend that is likely to intensify post crisis is the trend towards sustainability and a desire for more responsible consumption,” authors Antonio Achille and Daniel Zipser wrote in their April paper. “This reinforces the need for companies to provide clear, detailed information about their processes and products.”
The analysts also think that as the social and economic fallout from the pandemic continues for the foreseeable future, consumers could move to less in-your-face-extravagant forms of luxury. “Experience also suggests that after a large-scale crisis with a heavy emotional toll, consumer preferences could shift, at least for a time, toward ‘silent luxury’ paying more attention to classic elements, such as craftsmanship and heritage, and less to conspicuousness and ‘bling’,” they write.
A paper by US-based consultants Bain & Company on the future of luxury after COVID-19 also identified a heightened “environmental and social consciousness” among consumers, and warned companies to rethink supply chains, product life cycle and what they do with any unsold stock. They believe this is part of a “post-aspirational mindset” among luxury shoppers that is on the increase. “Ethics will become as important as aesthetics as consumers prioritise purposeful brands,” they advise.
German brand strategy firm LIGA2037 released a white paper a few weeks into the pandemic that plotted out two scenarios for consumers beyond COVID-19. One was that individuals become more hedonistic as a reaction against the isolation of lockdown and seek pleasure in shopping, travelling and going out with friends – basically making up for what they missed out on plus a whole lot more. The alternative was that the consumer would become a “conscious minimalist” whose every purchase is considered and whose socialising is kept low-key and confined to a bubble of close friends and family.
“That paper was done a few months ago and things have been developing so quickly,” Mathias Ullrich, managing partner at LIGA2037, tells WISH over Zoom from Stuttgart. “But what we are discussing right now with clients – and what is probably a more realistic scenario – is looking like the conscious minimalist approach. They spend more selectively, which means for luxury, it is not the worst case, because the average order basket won’t go down too much, it will just be a little less frequent.”
This growing sentiment towards responsible purchasing is not only limited to consumers. Fashion designers have also echoed their concerns about the amount of clothing being produced for the current – and hectic – fashion calendar amounting to five collections a year. Giorgio Armani has argued for a “careful and intelligent slowdown”, and Saint Laurent and Gucci have announced they are withdrawing from the fashion schedule and will determine when they show collections (the latter deciding upon two). “Above all, we understand we went too far. Our reckless actions have burnt the house we live in,” Gucci creative director Alessandro Michele wrote in a post to Instagram in May. “We conceived ourselves as separated from nature, we felt cunning and almighty. We usurped nature, we dominated it and wounded it.”
Even the British Fashion Council and the Council of Fashion Designers of America – who determine the calendar and when seasons drop into stores – have urged brands to be more sustainable, to slow down and only produce two collections a year. “We are united in our steadfast belief that the fashion system must change and it must happen at every level,” says a BFC and CFDA joint statement. “Through the creation of less product, with higher levels of creativity and quality, products will be valued and their shelf life will increase … the focus on sustainability will increase the consumer’s respect and ultimately their greater enjoyment in the products.”
The other key element of the post COVID-19 consumer is the move online. While most of the major fashion houses, such as Dior, Gucci, Hermès and Louis Vuitton, already had a significant digital presence, they have also invested billions of dollars in flagship stores around the world to offer customers a full immersive experience. When the pandemic hit, many countries forced residents to isolate at home, shut non-essential retail and banned travel, so luxury stores closed their doors for weeks in some countries and months in others. Consumers were forced online, and this meant brands had to rethink their communication with clients and the experience they offered.
The expanded role of online shopping in luxury – with even older generations taking it up during the lockdown – is here to stay as people are still cautious about heading back out.
In China, where COVID-19 hit first, this meant sales staff reached out to customers directly via social messaging apps. Daniel Zipser, a senior partner at McKinsey & Company in China, and co-author of a paper previously mentioned, told WISH that the Chinese consumer was already highly digitally engaged in luxury and the pandemic just increased this. “Sales staff and sales managers were quite active on their social media and they were quite active on the messaging software to engage directly with the consumer,” he says from his office in Shenzhen. “This is something that is not totally new but it is one of the things that have massively accelerated. There has been a huge boost in e-commerce and a huge boost in social commerce in the past few months.”
The new expanded role of online shopping in luxury – with even older generations taking it up during the lockdown – is here to stay, experts believe, as people are still cautious about heading back out to shop in the real world. Even with restrictions eased, the bricks and mortar store of the past will not exist as we know it; social distancing and hygiene rules add up to the reality of a limited number of people in boutiques, queues to get into stores, and changes to how we touch the wares. Ullrich, from LIGA237, says this will mean that the whole luxury experience for consumers will have to be transformed, both in the digital space and instore.
“I think the whole ecommerce landscape will change, and brands will bring more elements that are more experiential and bring the product closer in a more emotional way,” he tells WISH. “You can see this already, with some bringing the social experience of shopping with friends online. There are apps out there that mimic this behaviour in the online world. Just recently, an app called Squadded Shopping Party launched that basically allows shoppers to put stuff in an ecommerce basket in real time and then get feedback from friends about whether they should purchase it or not. They are trying to mimic the experience you have in the physical world and bring it into the digital world,” says Ullrich.
He also believes that the role of the bricks and mortar outlet will change as well. “The store will transform from a point of sale to where people meet friends; there may be coffee bars, the spaces will be cleared up – it is more of a meeting point, it will become a destination,” he explains. “There will be more cultural programs around stores. On one day, there may be someone playing music, for example. The store will become more of a place to bring people to learn about the product and the purchases will shift into the ecommerce spaces.”
This move to digital is nothing new but COVID-19 has accelerated an existing trend. Jenny Child, a partner at McKinsey & Company in Sydney and head of its consumer and retail department, says her team made the prediction last year that the number of bricks and mortar stores would decrease in Australia by 10 per cent over the next five years. Then the global pandemic hit.
“The indoor shopping experience will not be what it used to be, because the things that have always shown up in research was that people liked going to stores because they get to touch and feel a product, really test it out, and that will be constricted,” she says. “Your ability to touch and feel and navigate the store and have an amazing experience is going to be limited by health protocols that are going to be put in place for a long time. The drawcard to get out of bed on a Saturday morning and walking into a store will be decreased significantly for a lot of people because of this.”
Luxury consumers also face another change when it comes to the retail experience post COVID-19, at least in the immediate aftermath, and that is being able to travel to shop. According to McKinsey & Company, 20 to 30 per cent of luxury purchases are made by consumers outside their home countries. In 2018, Chinese consumers took more than 150 million trips abroad, and as many as half of their luxury purchases were outside the mainland in cities such as Paris, Hong Kong, Milan, Sydney, New York and London. That all came to a grinding halt thanks to the travel restrictions and quarantine procedures put in place by governments when the pandemic began.
“China is roughly a third of global luxury but only a small part of that is actually purchased in China,” Zipser tells WISH. “The remaining part is purchased in Hong Kong, Milan, London, other cities. The price outside China is better so people think they can get a good deal overseas, but it is also about the experience - if you travel to Milan and make the purchases in the flagship stores of the brands’ country of origin. That poses a challenge for the luxury goods industry; they need to think how they can create that experience for customers domestically.”
Zipser, who runs McKinsey & Company’s retail and consumer goods practice in China, says consumer spending is returning gradually after the country’s strict lockdowns were eased. “Consumer confidence is high and unemployment is low, so people are actually coming back to spend,” he says. “At the beginning of May spending was back to 85 per cent – so still 15 per cent lower than pre-COVID days. But that is just offline, so if you include online we are not too far off pre-COVID levels.”
China is ahead of the rest of the world when it comes to emerging from the COVID-19 pandemic, but it is also ahead in terms of the rebound in consumer confidence.
He also believes reports of “revenge spending” in China at luxury stores (apparently $US2.7 million was spent at one Hermès boutique in one day on its reopening) is a misrepresentation of the motivation behind the shopping. “That spending was not revenge, it was a sign of confidence,” Zipser explains. “The Chinese consumer has been thinking we are through it, we are incredibly proud, because they believe as a country that they managed the virus well. Being proud translates into confidence; you get in the mood. I am not sure that is the right word, but yes I feel like I do want to go back to restaurants again, I do want to go out of the house and go shopping again.”
China is ahead of the rest of the world when it comes to emerging from the COVID-19 pandemic, but it is also ahead in terms of the rebound in consumer confidence. There is still significant economic uncertainty in Australia, Europe, the US and the UK, and all the experts say no one really knows what the fallout from the pandemic will look like or how long it will last. This also forms an integral part of the conscious consumer; people will be selective about the products they purchase because of environmental and ethical concerns, but also because it is what they can afford to do.
“I think the big one is frugality,” says Child when asked to name a trait of the consumer post COVID-19. “We will absolutely see a huge segment of consumers who simply have less money to spend.” Sanderson agrees. “The associated economic impacts [of the pandemic] will be more prolonged and will be more marked,” he says. “What we have to consider is that does create a more mindful consumer who worries about whether something else is going to come along and have an impact on their ability to pay their mortgage, their job security, the opportunities their children may have. This is the type of insecurity that affects consumer confidence when it comes to spending.”
Bain & Company believes luxury sales will drop as much as 35 per cent this year, but will recover to pre-COVID-19 levels by 2022 or 2023. It predicts sales will start increasing from 2023 and reach €320-330 billion by 2025 - as long as the changing demands and priorities of consumers are met. As lead author Claudia D’Arpizio has noted, “This crisis may be transforming the luxury industry for good but it could also be a transformation for the good.”
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