Italy's nationwide coronavirus lockdown is set to rock the luxury retail industry, with brands bracing for what could be a billion-dollar setback
- Luxury fashion is bracing for impact as Italy has been put into complete lockdown amid the coronavirus outbreak.
- Italy has a fashion-and-textile industry worth $107.9 billion, The Wall Street Journal's Eric Sylvers reports.
- The headquarters of Prada, Versace, and Armani are all in the Italian city of Milan, while international brands, such as Louis Vuitton and Stella McCartney rely on Italy for the manufacture of various goods.
- Though many Italian manufacturers are unsure of what happens next, the main concern is not necessarily being able to produce the products - it's being able to sell them.
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The luxury fashion industry is still seeing the impact of COVID-19.Although Vogue Business reports that more than 80% of shopping malls and supermarkets have reopened in major Chinese cities including Beijing, Shanghai, and Guangzhou, Italy is now bracing for the impact the coronavirus will have on its economy and 60 million inhabitants.
As previously reported by Business Insider, luxury stocks were hit hard by the initial outbreak. Over about two weeks, from January 17 to January 31, the MSCI Europe Textiles, Apparel & Luxury Goods Index saw nearly $54 billion in market value erased. On Monday, Tamison O'Connor for Business of Fashion reported that multiple consulting firms, including Boston Consulting Group and Bernstein, had previously predicted in February the luxury sector could lose €30 to €40 billion (up to $45 billion) in sales this year.But this was before Italy's fashion-and-textile industry - alone worth $107.9 billion, per Eric Sylvers of The Wall Street Journal - was put on lockdown.
Italy's northern region is home to 60% of the country's textile and clothing manufacturers, according to O'Connor
The northern region of Italy has been on lockdown since Sunday, Business Insider previously reported, and that move has impacted the luxury sector already. The headquarters of Prada, Armani, and Versace are located in the northern city of Milan. Similarly, many international brands, such as Louis Vuitton and Stella McCartney, depend on factories located in the northern region of the country to manufacture their clothing, O'Connor writes.But with the rest of the country now on lockdown, brands will have to deal with not just a blow in the northern region's production, but in the southern as well. The southern region contains even more leather goods and jewelry manufacturers. As Business Insider previously reported, leather goods is often one of the top performing sectors for a luxury brand, and one popular handbag has the ability to financially stabilize a company.
Now under a full lockdown, Italian factories are not only worried about whether they can produce products but if they can sell them too.
The Wall Street Journal's Sylvers reported that foreign buyers around the world are cancelling orders of Italian textiles and products, impacting the entire clothing supply chain - from companies who produce the fabrics, to those who create the clothes and accessories.This couldn't have come at a worse time for an industry that just finished up a month of showing spring/summer collections, as brands must now worry about being able to ship and sell the inventory they spent thousands to produce - not accounting for the often six figure cost of putting on a show.
Though spring/summer collections showed during fashion month with hesitation, before the scale of the coronavirus outbreak was better known, WSJ reports that thousands of buyers, influencers, and journalists have now decided to avoid the Milan runways; consequently, many Italian luxury brands have decided to cancel upcoming cruise collections, per Business of Fashion.Giorgio Armani's cruise show, which was scheduled for April 19 to April 20 in Dubai, has already been moved to October and will no longer include its initial cruise collection. Versace and Gucci have similarly canceled US shows planned for May, while Prada canceled its May resort show in Tokyo, Business of Fashion reports.
Fashion month ends - and a two-week self-quarantine period beginsMany US-based editors, influencers, models, and buyers who did travel to Milan for fashion events returned home to find a memo from their employers requesting that they self-quarantine due to their travels in Italy.
On February 27, Women's Wear Daily's Kathryn Hopkins reported that Hearst Magazines, which publishes Harper's Bazaar, Marie Claire, and Elle, sent out a memo to staffers saying that anyone who had been to Iran, China, Japan, South Korea, or Italy in the past 30 days must work for home for at least two weeks. Milan Fashion Week took place from February 18 to February 24.Meanwhile, Dow Jones, which publishes The Wall Street Journal, issued a similar memo, asking anyone who had been to Italy since February 6 - or who lives with a person who had been to Italy in that timeframe - to self-quarantine.
Penske Media, which owns WWD, Variety, and Rolling Stone, advised staffers to work from home for at least 14 days following their return if they've traveled to a coronavirus-impacted area, while Meredith Corp, which owns InStyle and People, recommended voluntary two-week quarantines for those coming back from Milan. Condé Nast, however, which owns Vogue, Glamour, and GQ, did not issue a remote work mandate for its jet-set staffers.And these measures already seem to be necessary: The South China Morning Post reported on Sunday that Nga Nguyen, a 27-year-old steel magnate heiress and prominent Vietnamese socialite who, in February, attended Gucci's fashion show in Milan and Saint Laurent's in Paris, has been diagnosed with coronavirus.
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