Fashion & Luxury brands face a potential $600Bn decline in sales

As China shows signs of recovery, luxury goods and fashion brands have a very large mountain to climb. 

The combination of production stoppages in China and Italy, the temporary collapse of demand, closure of travel retail and concerns about long term changes to consumer appetites mean that only the strongest brands may survive into a long term future.

Even in a ‘least bad’ scenario where consumer spending and production starts to return, there will be fierce competition as many brands trade stock for cash and fight to gain share of a likely reduced wallet.

In other scenarios there are very real fears that a global slowdown, reduction in tourism and a long term shift in consumer spending will mean a sustained decline in the luxury goods market.

To help the strongest brands survive, their leaders need to take action now not just to conserve cash and secure the supply chain but also to restructure costs and invest in long term brand and channel growth. 

However, despite the challenging outlook for retailers, it is important that businesses think long-term while addressing the immediate impact of the Covid-19 crisis