However, with many stores closed for at least a few weeks, the inventory is not selling at the same pace and it is unlikely that e-commerce sales can make up the loss in revenue. Once the inventory has passed the prime time to sell, the goods are typically marked down. Two of the largest retailers in fast fashion, H&M and Inditex (Zara parent company), both have a majority of their stores closed due to the coronavirus pandemic. H&M, serving 74 global markets, has closed 3,441 stores out of 5,062 while keeping about 50 online digital markets open according to the latest press release. Zara reported 51percent of its 7489 stores temporarily closed and 156 online markets which continue to operate. Although online sales for Inditex grew 23 percent in 2019, the total online sales represent only 14 percent of total sales. H&M’s online sales increased by 24 percent for 2019 but represent a small portion of the total revenue.
Wednesday, April 22, 2020
Fast Fashion Leaders H&M And Zara; Weathering The Pandemic
Fast fashion, which is the mass production of fashion trend-right products at inexpensive prices, may have to deal with something it is not used to; excess inventory. Typically, the business model calls for many styles shipped frequently to stores, allowing for the trend-right merchandise to have a high sell-through, minimizing markdowns and improving profit margins. The industry inventory turnover for fast fashion is over 4.0 which is considered healthy for apparel stores.
However, with many stores closed for at least a few weeks, the inventory is not selling at the same pace and it is unlikely that e-commerce sales can make up the loss in revenue. Once the inventory has passed the prime time to sell, the goods are typically marked down. Two of the largest retailers in fast fashion, H&M and Inditex (Zara parent company), both have a majority of their stores closed due to the coronavirus pandemic. H&M, serving 74 global markets, has closed 3,441 stores out of 5,062 while keeping about 50 online digital markets open according to the latest press release. Zara reported 51percent of its 7489 stores temporarily closed and 156 online markets which continue to operate. Although online sales for Inditex grew 23 percent in 2019, the total online sales represent only 14 percent of total sales. H&M’s online sales increased by 24 percent for 2019 but represent a small portion of the total revenue.
However, with many stores closed for at least a few weeks, the inventory is not selling at the same pace and it is unlikely that e-commerce sales can make up the loss in revenue. Once the inventory has passed the prime time to sell, the goods are typically marked down. Two of the largest retailers in fast fashion, H&M and Inditex (Zara parent company), both have a majority of their stores closed due to the coronavirus pandemic. H&M, serving 74 global markets, has closed 3,441 stores out of 5,062 while keeping about 50 online digital markets open according to the latest press release. Zara reported 51percent of its 7489 stores temporarily closed and 156 online markets which continue to operate. Although online sales for Inditex grew 23 percent in 2019, the total online sales represent only 14 percent of total sales. H&M’s online sales increased by 24 percent for 2019 but represent a small portion of the total revenue.
Friday, March 20, 2020
As Coronavirus Lockdowns Hit Supply Chains, Luxury Fashion Is Not Immune
Luxury retailers have been hit by a double-whammy of falling demand from Chinese buyers, and lockdowns across major manufacturing regions in Italy that have now spread nationwide.
Suppliers of textiles and leather goods told Reuters that demand had been slashed from the likes of Gucci, Prada and Salvatore Ferragamo.
"We were producing 880 to 1,000 bags a month for Gucci. In February we made 450 and we have no orders for March," one owner of a supplier to the Kering-owned luxury brand told Reuters.
Italy has the largest cluster of Covid-19 cases outside China, and on Monday, a lockdown imposed on the worst hit regions and cities in the north, including financial and fashion capital Milan, was extended to the entire nation.
The tail-end of fashion month was hit by mounting concerns about the spread of the virus in Europe, with some editors leaving Paris fashion week early, while Giorgio Armani’s fashion show was displayed to an empty room and streamed online.
Like many other industries, the $320 billion luxury goods sector is wracked with uncertainty as to how long the effects of Covid-19 will last, with many retailers saying that they are monitoring the situation closely.
"The outbreak of COVID-19 has already negatively impacted the luxury industry," Fflur Roberts, head of Luxury at Euromonitor International, told Forbes. "Luxury companies such as Burberry, Tapestry and Capri, have already adjusted their sales forecasts for 2020 down."
Tangent: Italy is the 5th largest market globally for personal luxury goods, with leather goods dominating sales, Roberts said. Meanwhile, in 2018, Chinese shoppers accounted for one-third of luxury goods purchases, according to Bain & Company.
Crucial comment: Honor Strachan, retail analyst at GlobalData, told Forbes that while brands might be insulated in the immediate term, if the public health crisis continues, it could have adverse effects on stock levels as far as the Autumn and festive seasons.
Suppliers of textiles and leather goods told Reuters that demand had been slashed from the likes of Gucci, Prada and Salvatore Ferragamo.
"We were producing 880 to 1,000 bags a month for Gucci. In February we made 450 and we have no orders for March," one owner of a supplier to the Kering-owned luxury brand told Reuters.
Italy has the largest cluster of Covid-19 cases outside China, and on Monday, a lockdown imposed on the worst hit regions and cities in the north, including financial and fashion capital Milan, was extended to the entire nation.
The tail-end of fashion month was hit by mounting concerns about the spread of the virus in Europe, with some editors leaving Paris fashion week early, while Giorgio Armani’s fashion show was displayed to an empty room and streamed online.
Like many other industries, the $320 billion luxury goods sector is wracked with uncertainty as to how long the effects of Covid-19 will last, with many retailers saying that they are monitoring the situation closely.
"The outbreak of COVID-19 has already negatively impacted the luxury industry," Fflur Roberts, head of Luxury at Euromonitor International, told Forbes. "Luxury companies such as Burberry, Tapestry and Capri, have already adjusted their sales forecasts for 2020 down."
Tangent: Italy is the 5th largest market globally for personal luxury goods, with leather goods dominating sales, Roberts said. Meanwhile, in 2018, Chinese shoppers accounted for one-third of luxury goods purchases, according to Bain & Company.
Crucial comment: Honor Strachan, retail analyst at GlobalData, told Forbes that while brands might be insulated in the immediate term, if the public health crisis continues, it could have adverse effects on stock levels as far as the Autumn and festive seasons.
Evening Dresses
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