New strategy choices for 2022 (part 1): The 10 forecasts from Covid impact

The past 24 months have presented more challenges, more surprises, and more experiences than anyone could have expected.

The objective of this article is to understand how those past 24 months have been delivering a quite different situation that the one we were forecasting in 2019. From the 2019 end of the world scenari of COVID, to the surprising 2021 hyper growth, let’ s review what luxury CEO have on their plate in 2022 : strategic stock allocation.

Is discriminating customers, between China and US, a new strategic choice for CEO ?

For easier reading, like a newsletter, I decided to split in 5 parts :

-       Part 1 will review what industry was planning and expecting.

-        Part 2 and 3 will highlight what really happened and how those new realities are shaping the 2022 landscape. 

-        Part 4 will focus on the product supply shock issue

-        Part 5 will underline the possible strategies

The 10 forecasts from Covid impact - part 1

"How Covid-19 Is Catalysing a New Era of Luxury", BoF, January 2021

1.     Global turn over double digit decrease : business sharply impacted by the loss of the flagships business (which used to be the top line builder thanks to tourists). Europe was hit, especially European touristic capitals, US were hurt, travel retail was dying and less consumption mindset everywhere. Actually, people were dying; remaining healthy and alive had more meaning than buying the latest fashion.

2.     The end of over spending in collections : industry was talking of reducing the number of collections (“do we still need pre collections and collections ? do 6 collections a year still make sense ?“).  Show calendars seemed to belong from one day to another to the past and each Brand decided to go on its own. Reducing endless collections (“150 -200 looks ? too much waste”),  handling less customers (“she needs less and will buy less”). 

"Who Is Still Shopping?", BoF, April 2020

3.     The end of unlimited communication : industry was thinking of reducing the overwhelming runways to more conscious shows (last Karl Lagerfeld Chanel show was supposed to be the climax) : industry was announcing the end of runway opulence and the need to have a sustainable plan B for disposing runway decors aftershow (2018 Chanel trees story, rocket taking off from Chanel, a circus from Dior or the Orient Express train at Louis Vuitton). As digital was supposed to take over, digital shows and videos events were to become the new normal. Good bye all the busy schedule of the fashion weeks where so many professionals were struggling to attend, rushing from New York, Milan to Paris. Hello to the stay at home zooms where they could review everything at no cost

"Will Covid-19 Change Fashion Shows Forever?"

, BoF, August 2020

4.     A new value proposition for products : a luxury product would now be with less logo, more qualitative, we would see the return of life time investment products versus the super fast fashion which was supposed to disappear. We could read the arrival / return of “genuine, authentic, thoughtful” collections. Another idea was the hybridation of products. As the new customer was more discerning, some brands have been announcing new categories, multi category products (in leathergoods) or hybrid formula (in cosmetics) for busy or on the go people (whereas people were at home…). The objective was that instead of selling 2 products , one would sell one product, 2in1, more expensive.

5.     The end of retail : boutiques had closed, Brands realized they did not need so many points of sales. Covid would accelerate the removal of poor POS. Some were also planning for the end of wholesale business.

"Will we need boutiques post-Covid?", Miss Tweed, April 2021

6.     The e commerce pre dominance : with customers stuck at home, e commerce was the way to sell. Some Brands were ready to embrace e commerce in a larger scale, and those ones definitely won during that period. Questions on the luxury service here, as there is a huge difference between shopping in a boutique helped by a passionate associate and cataloguing on line. Some others Brands were not ready, especially supply chain wise, while a few brands were still rejecting e commerce…The later ones suffered more.

"As e-commerce booms, talking to a human being is a luxury", Miss Tweed, October 2020

7.     The return of the local customers : overnight, brands had to face adjusting prices (tourists were not spending at a higher price level than local Europeans), adjusting service even remotely (locals required a much higher customer service and advise than tourists who were just in boutique to show on their phone what they needed), adjusting boutiques (a local focused boutique is quite different from a VM and merchandising perspective than a tourist temple (cf Chanel at 51 and 42 rue Montaigne, segmenting customers)

"For Luxury Brands, the Latest Battle Is for Local Customers", BoF, April 2020

8.     The surge of sustainability across the value chain : finally fashion had learnt the message and was promising to go beyond the nice sustainability reports to implement real measures to save energy, carbon and more. Covid was the time to communicate you were nice with the planet. So many Brands over communicated, under delivered.

"When It Comes to Social and Environmental Transparency, Fashion Continues to Fall Short", BoF, April 2020

9.     The flexible organization, working from home was experienced everywhere due to pandemic, becoming soon a new HR policy for a healthier office.. up to a better life work balance. Less flights, both for executives who could not travel anymore and for goods. Same applies for materials :  Europe supplies for European companies, American supplies for US groups,  regional sourcing was supposed to become the new mantra for a modern supply chain.

10.  Inclusivity was reported to invade all luxury action plans : from LGTBTQ+ to sizes + to no gender items, Brands were embracing inclusivity, appointing here and there new C level to implement it across.

"The Year Ahead: The Business of Inclusivity", Bof, January 2020

Stay tuned for part 2 and 3, about "The 10 major features that really happened"

#businessoffashion #WWD #misstweed @Astrid Wendlandt