COVID-19: Dwindling Fortunes Of Luxury Goods
By Emmanuel Akpoborie
In many quarters, coronavirus has been described as the game changer. In the sea of this virus, to stay afloat, you need to sail light.
The pandemic has left a significant adverse impact on the global economy. Governments around the world are implementing various fiscal measures to mitigate the effect and provide relief for businesses and households. Employers in different sectors of the economy had to disengage workers to mitigate the negative effect of the pandemic on their ventures. Reports show that the worst hit industries have been the aviation, hospitality, banking, construction, manufacturing, media, sales, and the luxury industry. As gross domestic product drops, unemployment increases; which in turn causes a large reduction in the spending power of the consumer. This reduced the demand for luxury goods.
As consumers hold back on their spending, fashion brands of all shapes and sizes are forced to scale back production, and reimagine how they position themselves. Brands like Chanel, Hermes, Patek Phillipe and Rolex had to discontinue production while brands like La Chapelle and Zara had to close down over a thousand stores around the world.
“It has led to a real existential crisis for the fashion industry,” says Imran Amed, the Founder/CEO of The Business of Fashion.
As consumers grapple with uncertainty, their buying behaviour has become more erratic. What is clear, however, is that they have reduced spending on non-essential products. Survival before aesthetics seems like the order of the day for a lot of consumers around the world.
“At Pere Lei, a luxury Nigerian brand that specializes in leather goods, customer behaviour has varied really,” says Pere B.E. Emein, Creative Director of the brand.
“Male clients have largely purchased items that increased their comfort at home. So, we have seen an increase in sales of slippers and mules. Female customers have, however, resisted the impulse purchases and concentrated on making custom handbags that they deem dream items. Our home and lifestyle items, however, have kept things interesting because clients have had to pause and make changes in their living spaces, to make them conducive for remote working as well as increase style and comfort levels. So, sofas and chair constructions have seen a healthy increase,” Emein said.
At Mudi Africa, it’s a slightly different experience.
“Nothing has changed so much’’ says Mudiaga Enajomo, Head Designer, Mudi Africa.
“Some high network clients with health challenges are finding it very difficult to step out of their homes. Even when you try to reach out to them in terms of home services, accessing them is a huge challenge due to social distancing,’’ he added.
In a report by Weforum.org, it shows that as each country opens up, we can see a glimmer of increasing optimism levels, which, in turn, is linked to higher spending. Nigeria’s consumers for example are displaying higher levels of optimism, with more households planning to increase spending—a trend that is also evident in China, Indonesia, and India. Meanwhile, American consumers are still more optimistic about the future than the Europeans. This serves as perhaps light at the end of the tunnel for the luxury industry.
In 2017, stakeholders in the Nigerian fashion industry revealed that Nigerians spent over 2trillion naira on imported textiles and ready-made clothing items. This really undermined the local industry. However with the border closure due to the pandemic, things are taking a new shape. Luxury products are extremely hard to find and when they are available, they are overpriced. This led to a significant increase in the demand for locally-produced fashion items and also an even more significant increase in the number of fashion-preneurs. Consumers have started looking inward to satisfy their fashion craving.
Mr Nuga Oluwapelumi, a fashion-preneur based in Lagos, revealed that the demand for locally made fashion items has greatly increased.
“I made more money since the pandemic started than I have made in the past. Nigerians are beginning to accept what we do and the quality we provide. Hopefully, this marks a change in the orientation.
“In as much as this is a welcome development, a lot still has to be put in place to keep this rise. For instance, after the ease of the lockdown, there has been an upsurge in the amount of cheap clothing items coming in from china; which puts the local goods at risk once again. The Chinese produce faster, cheaper and even a lot more volume. If they are allowed the freeway, they would take over the markets in no time once again,” Oluwapelumi said.
Coronavirus might have sparked the required pendulum shift needed in the Nigerian fashion space. Hopefully, enough will be put in place to maintain this new found momentum; and we can at last get the much-anticipated upward swing the Nigerian fashion industry desperately needs.