Fashion, luxury or not, has had a rockier time than most this year. With some brands smashing sales records and others collapsing into administration, 2020 has exposed how volatile the industry can become when customers unexpectedly and rapidly change their shopping behaviors.
Luxury has especially struggled to adapt, seeing its all-important in-store footfall dry up almost overnight, and at a global scale. As a result, designer brands have had to put all their efforts into replicating the in-store experience, which they rely upon more than most other retail sectors, over on online channels.
Jones shared his observations of the changes in the state of luxury fashion this year and what this means for innovation in the industry going forward.
The most prominent difference he’s seen has been spending changes caused by travel restrictions.
“Chinese customers in 2019 represented about 35% of global luxury fashion spend… but interestingly, 70% of that Chinese spend was when they were travelling – about $70 billion of fashion spend [occurred] when they were on their travels.”
This means where purchasing luxury fashion was once a predominantly cross-border activity, for example foreign tourists shopping at Selfridges or Harrods in central London, it has now become localized in specific countries or regions.
“All of that demand has now repatriated to China… so there’s a huge opportunity for brands to capitalize on that… with all those Chinese customers now moving online.” he continues.
Meanwhile, the second evolution that the sector has been facing in recent months, Jones explains, is all to do with the age of those continuing to consume luxury goods throughout 2020.
“The spending power [has been] increasingly moving from parents to children… [Gen Z] are increasingly positioned as the new luxury shopping customers and what we’re observing is that they’re definitely driving a lot of the rebound.”
He adds that not only have they been more resilient customers throughout 2020, but they are the demographic that is most likely to drive recovery in brick-and-mortar stores, too. As younger customers are more digitally native, they also appear to be more willing to buy luxury through online channels (while other consumers may prefer to try out products in real life before committing to a purchase).
“Whoever owns the young generation in luxury fashion now will own the future,” he reflects, “That is something we are very mindful of in our activity [at Farfetch].”
Gareth Jones, CMO in one of the most important luxury market places today, Farfetch, has also observed the major operational challenges and changes since consumers moved online in masse this year.
“The distribution ecosystem in fashion is going through a huge transformation.”
Jones explained that brands are increasingly thinking about both their ‘monobrand’ D2C propositions, as well as the ergonomics of in-store spaces. Brands have also been forced to consider more seriously how offline and online parts of their businesses can integrate into a more streamlined omnichannel presence.
While he admits focusing on better providing an omnichannel experience isn’t a new strategy borne from the pandemic, brands are now having to fast track their efforts more than ever before to maximise revenue during this uncertain time and bounce back as successfully as possible once life begins returning to normal.
Accordingly, Farfetch’s strategy is mostly unchanged, but “moving forward at pace”, according to Jones. The marketplace has bucked retail trends this year, seeing lucrative results from its online strategy that follows today´s fast changing trends when it comes to online shopping.