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The Italian government has extended restrictions already in place in most of Italy’s northern region to all of the national territory until at least 3 April.
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China is gradually returning to some kind of normality, with more than 80 per cent of shopping malls and supermarkets now open in Beijing, Shanghai and Guangzhou.
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Luxury fashion houses have cancelled cruise collection events in North America, Dubai and Japan, while more trade show cancellations have also been announced.
The global impact of Covid-19 is increasing daily as it spreads throughout Asia Pacific, Europe, the Middle East and America. For millions of people worldwide, the usual rhythms of life are currently on hold. Cases of the virus have now been reported in over 100 countries, affecting retail and tourism — as well as the luxury production heartlands of Italy.
Here, Vogue Business highlights the latest news from the luxury industry and related sectors.
Italian factories in quarantine. Luxury fashion supply lines from Bergamo to Prato were plunged into uncertainty this week as the Italian government imposed a lockdown on the national territory until at least 3 April. The lockdown previously only included key manufacturing provinces in the North, representing as much as 60 per cent of Italy’s textile and clothing manufacturing, and had already sounded a bell of alarm for the country’s economy, which will now be further affected.
Italian luxury brands are directly supporting the fight against the virus. Giorgio Armani has donated €1.25 million to hospitals in Milan and Rome and the Civil Protection Institute, while Bulgari has delivered a new-generation microscope to the Lazzaro Spallanzani hospital in Rome.
China looks to return to work. From the factory floor to the retail mall, the Chinese are cautiously resuming work. More than 80 per cent of shopping malls and supermarkets in first-tier cities such as Shanghai, Beijing, Guangzhou and Chengdu are open, Baidu data research suggests.
JP Morgan Research forecasts that the Chinese economy will surge by 15 per cent from April to June compared with the previous quarter. The economy contracted by 3.9 per cent year-on-year in the first three months of 2020.
Cruise shows cancelled. Giorgio Armani’s cruise show, scheduled for 19-20 April in Dubai, has been shifted to October, although it will no longer include a cruise collection. Versace and Gucci both cancelled their shows in the US, originally planned to take place in May. Prada scrapped its May resort show in Tokyo.
The list of trade shows affected by Covid-19 is lengthening. Luxe Pack Shanghai, an important packaging show, and Esxence, an art perfumery show in Milan, shifted their dates from April to July and late May respectively. SXSW, the tech, film and music conference and festival in Austin, Texas, planned for 13-22 March, was cancelled one week before it was due to open, representing a significant blow to the city’s economy.
Duty-free sales forecast turns bleak. The Covid-19 crisis is expected to wipe $9 billion off the global duty-free market in 2020, equivalent to a 12.4 per cent fall, according to GlobalData, the data analysis company. The Asia Pacific region is likely to be hit the hardest. Luxury brands and cosmetics operators will be the biggest losers given their reliance on high-spending Chinese consumers, GlobalData said.
If unaffected, the Tokyo Olympics, scheduled between 24 July and 9 August, offers some hope for a rebound later in the year in the Asia Pacific region. The International Olympic Committee has expressed confidence the event will go ahead.
Uncertainty points to more bad news. Luxury’s return to normality is a long way off, but how long is open to multiple interpretations. Chris Meekins, a health policy analyst for investment bank Raymond James, claimed the market underestimated the duration of the coronavirus’s impact. “This is going to get worse before it gets better,” he said.
The World Tourism Organization (UNWTO), a UN agency, has said the number of international tourist arrivals is projected to fall by 1 to 3 per cent in 2020, replacing a previous forecast of 3 to 4 per cent growth. Probable losses in international tourism receipts are estimated between $30 and $50 billion, but UNWTO underscores that any estimates must be treated with caution and are likely to be updated.
