Expert Q&A: How Will COVID-19 Impact Fashion and Luxury Companies?

Editor's Note: Based near Milan, Italy, the fashion capital of the world, Alberto Riva is Aptos' regional vice president for Central Europe. In this Q&A, Alberto discusses the impact that the COVID-19 pandemic has had on the fashion and luxury segments, and how these changes will impact go-forward strategies.

The pandemic has caused many changes to the way people live and how companies operate around the world. In your opinion, what lessons can be learned from the outbreak?

AR: I think the pandemic revealed some very important lessons. First, I would say we have learned the importance of authentic relationships and cooperation. COVID-19 showed us with crystal clarity that we are all in the same boat. The crisis has awakened an instinct to help others and sparked a renewed social consciousness. Second, we learned the importance of investing in nature and pursuing more sustainable choices. During lockdown we saw the direct impact of human activity on the planet's health, which in turn can impact our own health. Both air quality and waterways cleared up while the majority of the population was staying indoors. Third, we have understood how vulnerable and dependent economies are upon one another (if one fails, the others will fail), and that accelerating digitalization is essential to avoid disruption.

Some might claim that "learning" is one thing and "acting" is another. Will companies and consumers really change their habits as we exit the crisis?

AR: I think so. As analysts confirm, the outbreak has represented for many people a pivot point to break old habits and start afresh with new, healthier and environmentally conscious ones. As consumers, we are likely to show a preference for brands that are more ethical, relevant and sustainable. In turn, companies might rethink the way they produce, recycle and manage unsold inventory, as well as their impact on workers and the overall community. In my work with fashion and luxury companies, I have seen that many brands are determined to turn the challenges generated by the pandemic into meaningful change by accelerating some small and large shifts that were already underway and can no longer be deferred.

Can you provide some examples of how COVID-19 is changing the luxury and fashion industries?

AR: What I am observing is a return to core values. It was back in April when we all read the open letter by Giorgio Armani to the fashion system. What he envisages for the future of fashion is an increased devotion to quality, a return to an idea of timeless elegance and a more intimate relationship with customers. "The moment we are going through is turbulent, but it also offers us the unique opportunity to fix what is wrong, to regain a more human dimension," Armani said.

A few weeks later, Gucci's creative director Alessandro Michele published a list of posts on the company's Instagram called "notes from the silence," which he wrote during lockdown in his Rome apartment. In those, he announced restoring the autonomy of creativity, which should be "released from other-imposed deadlines" and rather tell a story. Now, whatever approach each brand might take to collection management and seasons, a new horizon seems to be traced where establishing authentic, intimate and continuous dialogues with shoppers will be top priority.

Will sustainability also be top of mind for luxury and fashion companies?

AR: Yes, I think that quality, sustainability and corporate social responsibility will be crucial. Fashion and luxury companies acknowledge that sustainability is not a trend; it is a need. It was already a key investment area pre-COVID-19, and the pandemic has accelerated efforts in this direction, with many customers shopping more consciously and ethically during the crisis. "People are thinking a lot more around endorsing companies that have a mission, that have a purpose, that do good in the world," said Stephanie Phair, chief customer officer at Farfetch, in a recent interview. Additionally, vice president of public engagement at Patagonia Rick Ridgeway said in an interview with Fashion United that "the metrics we use to measure the health of our businesses should also include the health of our planet. All of us have to double down on sustainability, reducing environmental impacts and increasing social justice."

As you can see, the outbreak is forcing the industry to rethink its processes, and brands need to make their operations ever more sustainable and ethical. According to Javier Seara, BCG managing director, partner and global leader for the fashion and luxury sector, "this is a moment of truth for fashion industry players. Companies will need to change and are already changing their businesses (every day) to adapt to the new reality. Relentlessly incorporating sustainability practices into these changes will be the critical factor that separates winners from idlers."

Aside from sustainability, what other areas of the fashion industry have been particularly affected by the pandemic?

AR: Another key area is digital, which is experiencing an enormous escalation. As a top executive of a fashion brand recently shared with McKinsey, they've accomplished "two years of digital transformation in two months." The consultancy further reports: "The online share of fashion and apparel in Europe and North America is expected to increase by 20 to 40 percent during the next 6 to 12 months. In April, traffic to the top 100 fashion brands' owned websites rose by 45 percent in Europe."

The lockdowns and social distancing have showed brands the importance of having a multichannel presence, as well as the need to digitalize the whole supply chain to avoid interruptions: design, product development, supplier collaboration and the buying session. More than ever I am getting queries from top brands to help them digitalize the way they design and develop products with Aptos' PLM solution with 3D and augmented reality, as well as to support digital collaboration with their suppliers through Aptos SCM, our cloud-based supplier collaboration portal. The benefits of a digital approach include improved business continuity and risk mitigation, reduced costs and environmental impact (e.g., with digital sampling, no fabric or production resource is committed until the sample is confirmed), and greater transparency of operations.

If you are interested in learning more about Aptos' approach to digitalization of supply chain and merchandise lifecycle management processes, read the blog Lessons from COVID-19: Why Supply Chain Digitalization Is the Hottest Trend in Fashion by my friend and colleague Luca Ferraris.