09 January 2023, Mumbai
The pandemic has hit the hardest blow to the luxury fashion segment of the apparel industry. Inflation has led to a sharp rise in the costs of fibres and technology leading to a massive gap in demand and supply levels.
No one could have foreseen this disruption, but now we know the risks we face, and our key lesson has been to build our business in such a way that we can manage this risk effectively. A closer partnership, better understanding, and greater communication between brands and suppliers are even more important today than ever before.
Catch 22 situation
Cautious optimism is the mood of the street in India despite Sales of personal luxury goods including apparel, accessories, and footwear posted high double-digit growth in the first quarter of this year, and women’s luxury brands grew by only 14 percent in 2022 & Fifty-seven percent of men claimed that their fashion spending has increased, albeit momentum carried till the festive/wedding season on the whole but given the cloudy global economic outlook, the worries mount.
Inflation has started to bite; Experts feel that global luxury goods prices increased by 15% between January 2021 and January 2022, Eurostat reported its highest levels in June 2022, when it stood at an 8.6 percent annual rate.
As the pandemic subsided all was going right but given the challenges and difficult conditions & constraints prevailing inflation at this stage the situation has turned heads on ever since the black swan event of 2022 i.e. Russia @ war played out. Knowing that we are going into 2023 with expenses increasing for everything raising concerns about the growth of the luxury industry.
Focal point
Fashion suppliers are now focussing on prioritizing vertical integration, strengthening relationships with brands, and diversifying and simplifying their supply chains to face the new economic situation.
No one could have foreseen this disruption, but now we know the risks we face, and our key lesson has been to build our business in such a way that we can manage this risk effectively. Collaborative communication and planning the tipping point when brands begin to push back as well as improving the supply-demand chain is the key for luxury brands this summer of 2023.
Bright spot
Border reopening in 2023 brings hope; As mainland China and Hong Kong reopen borders, 2023 brings a ray of hope to global luxury retail.
The quick rebound in sales led to a hike in prices of luxury brands from Louis Vuitton to Gucci and Carter earlier this year.
The Indian luxury market is expected to grow by ten percent over the next five years as the country’s fashion market is driven by premiumization presently as there's also a surge in the number of Indian ultra-high-net-worth individuals. Global brands have been making a beeline into India through strategic tie-ups.
This growth has been driven by accelerated digital adoption & the theme of digitization is really playing out well.
