The fashion industry in Italy is facing the repercussions of the coronavirus outbreak in China, with projections of a 1.8% decline in revenues expected in the first half of 2020. This news comes as leading jewellery maker Pandora announces a halt in business operations in China. Renowned luxury brands such as Prada, Armani, and Moncler have taken the step to temporarily close their stores in China, which is considered the largest market for luxury goods globally. This has raised concerns about potential sales damage if the virus continues to spread.
Carlo Capasa, the head of CNMI (Italy’s national fashion chamber), foresees a 1.8% decrease in turnover for the Italian fashion industry, particularly in the initial quarter of the year. Italy, recognized for its fashion and luxury products, ranks right after France in Europe. With a total turnover of 90 billion euros last year, constituting about 5% of the nation’s GDP, the Italian fashion industry holds a significant position in the economy.
Initially, Capasa had anticipated a growth rate of 3% for 2020. However, the coronavirus outbreak in China has altered this projection. Chinese consumers have been pivotal in propelling the growth of the luxury goods sector, contributing to 35% of worldwide sales. Nevertheless, with sections of China under quarantine and travel constraints enforced, numerous Chinese shoppers are opting to stay home, impacting retail sales significantly during the lucrative Lunar New Year celebration.
High-end brands like Ralph Lauren and Tiffany & Co have also shuttered their stores in China due to the outbreak, further highlighting the severity of the situation. Alexander Lacik, Pandora’s Chief Executive, noted an unparalleled drop in business due to the closure of a substantial number of their Chinese stores. Consequently, foot traffic in other locations has dwindled significantly.
The repercussions of the coronavirus outbreak are evident in the fashion industry, with three Chinese designers deciding to cancel their showcases at Milan’s Women’s Fashion Week. Additionally, an expected decline in attendance from Chinese buyers has caused concern within the industry. The absence of Chinese consumers, renowned for their robust spending capacity, remains a significant worry for the industry stakeholders.
With ongoing developments, companies are gearing up to tackle potential disruptions in supply chains and financial setbacks. Although the complete economic impact of the coronavirus outbreak remains uncertain, the Italian fashion industry anticipates a challenging period ahead for now.
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