The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
All Eyes on Beijing
This is a big week for fashion brands with designs on the Chinese market. The Lunar New Year holiday begins on Feb. 1, and the Winter Olympics kick off a few days later. The pandemic has put a damper on both events; some cities are under lockdown, while the general public, let alone international visitors, are barred from attending the Olympics. That hasn’t stopped brands from engaging in their usual marketing bonanza around both the holiday and the games, from Bottega Veneta’s Great Wall takeover celebrating Lunar New Year to last fall’s “Prada on Ice” pop-up in Beijing.
For Western brands, the pandemic adds to a growing list of complications that have made marketing in China increasingly fraught over the last few years. Another unknown is how deteriorating relations between the US and China, including the US ban on cotton from the Xinjiang region, will play out in the market. With a few exceptions, brands have tried to avoid engaging on the topic, but governments on both sides of the Pacific are making a truly neutral stance increasingly difficult to maintain.
The Bottom Line: The lack of an international presence at the Games, as well as growing tensions with the US, would appear to play to the advantage of local brands. Chinese activewear giants such as Anta and Li Ning could see sales rise domestically if the patriotic spirit fostered by the Olympics carries over into spending habits.
ADVERTISEMENT
-Robb Young contributed to this item
Embracing the Renaissance
In May, Estée Lauder chief executive Fabrizio Freda tempered underwhelming financial results with predictions of an impending “makeup renaissance.” He wasn’t wrong — consumers who had adopted “natural” looks earlier in the pandemic were eager to stock up on colour cosmetics as soon as they stepped out of the house again. Yet it’s proven surprisingly difficult for makeup brands and retailers to fully capitalise on this welcome shift. Last fall, Estée Lauder and others reported strong sales, but flagged supply chain issues as a major headwind, indicating they would need to hike prices to compensate for rising transportation and logistics costs. The industry may be turning a corner; Sephora surpassed 2019 sales in the fourth quarter for the first time since the start of the pandemic. Rival Ulta Beauty’s holiday sales were up a modest 7 percent from 2019, according to Earnest Research, while US prestige beauty sales as a whole soared 30 percent last year, according to The NPD Group.
The Bottom Line: Glossier’s recent troubles, including declining sales and layoffs, point to the challenge of maintaining momentum in a market where tastes change fast and new brands launch constantly. Estée Lauder has tried to insulate itself from market shifts with a series of acquisitions, including last year’s purchase of a majority stake in Deciem, maker of The Ordinary, and other “masstige” brands.
Who’s Hiring
There’s an ongoing debate over what’s driving the “great resignation,” or if it’s even real. But there’s no question that retailers are struggling to find enough staff to keep their stores open and warehouses humming. We’ll get a new snapshot of just how tight the labour market has become with Friday’s employment data covering hirings and firings in January. The data will also offer a snapshot of wages, including whether anecdotal reports of retailers raising pay represented an industry-wide trend (and whether those raises kept up with inflation). Money isn’t everything — retail jobs got harder during the pandemic, as employees were asked to risk their health while taking on new tasks, even as a tide of angry customers and a crime wave made the core job more unpleasant. The pandemic remains a force to be reckoned with, though as Omicron recedes the temperature around the question of vaccine requirements for employees and customers is likely to go down as well.
The Bottom Line: It’s still too soon to say how long the labour shortage will last. If it fails to resolve itself soon, retailers will need to start making some hard choices.
The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.
Join BoF Professional to get access to the exclusive insight and analysis that keeps you ahead of the competition. Subscribe to BoF Professional here.
Chanel, Louis Vuitton and Tiffany & Co are among the brands expanding in Perth, Australia in a bid to tap its mining, oil and gas wealth and newfound status as a travel hub.
This week’s round-up of global markets fashion business news also features Haiti’s sourcing crisis, Brazilian jewellery giant Vivara and Dubai’s Ramadan shopping season.
This week’s round-up of global markets fashion business news also features Supreme’s long-awaited Shanghai flagship opening, India imposes MIP on undervalued imports of synthetic knitted fabric and striking Sri Lankan workers continue to protest.
Imran Amed shares his observations from a trip to the wealthy desert metropolis, home to the most lucrative stores for many of the world’s top fashion brands.