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One of the standout performers in the luxury sphere during the sweeping retail disruption and corresponding sales slump that has been prompted by the COVID-19 pandemic? Hermès, which has consistently beaten analyst expectations – and fared better than most of its luxury peers – thanks to its sales growth and in some instances, such as the 2020 fiscal year, smaller than average sales drops. Fast forward to the first quarter of 2021, one that saw it generate 2.08 billion euros ($2.50 billion) in sales (a 44 percent increase compared to 2020 and a 33 percent rise from 2019), and the brand revealed that “all the business lines have returned to growth, driven by “highly dynamic activity in Greater China, sustained activity in Korea, Thailand, Singapore and Australia,” and rebounds in America and Japan. 

In a conversation with former WWD executive editor Bridget Foley for the French American Chamber of Commerce on Tuesday, Bob Chavez, the president and CEO of the Americas for Hermès, shed some light on the state of the brand’s growth generally, and particularly, in the wake of the pandemic, stating that while luxury may have an inherently “limited consumer base,” as Foley put it, Hermès continues to grow thanks to the fact that it has “so many product categories,” which clients continue to come back for as they build out their Hermès-centric “lifestyle.” 

Citing one “simple example” from last year, Chavez revealed that Hermès’ “fastest growing category” came in the form of “home and tableware.” That was “always a good category for us,” according to Chavez. However, “Last year, it just exploded,” a testament, he says to the stories “we have all heard about how people spent so much more time in their homes, and all of a sudden, thought, ‘I want a really luxurious cashmere blanket.’” Or as a result of the fact that “we are all eating breakfast, lunch, and dinner at home now,” many consumers have opted to upgrade their dishes, which prompted “porcelain sales to really increase,” something that he says “has not stopped,” and instead, “has really, really continued.” 

But even “when the home category starts to slow a bit,” he contends that Hermès is still well positioned for enduring growth, as “all of a sudden [consumers] may move into footwear because the footwear collection is really strong, or [demand] moves into jewelry or ready-to-wear or equestrian becomes a big thing for people.” With that in mind, he says that the brand is fortunate to keep growing thanks to the sheer variety of products that it offers. And beyond that, growth continues to come from loyal customers. “It really is all about a lifestyle,” he says. “People move from métier to métier because it is that Hermes lifestyle that they are enjoying and living.” 

In terms of COVID-era elements that the brand plans to continue to implement even as vaccines roll out and restrictions begin to fade, Chavez asserts that “one of the best [developments during the COVID pandemic] has been the very personalized service” that Hermès’ introduced. “We didn’t open our stores to the public right away, we opened by appointment, and we found that our clients loved that they could have these great individual appointments with their sales associates.” In addition to “giving us the opportunity to hyper-enhance that experience,” the introduction of appointments served to illustrate how much customers valued that service. “Now that we have started to open to the public, many of the clients still want to have an appointment and have that one-on-one time.” So, Chavez says that Hermès is planning to continue to accommodate clients in this way and offer appointments even after all COVID restrictions have been lifted. 

In another COVID development, Chavez noted that “clearly, everyone experienced a huge boom in digital sales last year.” Hermès’ revealed in its annual report in February that its e-commerce sales were up by more than 100 percent or more in all regions. More recently, in a Q1 conference call in April, the company’s Executive Vice President for Finance Eric du Halgouët touched on the topic of e-commerce, revealing that digital sales will likely exceed 1 billion euros in the not-too-distant future. At the same time, the group revealed that e-commerce was helping it to reach new clients; 65 percent of its sales online were to new customers. 

Addressing the enduring question about how such significant COVID-specific e-commerce growth will play out as stores begin to reopen, Chavez claims that “the digital business has continued to soar even into this year.” Yet, at the same time, the brand is starting to see a trend of customers that made their first-ever Hermès purchases online, “now wanting to come into the store to discover other things, [or to] touch and feel [products], and have that human contact.” This appears to be in line with the sentiment that the striking rise in e-commerce is not necessarily cannibalizing in-stores sales (as has been suggested as a potential outcome), but instead, it may be setting up first-time buyers to ultimately shop in-store when possible – or some mix thereof. 

As for what is currently drawing in consumers, aside from the obvious allure of the Hermès brand and its offerings, Chavez stated that the role that sustainability plays in the ethos – and the practice – of the 184-year-old brand is proving to be a noteworthy driver. “A lot of customers are coming in now because we make products that last a long time, products that don’t go out of style the next season or the next year, and because people know that they can pass those products on to their children and even their grandchildren,” which he says is important to sustainability-minded consumers. At the heart of this is something that Chavez says that fourth generation family member Robert Dumas put well when he stated that “Hermès makes things that can be repaired.” And “that is what we do,” per Chavez. “We will repair pretty much anything if it has to be repaired. So rather than throw it away, and buy something new again, we believe in this longevity, and I think it resonates with a lot of people today.” 

Logistically speaking, he admits that this “requires a lot of manpower,” particularly as the business has growth. 

Finally, Hermès in the midst of a 5-year expansion plan in the U.S., with stores coming outside of Detroit, in Aventura, Florida, and in Austin, Texas, for example, and with renovations of stores, including a major revamp of its Madison Avenue store in New York, underway. Amid an exodus of luxury brands from some of New York City’s most heavily-trafficked shopping areas due, in large part, to the onset and enduring impacts of COVID (and no shortage of lawsuits coming as a result), Chavez says that while Fifth Avenue, for instance, has “become very heavily tourist oriented,” with new stores opening and “pushing some of the luxury out,” to some extent that “might be changing again.” And he is “optimistic” that these major shopping avenues will bounce back.

Australian Fashion Week is touting itself as one of the first live fashion shows since the COVID-19 pandemic began. The runway shows, which are slated to start on May 31, will feature established names like Romance Was Born and Zimmermann, as well as emerging-stage designers. The foray back into physical shows after a year of lockdowns and pandemic-related restrictions follows from a decades-long routine that has seen journalists, editors, buyers, celebrities and taste-makers descend twice a year on Paris, New York, London and Milan to attend the seasonal fashion weeks, where global and emerging designers present new collections by way of runway shows. Tokyo, Shanghai, Seoul and Moscow have since joined these four global fashion centers, along with Australian cities.

Beginning in the early 1900s, the primary purpose of runway shows has always been about promoting and selling new product. (The fundamental rule of fashion is endless change and newness.) The pandemic has altered things on the runway and beyond, forcing these formerly in-person events online. But even though COVID has prompted the digitization of many aspects of the fashion industry, the world of high fashion had already been experimenting with technology on the catwalk – from launching handbags and frocks attached to drones to presenting digital shows beamed to viewers with 3D glasses.

In the early 2000s, runway shows were grand spectacles. In 2005, Chanel began using Paris’s Grand Palais as a set on which Karl Lagerfeld envisaged grandiose installations recreating microcosms of everyday life. They included a supermarket, an airport, a beach, complete with sand and water; and a launch-pad complete with a mechanical rocket. In 2008-2009, at the height of the financial global crisis, one runway became a giant merry-go-round, carrying oversized pendants, bags and pearl bracelets. Meanwhile, other luxury brands, such as Dior and Dolce & Gabbana have routinely organized pre-season shows in exotic locations, such as Marrakesh, Mexico City, Capri, Cuba, and Hong Kong, flying in – and housing – dozens of visitors often at great expense.

Digital collections and social distancing

Then came COVID-19. The onset and enduring impact of the pandemic has had a huge economic impact on the industry, highlighting in many ways fashion’s environmental and ethically unsustainable practices. And brands that have survived were required to switch otherwise in-person events to digital presentations of their collections with the pandemic, forcing designers to think in fresh ways. Valentino’s Pierpaolo Piccioli, for instance, dealt with rules of social distancing by setting 15 models on pedestals up to 5 meters high and creating elongated silhouettes of white couture dresses. Textile patterns and colors were then projected on these silhouettes.

In September 2020 in Milan, Jeremy Scott, Moschino’s designer, created a COVID-safe fashion show that eliminated both models and audience. Forty miniature marionettes, 76 centimeters tall, walked the runway between two rows of puppets replacing the audience. In the first row, a puppet version of Vogue editor-in-chief and fashion power broker Anna Wintour stood out. Not to be outdone, in October, Chanel – whose president Bruno Pavlovsky has held from the outset that Chanel will stick to its practice of showing “six more focused collections” each year, asserting that “the fashion show remains the best way to express the brand’s creativity and know-how” – returned to a live show with an audience to present the ready-to-wear Spring/Summer 2021, but a new COVID lockdown in Paris prevented any further live shows in 2020. Its 2020/21 Haute Couture collection was a digital show streamed from a chateau in the Loire region. 

Drones and 3D

Still, some major global brands had already been presenting digital alongside physical shows, or toying with technology. In February 2010, Burberry experimented with live streaming its womenswear collection digitally in 3D in five locations. Journalists and celebrities were invited to private screening spaces in Paris, New York, Dubai, Tokyo and Los Angeles where they watched the show with 3D glasses. The show took inspiration from the popularity of James Cameron’s film Avatar (2009). In 2014, Fendi sent three drones down the runway to film a show. The move created excitement, but also raised concerns related to hyper-surveillance. And still yet, in February 2018, Dolce & Gabbana showed their new bag collection attached to drones. Small drones glided down the runway and over the heads of the audience before vacating the stage for models. 

In the same year, in Jeddah, Saudi Arabia, fluttering clothes were sent on the runway attached to drones, producing a ghost-like effect. The show prompted outrage on social media, while organizers explained it was about adding novelty. However, it was the first time a fashion show had been opened to an audience of both men and women, instead of just women. This change may have prompted the use of drones.

Fashion is a major industry commanding some 2 percent of the world’s Gross Domestic Product annually, and given the that runway shows are important marketing devices, they are likely here to stay. A seeming return to normal is evidence of that: In-person audiences will be allowed during Paris Fashion Week in July, and in June in Milan, for the menswear collections. The British Fashion Council is also preparing to hold COVID-safe, smaller, in-person events. And all the while, brands will almost certainly continue to experiment with technologies in the name of novelty. 

Tiziana Ferrero-Regis is a Senior Lecturer in Fashion at the Queensland University of Technology. (This article was initially published by The Conversation)

Sales of goods that COVID firmly relegated into a corner are starting to rebound, in some cases in a big way, making for increased demand for things like lipstick and an opened floodgate for all things wedding. First up: Lipstick sales, which are growing again, as mask mandates continue to loosen amid the roll out of vaccines across the U.S. Following a striking slump in makeup sales in 2020, with sales across the prestige beauty segment down 34 percent for the year, according to market research firm NPD, which pointed to “broader lifestyle changes due to the pandemic moved the needle in unprecedented ways” as driving the drop in beauty purchases. Among the hardest hit within the beauty sphere was, of course, lipstick, while things like skincare and eyeshadow did not fare as poorly. 

Down by almost 50 percent in Japan in 2020, sales of lip products on Amazon saw a slip of 15 percent in between March and April 2020, while prices were down by almost 30 percent for the month-long period, per McKinsey & Company. Yet, with lockdowns out of sight in the U.S., and masks swiftly becoming less of a daily requirement, the category is bouncing back. Citing the latest figures from market research firm IRI, CNN reported this week that while lipstick sales have no reached pre-pandemic levels, they did, nonetheless, reach $34.2 million between March and April of this year, “an increase of more than 80 percent from the same period last year.” 

Walmart, for one, told CNN that lipstick is “the top performer across all segments of cosmetics” at the moment, and that lipstick sales were “a standout” in its latest quarter, which ended on April 30, as consumers resumed their purchasing of pre-pandemic-esque products, such as teeth-whitening kits, formal apparel), travel bags, and of course, cosmetics, in lieu of sweatpants, athleisure, homewares, etc. “Both Walmart and Macy’s reported strong results for the latest period and boosted their outlooks as consumers, flush with stimulus checks and buoyed by the vaccination rollout, unleashed spending on items they haven’t needed for more than a year,” Bloomberg reported early this week.

The Floodgates are Opening

Look beyond the lipstick-specific headlines and there is another bright spot on the horizon: a boom for the wedding industry. The business of brides and grooms – which is valued at upwards of $300 billion – was hit especially hard by the pandemic, and is expected to lose nearly $50 billion in sales between 2020 and the end of 2021 as a result, as couples joined a mass move to cancel or postpone weddings that were previously slated to take place in 2020. In a nod to the nuptial-specific upheaval that came with COVID, wedding planning site The Knot asserted in its recently-released “2020 Real Weddings Study [COVID-19 Edition]” that 96 percent of all 2020 weddings were modified to some extent. For instance, 32 percent of couples that planned to marry in 2020 still had a small ceremony but scheduled a larger reception for 2021. 15 percent postponed their events entirely, opting to forego any events in 2020.

Now, with COVID-19 restrictions consistently easing, the floodgates are opening and “momentum” in the wedding industry – which saw an overall drop in revenues of 20 percent in 2020 – is “coming back,” David’s Bridal CEO James Marcum told the Wall Street Journal. David’s Bridal revealed that July and August 2021 wedding dates have increased 35 percent compared to last year, and 2022 dates are up 22 percent already. At the same time, a rep for Walmart told Business Insider that its sales of bridal jewelry spiked by 80 percent in April compared to the same time last year, while the American multinational retail chain is also seeking a surge in demand for artificial flowers, wedding décor, and wedding-specific arts and crafts. 

Meanwhile, at the higher end of the spectrum, Monique Lhuillier recently revealed that as of late last month, “ready-to-wear and special occasion sales [were] ‘a bit slow to come back,’” but that bridal sales were, nonetheless, on the rise in the U.S. – with some of that coming by way of online appointments and e-commerce sales, which have accelerated during the pandemic. 

Reflecting on how Oscar de la Renta – which has famously dressed the likes of Amal Clooney – adapted to mandated store closures, co-creative director Fernando Garcia told Brides that the brand “created a Zoom call type of interview process to discuss what each bride wants to do,” which he said led to “a more personalized experience for our brides and therefore, [has] increased the demand for gowns, which came as a surprise to us. We essentially developed a new selling tool that helped the business and increased our sales.”

And still yet, e-commerce retailers like Moda Operandi have sought to cater to brides-to-be by way of its trunk-sale site – curating everything from dresses and accessories for “micro weddings” (think: Jacquemus linen frocks, Simone Rocha midi dresses, and no shortage of slip dresses) to maintaining a packed “For the bride” section on its site with bridal jewelry, and Markarian and Miu Miu gowns in case the bride opts to buy off the rack, a consumption trend that has been on the rise in the midst of COVID and the onslaught of Zoom weddings, complete with slightly more pared back dresses.

Dresses aside, putting the push for 2021 weddings – and the scramble of those aiming to walk down the aisle this year – firmly into perspective, the traditional Saturday wedding has gone out of the window. “Monday is the new Saturday in Palm Beach,” Caroline Scarpinato, director of event services at the Breakers Palm Beach, told the WSJ. “With such limited availability, couples are willing to host their event on a Monday or Thursday.”

Six months after revealing a 23 percent plunge in the sales of luxury goods ranging from sports cars and yachts to pricey wine and designer handbags as a result of the impact of the COVID-19 pandemic, which was the largest percentage-drop that it had ever recorded for the luxury segment, Bain & Co. has released a new report, claiming that the luxury market “has started its path towards recovery.” Pointing to the first quarter of 2021, Bain & Co. states that luxury goods sales “are growing by 0-1 percent versus 2019, which is viewed by the industry as the last comparable year,” and if current market dynamics persist, the industry’s sales could return to 2019 levels by the end of this year. However, the chances of a full recovery in 2021 appear to be slim.

In the newly-released “Luxury Study 2021 Spring Update,” Claudia D’Arpizio, a Bain & Co. partner and lead author of the study, says that it is “clear that consumers still want to buy luxury goods, and this, along with the brands’ ability to adapt and innovate, is driving a return to growth in the market.” The luxury market is expected to reach between €250-295 billion ($305-360 billion) over the course of this year, driven in large part by China’s “continuous repatriation and acceleration of domestic spending on luxury,” as well as by consumers in the U.S., which “has been the unexpected bright spot.” Bain states that “renewed consumer confidence coupled with stimulus and a rapid vaccine rollout has meant that luxury consumption has returned at surprisingly fast pace.” 

What is less obvious, according to Bain, is what – exactly – the market rebound will look like. The consultancy suggests two likely scenarios: “Scenario 1 (probability 30 percent): Recovery path to continue throughout 2021, winning back 2019 market level as early as this year. In this outcome, the market could reach €280-295 billion ($342-360 billion) this year; and Scenario 2 (probability 70 percent): Despite the strong momentum of the first quarter, full year growth is stifled by slower domestic luxury purchases and limited intra-regional tourism. In this case, the full recovery to 2019 levels would be expected only in 2022 and the market would reach €250-265 billion ($305-324 billion) this year.” 

Regardless of which scenario comes into play, there are a few key trends worth keeping an eye on in the next several months. These include “roaring 20s”-esque growth in the U.S. thanks to “improved macroeconomic conditions, a buoyant stock market, increasing consumer confidence and a fast vaccine rollout,” etc. In the U.S., in particular, Bain says that it has seen the rise of “new city hubs and a growing emphasis on suburban areas, as well as the rise of subcultural relevance and next-generation mindset,” which are worth watching as further development takes place. 

Another trend currently underway: the role that “human touch” still plays in the luxury consumption sphere. While COVID-19 accelerated the existing adoption of e-commerce in the luxury space and beyond, prompting “more than 85% of luxury purchases [to be] digitally influenced in 2021,” per Bain, the group asserts that “the human touch in luxury remains needed,” and it is not exactly clear how brands will tackle that in an increasing digital world. 

Beyond that, Bain asserts that the rise of the secondhand market – which it estimates was worth €28 billion ($34 billion) as of 2020 – cannot be overlooked, as both consumers and luxury brands embrace the reality of resale. “The market for pre-worn luxury items encompasses not only entry level younger consumers who are mainly buying aspirational categories and products but also top spenders and collectors who are searching for high-end or collectable products,” Bain states, noting that “brands are increasingly tapping into this market and becoming platforms in order to engage with them throughout the lifecycle of an item.” 

And finally, “the appetite of China and Chinese nationals for luxury remains insatiable and all customer nationalities are positively growing or on a recovery path,” according to Bain, while “growth of the online channel remains robust” – in China and beyond – “as new clients buy luxury online for the first time, and the range of prices is widening, with more entry-level products but also more high-end items.” 

Auction houses like Christie’s and Sotheby’s have garnered attention throughout the COVID-19 pandemic as they have successfully doubled-down on their pre-existing efforts to diversify their offerings – adding hyped sneakers and coveted streetwear, as well as rare watches and Hermès handbags – to their increasingly-digital auction blocks, which have traditionally consisted of in-person events and bids for more traditional works of art. As the New York Times reported in November, “In ‌a‌ ‌process‌ ‌fast-forwarded‌ ‌by‌ ‌the‌ ‌coronavirus pandemic, ‌technology‌ ‌is‌ ‌transforming‌ ‌these‌ ‌venerable‌ ‌names‌ ‌into‌ ‌very‌ ‌different-looking‌ businesses,” as auction titans continue to move more events online, and as personal luxury‌ ‌goods‌ are increasingly being brought into the fold. 

In a nod to the developing nature of the space, which has seemingly only thrived during the pandemic, the Times’ Scott Reyburn wrote late last year that Christie’s – the 255-year-old British auction house that is now “owned‌ ‌by‌ ‌the French‌ ‌billionaire‌ art ‌collector‌ ‌François‌ ‌Pinault, who also founded the ‌luxury‌ ‌goods‌ ‌group ‌Kering” – first introduced “online-only ‌sales‌ ‌of‌ ‌designer ‌handbags in 2012.” Fast forward five ‌years and not only did “Handbags & Accessories” have their own category, they transitioned from an online-only experiment to a record-breaking segment, with “a ‌white‌ ‌crocodile‌ ‌Hermès‌ ‌Birkin‌ selling ‌at‌ ‌a‌ ‌live‌ Christie’s ‌auction‌ ‌in‌ ‌Hong‌ ‌Kong‌ ‌for‌ ‌a‌ ‌‌record $380,000.” 

Since then, demand for these “alternative” assets has abounded. “The pandemic has made internet-based fashion auctions more popular than ever,” the South China Morning Post (“SCMP”) revealed this week, and handbags have “remained the most popular fashion item to buy and sell at auction.” The media outlet’s report echoes one of the findings from the annual “Wealth Report” that Knight Frank released in March, which found that “an established online auction presence and the appetite for relatively affordable luxury pick-me-ups during the Covid-19 pandemic helped the [handbags] asset class retain pole position.” 

According to Knight Frank, such enduring demand to park money in assets like personal luxury goods, which boast a well-established resale value, has prompted demand in the handbag class soar, and prices to grow by almost 20 percent in 2020, alone, and by 108 percent over the past decade. By Knight Frank’s findings, those figures put handbags ahead of fine wine, classics cars, and watches, among other assets on the Luxury Investment Index, the consultancy’s running system that tracks the performance of a group of selected collectable asset classes. 

In addition to general rise in demand for digitally-auctioned luxury goods, SCMP notes that sales in Asia are driving much of the auction momentum, stating that in 2020, “The number of Chinese clients bidding online for luxury fashion tripled.” Knight Frank similarly pin-pointed the Asian region as a hotbed for sales of investment-grade handbags at auction. And in line with an already-established trend in the luxury space, the buyers are getting younger. (As we reported a few years ago, Chinese natives born in 1998 and after have been demonstrating remarkable spending power, in some cases, shelling out more than $7,000 per year for luxury goods even before they reach age 21, which is substantially more than their Western counterparts.) Citing one example, SCMP states that a December 2020 Christie’s Hong Kong auction set a new world record for a handbag when an Hermès Himalaya Kelly sold for $437,330. The buyer?  “A young Chinese client.” 

As auction houses continue to cater to online-natives and/or e-commerce-centric consumers, with Christie’s currently hosting a Luxury Week, complete with an online “Jewels and Handbags” auction  “led by an Hermès 2016 Rose Sakura Swift leather Birkin with gold hardware, tripling its pre-sale estimate to make CHF 22,500” ($24,899), they are not necessarily shunning their roots. In fact, in at least some cases, are hoping that these “entry-level” offerings – whether they be Birkin bags or hard-to-get Nikes – open the door to bigger-item offers.  

“Fine art is what Sotheby’s is best known for, and that’s not going to change,” ‌Josh‌ ‌Pullan,‌ ‌the managing‌ ‌director‌ ‌of‌ ‌Sotheby’s‌ ‌global‌ ‌luxury‌ ‌division, told the Times. As the push towards mostly-digital auctions of alterative assets like bags and shoes (aside from a purely revenue-generation standpoint), the rationale is this: “If‌ ‌a‌ ‌new‌ ‌client‌ ‌can‌ ‌afford‌ ‌to‌ ‌pay‌ ‌$10,000‌ ‌for‌ ‌a‌ ‌pre-owned‌ ‌luxury‌ ‌item such as a handbag, ‌they ‌might‌ ‌eventually‌ ‌gain‌ ‌the‌ ‌confidence‌ ‌to‌ ‌spend‌ ‌$100,000‌ ‌or‌ ‌even‌ ‌$1‌ ‌million‌ ‌at‌ ‌an‌ ‌art‌ ‌auction, ‌where‌ ‌these‌ centuries-old companies‌ ‌have always made ‌their‌ ‌biggest, brand-enhancing sales.” Sound familiar? Luxury brands have been playing this game – albeit in a far less expensive scale – for years, initially hooking consumers with small, often logo-adorned, leather goods and other more-affordable accessories, in hopes of ultimately selling them bigger-ticket items. And judging by their bottom lines and consistent growth, it is a successful strategy.