COVID-19 has disrupted all facets of the economy and the fashion industry is no exception.
With over 38 million people currently unemployed, leisure fashion has taken a backseat in favor of necessities.
Buying the latest designer shoe or handbag isn’t exactly top of mind in a pandemic, and experts predict this “recession economy mindset” will have major ripple effects on shopping patterns, spending, and the success of major brands.
“Consumers are likely to cut back on fashion-related spending, particularly of the high-end variety,” said Paul Sheard, a senior fellow at Harvard Kennedy School. “In a recession, people have less money to spend, in a world of ‘social distancing’ they have fewer flashy events to go to, and in a post-pandemic world the mood is likely to be more reflective and subdued.”
“In a world of rising inequality, ‘the 1%’ flaunting its wealth will not be cool,” he added.
The impact on fashion may be even stronger now than during the 2007-2009 financial crisis, when the unemployment rate went up from 4.4% to 10.0% over nearly 2 1/2 years, according to Sheard. Fast forward to the present, and in just two months, the unemployment rate has gone up from 3.5% to 14.7%– resulting in a dip in fashion retail spending across all markets high and low. Sales are estimated to decline $450 billion to $600 million worldwide compared to 2019 levels, according to Boston Consulting Group.