- Don-Alvin Adegeest |
2016 was a year of uncertainty, economic instability, and a tectonic shift of plates when it came to politics. The outcome of the EU referendum and the US election means the outlook for 2017 isn't looking any less uncertain. Nor are the woes in Italy, the far right advancing in France and the Netherlands and the questionable future of the European Union helping to stabilise our communities and businesses. Terrorist attacks from Germany to Belgium to France have become near common events in the lives of Europeans, perhaps making the acquisition of luxury goods seem less important in the scheme of all that is happening in the world.
Optimism for the fashion industry and creative industries at large for 2017 has taken a colossal hit with the recent losses of its scions. The world of music is still grasping with the deaths of George Michael, Leonard Cohen and Prince, while the fashion world equally mourns some of its greats with the passing of Franca Sozzani, Sonia Rykiel, Betsy Bloomingdale and Bill Cunningham.
This year the luxury markets saw a shift in demand for luxury goods with Hong Kong suffering a downturn of Chinese spenders, and indeed the slowdown of growth in Asia as tastes and spending patterns are changing.
The world's eyes are on the UK on how successful it will transition out of the European Union. Will it affect trade and export? Will goods in the UK become more expensive? Early reports have signalled prices are set to rise 10 percent as the weaker pound puts pressure on input costs and profit margins. In the same vein we are awaiting how new US president-elect Donald Trump will affect the world both politically and economically. What will be the implications for brands and their international trade?
“We are not yet willing to call a bottoming out of the luxury industry,” said Mario Ortelli, of Bernstein Research, in a report published in December. He acknowledged a “potential for deterioration in the underlying economic fundamentals that support growth in the luxury sector, especially against the backdrop of political uncertainty."
In the personal luxury market, Ortelli is forecasting 0 percent growth for 2016; 2 percent for 2017 and 4 percent thereafter to 2020, with the “potential for year-over-year volatility,” due to macroeconomic uncertainty, reported WWD.
The big challenges that emerged this year will continue into 2017, but the silver lining is how the industry will adapt to change. Changing spending and tourism flows, the weak sterling and currency fluctuations; political and social turmoil in Asia; price increases in high street and luxury goods; and increasing pressure on the luxury brands to drive sales and protect their margins. All these challenges will drive the fashion world to garner solutions and adapt to meet change and demand.
Cost-cutting, reorganizing, repositioning and soul-searching about their approach to creativity, is a common denominator for luxury brands, according to WWD. Changes in the retail landscape, from mobile shopping to omni-channel experiences will force brands to reposition themselves.
Richmond, for example, is poised for its second round of Swiss watchmaker layoffs in the past year, while Burberry lowered its profit expectations and unveiled a multi-year turnaround plan based on a narrower product range.
American Apparel filed for another bankruptcy and is closing stores at an accelerated rate. Sonia Rykiel shuttered its diffusion collection while Hugo Boss disclosed plans to return to the premium category. Change, it appears is everywhere.
2016 was a year where the runway was reinvented to embrace the 'see now, buy now' model, a change which will continue into 2017. Shopping the catwalks from a mobile phone was unheard of as recently as 2015, but is a firm reality now. According to eMarketer the number of mobile shoppers ages 14 and older will reach an estimated 40.1 million - nearly 89 percent of the UK's digital shoppers. And many more of these shoppers will click to buy on their handsets.
This is why brands and designers must adapt their methods in how they communicate to their customers in 2017. No longer are simple Facebook updates enough to woo consumers. Marketers polled by the Institute of Direct and Digital Marketing (IDM) in August 2016 agreed that personalisation was a key factor to reach consumers, instead of generic messaging. 82 percent reported a higher email open rate and more than half of respondents noted an increase in sales and customer satisfaction when their email was personalised.
Experience and technology will be two key factors in how retailers and brands will re-invent themselves in 2017. The main consideration is providing new shopping experiences while acknowledging the increasingly segmented needs of consumers. In 2017, brands can no longer expect one size to fit all.
Photo credit: 2017; Sonia Rykiel, source Wikimedia Commons; Burberry store, source: Burberry.com