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Luxury brands brace for the impact of the coronavirus

By Don-Alvin Adegeest


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Chinese New Year is a major event on the retail calendar for fashion brands, much like Christmas in the West. This year’s unfortunate break-out of the coronavirus will have an enormous impact on Chinese spending abroad and back home. Early predictions of overseas holiday spending to increase 13 percent over 2019 looks set to be much lower.

China has severely limited the travel of its citizens, but growth in certain areas is still possible on domestic spending as brands have increased their seasonal product 45 percent over last year. According to analytics from Edited, themed products arrived as early as September with Alexander Wang and Superdry as some of the first retailers off the mark. Accessories and tops remain the core categories retailers are pushing for CNY-themed products with graphic tees, pendent charms and bags trending in the market.

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Brands need to do be sensitive when marketing themed product during Chinese New Year, especially during a crisis. This means being respectful of their cultural codes as well as ensuring targeted messaging will reach the Chinese audience on the right social platforms.

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The global economy is bracing itself for the impact of the virus as the world relies on China for everything from fashion and car manufacturing to mobile phone technology. Many businesses in China have closed for an extended period of time as the country deals with its biggest crisis since SARS. Major airlines have suspended or reduced carrier service to the mainland, and outgoing travel has also been restricted, with entire cities shut down.

The full extent of the implications to brands, the fashion industry and wider economy remains to be seen. Bernard Arnault, chief executive officer of LVMH Moet Hennessy Louis Vuitton, said at its results announcement this week if the coronavirus dies out by March the impact on sales won’t be ‘terrible’.

The South China Morning Post reported in December that LVMH would shutter one of its eight Hong Kong stores, in the upscale Times Square shopping mall in Causeway Bay due to the impact of anti-government protests. LVMH said it recovered some of its Hong Kong losses from sales in mainland China but its January and February 2020 sales will no doubt be affected.

Photo courtesy of Burberry

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