What a Post-COVID Future Has in Store for Luxury Fashion

2020 was a disruptive year for the luxury fashion industry, to say the least. With brick and mortar retail already under high pressure in 2019, the COVID pandemic looked as though it might be the coup de grace for many players in the industry. Amidst national lockdowns, travel and shipping restrictions and widespread, permanent store closures, brands have had to act quickly and consciously to stay afloat and relevant in the scattered zones of consumer resurgence.

Although these turbulent times have heralded an irreversible change in luxury fashion retail as we know it, it has also provided the opportunity for an industry-wide reset with exciting consequences. Read on for a brief look at the biggest challenges and opportunities in luxury fashion coming into a (hopefully) post-COVID world.

Changes in Luxury Fashion Post-COVID

Less Traditional, More Digital

Without a doubt, the top-ticket item in the shifting luxury fashion industry is digital engagement. Online conversions and sales have been steadily on the rise for quite some time now, but the year past saw a significant jump in online engagement and sales across the luxury fashion industry.

According to a McKinsey report from 2020, fashion industry spending through social media and digital channels grew among 24% and 18% of consumers, respectively, across Western Europe and the US. The report also noted that the lockdown periods across these regions saw a significant number of consumers enter the e-commerce landscape for the first time.

Industry analysis points to the crippling slow down and closure of traditional in-person retail methods to explain this major jump in online engagement.

One major factor impacting "real life retail" can be attributed to the shutdown of global travel, and thus, tourism shopping. Travel is connected to about 40% of all luxury spending, according to Pauline Brown, former LVMH chairperson of North America, who had an interview on the topic with Yahoo Finance.

To overcome this challenge, luxury brands need to explore new avenues to engage with consumers online in sincere and enriching ways.

The shift towards e-commerce and digital engagement is also being driven by the fastest-growing consumer demographic in luxury fashion: Millennials and the digitally native Gen Z. These tech-savvy shoppers accounted for 40% of all luxury spending and 100% of industry growth in 2019. With high standards, and an expectation of thoughtful, story-driven content, courting these consumers has demanded digital acumen and adaptability for luxury fashion brands, a task in which Gucci has performed exceptionally well.

Ethics Are the New Aesthetic

One of the most significant changes in the luxury fashion industry has been the change in the meaning of luxury itself. Far from its old identification as the aspirational, as the exclusive, luxury has come to assert a much more self-expressive, fluid and experiential notion in the millennial mindset.

In many ways, the element of self-expression found within new-luxury tracks very closely with an increased consumer understanding of the social and environmental issues within luxury and fashion in general.

Widespread social backlash against unsustainable fast-fashion has blunted the growth of retails giants in the industry, and opened the floor to brands that seek to build their ethics into their aesthetic. The industry norm of huge inventories, over-production and waste are certainly waning in favour of lean, on-demand operations.

Luxury brands are increasingly scaling back their exclusivity and mystique in exchange for radical transparency in hopes to satisfy this growing concern for sustainability.

Meanwhile, brands are foregrounding their commitments to various social and environmental causes as key components of their brand identity, in spaces that were once dominated by displays of prestige and craftsmanship. By telling authentic stories and connecting to relatable concerns, luxury brands are increasingly selling the experience of being involved in sustainability, rather than just a product for consumption.

As for what the future has in store for luxury fashion, it’s largely going to be dominated by the concerns and comforts of millennial consumers. With in-person retail on the decline, brands will be expected to engage sincerely and regularly in digital spaces and all manner of e-commerce platforms. Furthermore, as luxury becomes synonymous with sustainability, brands will need to continue displaying their ethical practices and value-chain integration, as young consumers seek transparency and social responsibility.

In some ways, this shift signifies the decline of not just traditional luxury fashion, but also a reckless consumer culture. If these can be replaced by something more sustainable and ethical, then that’s a win-win for the luxury fashion industry and the planet alike.

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