High-end fashion brands like Gucci, Louis Vuitton, and Saint Laurent are taking big financial hits as Chinese shoppers – some of the largest spenders in the industry – choose to stay home amid fears of the coronavirus’s spread.
More than 560 people have died from the coronavirus outbreak in China as of February 6, according to the Wall Street Journal, with more than 28,000 confirmed cases. As a result, luxury brands have closed their boutiques in the virus’s epicenter of Wuhan, and stores elsewhere in the country have faced extremely low sales as shoppers avoid public places where the virus may be spread.
Stores within China’s mainland aren’t the only ones affected. With many airlines suspending flight services to the country and governments imposing travel restrictions, stores abroad – especially in Europe – that rely heavily on sales from Chinese tourists are taking a hit. According to the Wall Street Journal, the virus is the biggest threat to the fashion industry since 2008’s financial crisis.
The outbreak’s drastic effect on the fashion industry comes as no surprise when taken into account that 33% of global luxury good sales were made by Chinese customers in 2018, according to a report by Bain & Company. This makes them the highest-spending segment in luxury fashion by far, with the second highest being the United States at 22% of market spending.
The true extent of the threat the outbreak poses to the fashion industry depends greatly on how long it lasts.
“If it’s resolved within the next two, two-and-a-half months, it won’t be terrible. If it lasts for two years, that’s another story,” said Bernard Arnault, chairman and CEO of luxury conglomerate LVMH, in a statement last week.