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A resurgence of Covid-19 infections in Mainland China is leading fashion organisations, luxury brands and department stores in major cities to cautiously rethink offline events and tighten safety measures.
Shanghai Fashion Week has been postponed to early April according to internal sources. Shanghai Fashion Week is yet to make an official announcement. The fashion showcase, one of the few to host physical events in 2020 with audiences, was planned to happen in March.
Last week, luxury outerwear brand Canada Goose planned to host an offline event in Shanghai IAPM, the upscale shopping mall, to showcase its new collection in collaboration with designer Angel Chen. The company says it “made an internal decision” to move it online, hosting a private virtual event live streamed on WeChat instead. Cartier also cancelled an offline event that was scheduled on 29 January to celebrate the brand’s first year anniversary on Alibaba’s Tmall. Parent company Richemont declined to comment.
Other international brands have gone ahead with Chinese New Year events in the last few days in Shanghai, with organisers paying for the nucleic acid tests required for guests arriving from other cities like Beijing.
Others are ramping up safety measures at stores. A Lane Crawford spokesperson confirmed increased safety measures have been in place since December in Mainland China, including thermal camera temperature checks and more frequent cleaning and disinfecting of all areas of the stores. Staff has also been instructed to check customers’ health code prior to entry. Beauty services have been suspended in Shanghai and Beijing, while very limited one-on-one services remain available for select customers in Lane Crawford’s Chengdu store.
Further travel restrictions and lockdowns in China could unsettle luxury brands, which have become increasingly reliant on the region and come amid the build-up to the crucial Chinese New Year holiday period. According to Jefferies, the country accounted for an estimated 37 per cent of global luxury spending last year and will continue to do so in 2021. Last year, China was quick to bounce back following strict Covid-19 lockdowns, which were lifted starting from April. But on 27 January, China’s National Health Commission reported 54 new infections, including seven new cases in Shanghai. Reported cases are still low compared to the daily new infections recorded in Europe and the US, but the Chinese government has been swift in enacting preventive measures such as travel restrictions, local lockdowns and mass testing to curb the virus spread.
Travel restrictions during the Chinese New Year holiday could negatively impact luxury spending, UBS analysts warn, while store closures would compound risk. “Should the country fail to contain the spread of the virus, new lockdowns cannot be ruled out, which could have a far bigger impact on sales than travel restrictions alone,” analysts wrote in a note on 20 January. Currently, UBS stated, around 100 per cent of Chinese luxury consumption — one-third of global demand — is taking place in China. A note from Jefferies stated that Chinese New Year restrictions “would be unhelpful for the luxury industry as this is an important holiday for generating sales and many capsule collections have been created and marketed”.
As retailers brace for new lockdown restrictions, some never let up past measures. A spokesperson for New World Development, owner of the K11 malls, said the company didn’t need to apply further measures as they have continued to maintain the strict preventive ones imposed at the beginning of 2020.
New outbreaks were first detected starting from December in the northeastern provinces of Liaoning and Hebei, where partial lockdowns and mass testing have been enacted. Last week, Beijing tested more than two million people in two of its central districts, Xicheng and Dongcheng. Local authorities are advising citizens to “celebrate New Year on the spot”, encouraging people not to travel to their hometowns during the upcoming Spring Festival. The holiday, which falls on 12 February, sees millions of people crisscrossing the country every year. Authorities expect 1.7 billion trips to take place in the 40 days between 28 January and 8 March. Last year, the city of Wuhan was placed in lockdown two days before Chinese New Year, on 23 January, but many citizens were already on the road.
According to Tianbing Zhang, Deloitte APAC consumer product and retail sector leader, consumer sentiment remains stable as the government’s response to the latest outbreaks did not involve store or business closures. “The impact of the resurgence of Covid-19 cases and the restrictions around travel will be compensated by local in-city and online purchases,” he says, adding that even if stricter domestic travel restrictions are enacted the impact will probably only be felt by Hainan island, which has emerged as a favourite domestic duty-free destination in the last year. “The Chinese New Year pattern of travel is really towards [hometowns],” he underlines.
China Railway reported a 66 per cent decrease in the number of passengers travelling on 28 January, the first day of the travelling holiday period, compared to last year. Air travel has also been impacted by the new restrictions. According to ForwardKeys, the number of tickets issued to travel within China for the Chinese New Year as of 14 January was down 70.9 per cent over 2019 data. “Looking at issued tickets for Chinese domestic travel, the past few weeks of ticketing have been progressively getting worse,” says Nan Dai, China market expert at ForwardKeys, adding that the situation could change with last-minute bookings, which have become popular in 2020.
“The situation could be improved, but the priority for the Chinese authorities is to keep the spread of the virus under control nationwide,” he says.
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