While these may not be the worst of times for the fashion industry, they’ve certainly been painful for luxury players and high street retailers alike, with the next six months set to deliver more slow growth and uneven demand.

This story first appeared in the May 11, 2016 issue of WWD. Subscribe Today.

Most of Europe’s big-name brands — from Burberry to Hermès — have been witnessing a slowdown in demand, while upscale retailers are being forced to move faster and embrace omnichannel ever more as footfall wanes.

A hostile macroeconomic environment — marked by stock-market and oil-price volatility, low interest rates and inflation, the deterioration of Hong Kong as a shopping hot spot for big spenders and fears of fresh terrorist attacks in Europe — have dented demand for luxury goods and spooked the big brands that were reliant for years on tourist flows.

In March, Chinese tax-free shopping spending turned negative, falling 24 percent year-on-year. It followed a period of slow growth for the first two months of 2016 and an overall increase of 58 percent in 2015, according to Global Blue, the tax-free shopping agency.

The decline was due to several factors, including the new and more difficult Schengen biometric visa demands and terrorist attacks in Europe over the past six months.

At the lower end of the market, consumers continue to scour for bargains — mostly online — and shun the bricks-and-mortar flagships that cost a fortune to build and come with expensive leases.

“People are saying, ‘That’s alright, but I can get it cheaper online,’” said George Wallace, chief executive officer of MHE Retail, a London-based consultancy. “That is a big change in the culture. People don’t say, ‘I’ll go to such-and-such store because I always go there or I’ve been there before.’ They’ll rather coldly assess [where they make their purchase] to all of those issues.”

In the U.K., where citizens are preparing to go to the polls in June to decide whether they want Britain to remain in the European Union — bringing even more uncertainty into the marketplace — April retail sales fell at their fastest pace since January 2012.

According to the Confederation of British Industry, a “modest rise” in sales is expected in May.

“However, with margins remaining tight within the sector, retailers will continue to operate in a fiercely competitive environment for some time,” said Rain Newton-Smith, CBI’s director of economics.

Harsha Wickremasinghe, an associate at Livingstone Partners, the international M&A and debt advisory firm, said in the U.K. consumers will continue to be driven toward value, but “they also want regularly refreshed products.”

Wickremasinghe said retailers will also have to work harder to ensure they get their allocation of household disposable income, against a backdrop of continued deflation in the sector. “They have to fight for every element of household spend,” he said.

According to Euromonitor International, the global luxury goods industry in 2016 is set to rise “only slowly, with top-line growth remaining disappointing.”

The market research firm said the industry faces mounting risks this year with slowdowns in key emerging markets.

“At the same time, luxury brands and retailers will continue to seek ways to expand their portfolios, driving up investment in ‘luxury experiences’ and ‘lifestyle branding,’ as well as harnessing social media and tapping into the psyche of the new digital consumer,” it said.

In a separate report on the apparel and footwear industries in 2016, Euromonitor said despite early signs of financial recovery, consumers in highly developed markets are still cautious and pre-crisis purchasing power levels have not been recovered yet.

It added that fast-fashion brands are having to find new manufacturing bases because the stronger dollar is putting heavy pressure on profit margins.

“Giants like H&M, which sources up to 80 percent of its portfolio from Southeast Asian production hubs, has suffered in a greater extent with the strengthening of the greenback,” said Euromonitor.

It said sportswear remains the best-performing segment within the apparel and footwear industry, generating almost a quarter of total value in 2015.

Not everyone, however, believes that the year — at least from a macroeconomic point of view — will be a gloomy one. UBS said in a recent report it remained “constructive” about the outlook for the world economy.

The bank is forecasting global growth to be 2.9 percent in 2016 followed by 3.3 percent in 2017. That follows growth of 3.1 percent in 2015.

UBS pinned its optimism on an upturn in leading indicators of economic activity, including manufacturing purchasing manager indices.

“Further positives include recent evidence showing stronger G3 capital goods orders and sturdier manufacturing new orders also in the G3, along with restrained inflation,” UBS said. “Real global trade is also holding up with trade in goods and services hitting a record high as a share of global GDP.”

Though China’s gross domestic product is growing at its slowest pace in 25 years, registering 6.7 percent growth in the first quarter of 2016, the apparel and textile industry is generally more concerned with other gauges of economic activity.

CHIC Shanghai organizer Chen Dapeng, executive vice president of the China National Garment Association, said the continued double-digit growth of China’s retail sales, which grew 10.7 percent in 2015, was a more important factor for these consumer-focused industries. Another positive is the continued growth of the middle class of China, which according to Chen, will continue to propel growth for the medium-term.

One of the biggest economic trends in Japan continues to be the steady rise of international tourists. Many of these tourists head to Japan specifically for shopping trips, giving a boost to the retail sector and the economy in general. Last year, the number of foreign visitors to Japan totaled nearly 20 million, an increase of over 47 percent on the previous year. In the first three months of 2016 the numbers have continued to rise, with over 2 million visitors coming in March, 31.7 percent more than the same month in 2015.

Last year, the weak yen helped make it easier for overseas buyers to order products from Japanese companies, but recently the yen has begun to strengthen, which may signal that growth could slow in the future. However, some analysts don’t see this to be the case.

“Some equity market observers were probably concerned that yen appreciation from January through February would dent inbound demand. However, we have yet to see any slowdown in visitor numbers,” research analyst Masaharu Hirokane wrote in a report published by Nomura on March 16.

Hirokane wrote that Korean tourists are considered to be the most sensitive to a stronger yen, and yet the numbers of Korean visitors to Japan continue to rise. He expects the number of overall international visitors to Japan to grow 22 percent year-on-year in 2016 to 24.07 million, with the number of Chinese visitors up 41 percent to 7.04 million.

“We think that increased flights by major airlines and the rise in the number of low-cost carriers and cruise ships serving Japan will stimulate demand,” Hirokane wrote.

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