Explosions in Brussels

Terror struck in the heart of the European continent again on Tuesday, setting the world on edge and dealing another blow to the retail and luxury sectors, already smarting from withering tourism.

According to press reports, at least 34 people died and more than 100 were wounded on Tuesday morning in two separate bomb attacks in Brussels, at Zaventem airport and Maelbeek metro station, with the city going into full lockdown for the second time since November, following the Paris atrocities that claimed some 130 lives.

“By attacking Brussels, they attacked Europe and the world we grew up in,” said Diane von Furstenberg, who was born in Brussels.

The Islamic State claimed responsibility for the carnage as Belgium raised terrorism alerts to the highest levels and commenced three days of national mourning.

“It’s a catastrophe,” said Belgian designer Jean-Paul Knott. He was speaking from his studio in Brussels’ city center, where he’s working on his spring 2017 collection. “We heard sirens all morning and they started dwindling down in the afternoon. I stepped out around 3 p.m. to grab lunch. Everything is closed — stores, metro stations. I saw people run to get back home. Now, streets are empty; it’s silence. We hear metro stations are to reopen later today. Like in Paris, life will gradually resume.”

Belgian department store chain Galeria Inno, a subsidiary of Hudson’s Bay Co.’s Kaufhof department store division, decided to keep its four stores in greater Brussels closed. Its 12 other Belgian stores remained open with heightened security, a spokesman said.

While the news of the Belgian bombs will eventually fall off the front pages in the coming days, the cloud of fear will remain, with tourists — already scared off by the November atrocities in Paris — expected to steer clear of the Continent once again. The Brussels attacks came only three days after a suicide bombing in Istanbul claimed the lives of five people and injured at least 36. That attack — the fourth in Turkey this year alone — took place on Saturday on Istiklal Street, a busy pedestrian avenue lined with international retailers such as Mango and Zara; local stores; restaurants; cafes, and nightclubs.

“We are in a new era now, with terrorism almost endemic. You could call it serial terrorism. Barely a fortnight goes by before a new terrorist attack hits the news and people no longer see themselves as having a one-in-a-million chance of dying,” said George Wallace, chief executive officer of the consultancy MHE Retail. “Terrorism is now beginning to impact domestic shoppers who would have once said to their children, ‘Let’s go to Westfield [mall] today and have lunch.’ Now they won’t do that.

“Terrorism is now front-of-mind for so many people that major shopping malls are a red alert. Instead of Westfield, they’ll go to Selfridges or buy online. Spending will carry on but in different places.”

Westfield’s London mall, which houses the Yoox Net-a-porter headquarters and more than 250 major retailers, almost fell victim to a suicide bomb last year. Husband-and-wife terrorists were planning an attack to mark the 7/7 London Underground and bus bombings in the British capital, but they were arrested after police discovered tweets that explicitly stated their plans to stage the attacks and found guilty last December.

Wallace also warned that brands with expensive retail rents to pay in the larger cities would probably see their like-for-like sales suffer, “and those rents could come back to bite.” He pointed out that falling like-for-like sales are not good for sentiment, investor confidence or share prices, and it’s a “nervous” time on a number of levels.

The most recent figures from Global Blue, a tax refund company that tracks tourist flows and spend in regions including Europe and Asia Pacific, show that spending in Europe was negative for the second month in a row, or minus 2 percent in February after an 8.4 percent fall in January.

France, which saw an average monthly sales growth of 40 percent year-on-year during 2015, slowed down sharply in October to 5.4 percent.

Not surprisingly, the spending growth turned negative in November, minus 2.6 percent, which deteriorated further to minus 8.3 percent in December, minus 20.8 percent in January and minus 10.4 percent in February “after a significant reduction in incoming tourists post-the November terrorist attacks in Paris,” according to Barclays, which analyzed the data.

The bank pointed out that other Northern European countries also saw a decline in traffic, “which aligns with the comments made by tour operators and the brands stating that tourists have diverted travel away from Europe on the back of terror threats.”

The January-February period taken together saw an 8 percent decline from Chinese travelers to Europe. The Chinese represent about 36 percent of spending.

The reluctance of travelers from Asia to travel to Europe didn’t only impact tourists, however — Japanese retailers severely cut back their trips to the European men’s and women’s runway shows in January, February and March following the attacks in Paris.

Tuesday’s Swiss Watch Exports data delivered more evidence of the lingering impact of the Paris attacks: While sales to Europe were up 4 percent overall, the U.K. and France both saw negative growth in February, with sales falling 3.3 percent and 5.1 percent, respectively.

Back in January, both Burberry Group and Compagnie Financière Richemont flagged uneven tourist patterns as a drag on sales in the three months to Dec. 31 — the key third quarter.

Early Tuesday, before the Brussels attacks occurred, British retail analysts Springboard were already predicting slower growth and declining footfall during the four-day Easter weekend in Britain, a major shopping period in the U.K. Springboard is expecting the U.K. high streets to see “modest growth” of just 1.3 percent over the weekend and a decline in footfall of 1.1 percent year-on-year.

Although Springboard blamed cold and wet weather, plus the early date of Easter, there is little doubt that the threat of terrorism is also denting the numbers.

According to British newspaper reports earlier this week, special forces were put on alert in London, preparing for as many as 10 simultaneous terror attacks. Earlier on Tuesday, however, following the strikes in Brussels, London Mayor Boris Johnson said there was no evidence of an imminent attack in London.

Following the Brussels attack, Mark Rowley, assistant commissioner of the national lead for Counter Terrorism Policing, said London’s Metropolitan Police is increasing policing at key locations across the city, including transport hubs, as a precautionary measure.

“In London specifically, the Metropolitan Police Service has mobilized additional officers who will carry out highly visible patrols at key locations around the capital, including the transport network,” said Rowley. “The police presence across London and the rest of the U.K. is constantly under review. We are in close liaison with the Belgium authorities and will continue to monitor the situation. The threat to the U.K. from international terrorism remains as severe as it has been since August 2014, meaning an attack is highly likely.”

According to the BBC, security was increased at Gatwick and Heathrow airports and the U.K. Foreign Office has advised British nationals to avoid crowded areas in Belgium.

President Obama, who is in Cuba for an historic visit to strengthen bilateral ties and open markets to U.S. goods and services, addressed the terrorist attacks in Belgium before a key speech on Tuesday morning.

“The thoughts and prayers of the American people are with the people of Belgium who stand in solidarity with them in condemning these outrageous attacks against innocent people. We will do whatever is necessary to support our friends and allies in Belgium in bringing to justice those who are responsible. This is yet another reminder that the world must unite. We must be together regardless of nationality, or race or faith, in fighting against the scourge of terrorism.”

He added: “We can and we will [defend against those] who threaten the safety and security of people around the world.”

In France, interior minister Bernard Cazeneuve dispatched some 1,600 additional security officers, and reinforced security in all transport and train stations, following an emergency meeting at the Élysée Palace Tuesday morning. He also noted that since Nov. 13, 5,000 additional officers have been mobilized to secure French borders. Six million individuals have been checked, 10,000 of whom have been refused entry.

The Brussels attacks came four days after Salah Abdeslam, the sole remaining fugitive in the Paris atrocities, was captured in Brussels.

“We’re at war,” said French Prime Minister Manuel Valls. Security measures are still at the highest level since the November terror attacks in Paris and the state of emergency was extended in February until late May.

On Tuesday night, Paris Mayor Anne Hidalgo ordered the Eiffel Tower to be illuminated in the colors of the Belgian flag to show solidarity with the victims and the Belgian people.

“Faced with these despicable, arbitrary and cowardly actions, we have the responsibility to uphold our convictions,” said Hidalgo. “Our response must be firm and uncompromising: on the one hand, to guarantee the safety of our citizens — and for this I rely on the police, gendarmes and the army mobilized in the field — and on the other hand by continuing and stepping up our actions in the fields of education, good cohabitation and dialogue between communities. We will not give up. We will remain united in defending our model of society.”

According to a new report released by the Paris tourist and convention office, the city was deeply impacted by the attacks that struck the city in January 2015 and then again in November. Hotels in the French capital registered 15.23 million bookings for the whole year, down 1.5 percent versus 2014, with two downward peaks — 6 percent in January and 14 percent for the months of November and December combined.

Japanese tourists were the most reluctant travelers, down 23.4 percent for the year, though visitors from the U.S. and China came in greater numbers than before, up 5.5 percent and 41.8 percent, respectively.

The tourist office noted that the situation remained tense in January, which saw hotel bookings slump by 7 percent versus January 2015, already impacted by the first wave of violence. Against January 2014, the decline stood at 9 percent.

To be able to assess long-term effects, Thomas Deschamps, in charge of the office’s statistics division, said: “The crucial period will be at the end of March, beginning of April, which coincides with the Easter holiday period, typically a busy season for tourists.”

Deschamps added that he was optimistic for the remainder of the year as France is gearing up to host the UEFA European soccer championships, slated to run in Paris from June 10 through July 10.

“The Euro [the championships] should bring us a clientele. Already, air travel reservations are up 4 percent for the month of June,” he noted. Paris’ two major airports, Charles de Gaulle and Orly, logged an increase of 3 percent in arrivals in 2015, but a spokesman for the airports said the November attacks squeezed the figure by 0.7 percent to 0.8 percent for the full year.

The number of passengers was down 1.8 percent in November and slumped another 2.8 percent in December. The spokesperson confirmed that incoming traffic from Japan, Korea and Singapore was particularly affected, though figures seemed to be recovering in January, up 0.9 percent with 4.7 million passengers landing in Paris.

The city of Paris is stepping up spending to enforce post-attack measures and install long-term prevention plans.

Hidalgo has allocated more than 5 million euros, or $5.6 million at current exchange, for actions related to economic and cultural activities. Some 2 million euros, or $2.3 million, have been assigned to the performing arts, a sector that has been particularly impacted by the November events, the mayor’s office said, adding that the bulk of the money would go into the safety of theater and concert halls, as well as museums.

Another 3.2 million euros, or $3.6 million, are to help the social and medical sectors. The city said it wants to invest in its youth via a series of structural plans aimed to fight an elevated high-school dropout rate, particularly in the city’s suburbs, where a significant percentage of the population are immigrants or descendants of immigrants. They are to see more social stewardship programs, among others.

The prevention of radicalization in the city’s prisons is also on the map, along with improved post-traumatic care and the training of first aid personnel.

According to a spokesperson for the Paris mayor’s office, hotel bookings plummeted 20 percent in the second half of November but have been recovering since.

“Parisian life is taking its course, activity is picking up again with an extremely solid tourist sector,” the spokesperson told WWD, though it’s unclear how the new wave of violence in Brussels would spill over to Paris.

Following last November’s attacks, analysts suggested the economic consequences would likely be modest, provided there would be no further incidents and no greater disruption to business activity from enhanced border controls.

In light of Tuesday’s events, Luca Solca, analyst at Citi, stressed the importance of tourism to the French economy.

“Terrorist acts discourage travel – at least in the short term. This is a negative for luxury goods: We know that more than 60 percent of luxury products are bought by people traveling,” he noted, adding: “Terrorist attacks in Europe are particularly damaging for the industry, as Europe is where you have today the lowest prices, and where many consumers — and professionals — come to shop.”

The Paris events took a direct toll on apparel consumption, which had started to see a recovery in the months of August, September and October. “The attacks of November 13 altered the playing field, and business activity that month registered a sharp decline compared to November 2014, down 7.7 percent in value terms,” according to the French Institute of Fashion (IFM). “Year-end festivities failed to reverse the trend, especially as the mild December weather limited clothing buys, eliminating any hope of a consumer recovery in 2015.”

Subsequently, textile and apparel consumption for the full year 2015 is expected to show a slight decline of 0.4 percent versus 2014.

Première Vision, the bellwether textile trade show that attracts a large number of international visitors, registered a 5.2 percent drop in visitors year-on-year to 55,025 during its last edition in February. Visitors from Japan were down 19 percent to 1,258, though the organizers noted that foot traffic from the U.S. increased 6 percent to 1,847.

Despite the recent terror attacks in Istanbul and Brussels, Première Vision Istanbul is slated to go on as planned from March 23 to 25 — albeit with increased security measures. “Please kindly note that we took the necessary actions to reinforce the security measures and welcome you in a safe and successful show,” it posted on its Web site.

At Texworld and sister shows Apparel Sourcing, Avantex and Avanprint, which were held at the same time, attendance declined by around 7 percent from last year’s 13,639.

A spokeswoman for Galeries Lafayette Group said that “traffic is still not exactly back,” without providing any details.

In the immediate aftermath of the November attacks, the French capital’s two major department stores — Galeries Lafayette and Printemps — had reported a slump in sales of 50 percent and 30 percent, respectively.

Both venues have beefed up security measures to reassure customers since then.