Antonia Introduced 20% reductions on spring/summer collections

They hit stores in February and they are already on sale. Spring 2020 collections are expected to be the most significantly affected by the impact of the coronavirus crisis, which is shaking the very foundations of international economies.

With millions of brick-and-mortar stores shut down across Europe and the United States — shops are slowly reopening across China — a range of international online retailers are taking decisive measures to navigate the complicated season.

In Europe, from Italian leading e-commerce names, such as LuisaViaRoma, Antonia and Modes, to British players, including Fenwick, online retailers are rapidly marking down spring collections, ranging from 15 percent to 50 percent.

“In this period, retailers aligned offering reductions to support the business. For sure, this will boost competition,” said Aldo Carpinteri, founder and chief executive officer of Modes, which in 2019 registered sales of more than 100 million euros and is now offering a 20 percent discount on spring collection. “I don’t think this strategy will have a negative impact, we are all just offering customers opportunities in such a critical moment. The market is driven by the law of supply and demand. We are constantly monitoring the market moves and we try to catch all the opportunities.”

While 70 percent of the company’s sales are online, Modes also runs a significant brick-and-mortar business, including two new stores in Milan and St. Moritz, along with the storied boutique in Trapani, as well as summer seasonal units in Portofino and Favignana, a tiny island off the northwest coast of Sicily. In addition, Modes operates through a concession agreement three Balenciaga flagships, located in the Italian high-end seaside resorts Porto Cervo, Portofino and Forte dei Marmi.

Florence-based retailer LuisaViaRoma, which was among the Italian pioneers of online commerce, having debuted its own platform in 1999, is also banking on early discounts on spring 2020 fashion items, offering shoppers a 25 percent reduction on selected products. “It’s a measure we implemented to try to stay closer to our customers in this complex moment,” commented Nicola Antonelli, the company’s chief marketing officer.

In 2019, the company’s online sales accounted for 93 percent of LuisaViaRoma’s revenues, which amounted to 123 million euros, up 34 percent compared to the previous year. The remaining 7 percent was generated through its two brick-and-mortar units both located in Florence. While noting it’s too early to make forecasts on the impact the health emergency might have on business for 2020, Antonelli said he expects delays in deliveries of upcoming drops from the spring collections and certainly for the pre-fall lineups, generally landing in-store in the summer.

According to José Neves, Farfetch’s founder and chief executive officer, the platform’s sellers are “reactive” to sales rather than “proactive,” so if they see everyone else starting to discount, it is likely they will begin to do so, too. Although he admitted this is going to be an “unusual season,” Neves does not foresee any early discounting right now and he said that Farfetch’s priority is to keep its promises to stores, to continue fulfilling orders, and to keep business moving.

“Our focus is on being a full-priced business, but as you’d expect due to these unprecedented times we are having to work through contingency planning. But there’s nothing more to share at this stage,” said a Matchesfashion spokesperson, asked about the British retailer’s strategy. “The good thing is that as a global business we’re well positioned to respond to shifting patterns of demand across the world. The economic impacts of the coronavirus were felt first in Asia, and Asia will be the first region to recover; indeed we are already seeing some early signs of that. Our global footprint gives us some flexibility in how we respond to the challenges we face.”

The discounting issue is also on the table of brands, including British label Boden, which already took action by this week introducing a 50 percent discount online on spring products.

“We are obviously considering this. We are deciding what to do. For sure, there will be a lot of unsold stock in the warehouses,” said Missoni creative director Angela Missoni, asked about the possibility of reductions on spring collections. “We expect that some of our clients won’t pay or even won’t pick up the spring orders.”

According to Missoni, the current health crisis will cause a shift in the way people shop. “As it happened after World War II, when this epidemic is over, people will be keen to buy products that bring something positive to their lifestyle, products that have an added value, that exude high quality…and our brand will be in a good place,” she said.

During a conference call with analysts to discuss the group’s 2019 results earlier this month, Tod’s chief executive officer Umberto Macchi di Cellere said the company had “not yet taken a decision on discounts” and that the spring/summer season could be managed “in a reasonable way,” also leveraging “a well-structured network of outlets around the world that would allow to manage” remainders. Chief financial officer Emilio Macellari said that, compared to other fashion brands, Tod’s had a “higher proportion of carry-overs,” which reduced the risk and the impact of end-of-season sales.

Salvatore Ferragamo’s coo Alessandro Corsi also spoke during a call with analysts to comment on the company’s year-end results and said that “strategies in terms of discounts would be adopted case by case” and not in all markets at the same time as to “not jeopardize the brand’s image.”

However, the Camera della Moda is taking a very definitive stand on the topic. “We are thinking of stretching the spring season until July. We don’t want any store to close,” said Carlo Capasa, president of the Italian fashion chamber. “Discounts create a huge problem and this is not the moment to implement such a line of action. We are asking stores and brands to sell at full price. We must work all together to save the industry and jobs and to understand how to tackle the upcoming months.”

Francesco Tombolini, president of Camera Buyer, the association representing over 100 Italian luxury retailers, cited Roman emperor Marco Aurelio to review the current situation. “What is good for the beehive cannot be good for the bees,” he said, referring to the fact that these measures cannot be considered a cure to face the moment. “However, if from an ethical and business point of view, the decision to start reductions on spring collections so early is wrong and unfair for brick-and-mortar retailers, at the same time the online business is the last bastion for the retail industry.”

Describing early reductions “as a toxic medicine, but one which enables us to stay alive,” Tombolini predicted the impact of the coronavirus outbreak across the whole world will be “100 times stronger then that of 9/11,” and that “we are currently bringing old solutions to solve new problems.” Tombolini added that the industry needs a sort of Yalta conference, where “brands, retailers and makers write a new protocol for a new consumer. We all have to understand that the effect of this situation will be viral and will force the industry to reconsider marketing budgets, mark-ups and wholesale strategies.”

Discounting measures are not a strategy but a necessity, according to Herno ceo Claudio Marenzi, who is also president of Confindustria Moda. “This spring/summer season is definitely compromised and the fact that online stores are doing reductions online is a consequence,” he said, adding that “while the online commerce business has been overestimated so far, it is now becoming highly important.”

With six stores in Italian luxury sky resorts Cortina D’Ampezzo and another flagship in Dobbiaco, a town located by the the Italian-Austrian border, Franz Kraler is one of the many powerful Italian retailers not operating an online store. “We have always focused on the significant physical presence in the tourist areas we are based,” said Kraler owner Daniela Kraler. “All the luxury brands we work with are being extremely collaborative and they are offering us the possibility to defer payments and postpone summer products’ deliveries. I honestly think that this early reductions online will create a sort of price war, which will force us, when we can finally reopen, to ask brands to kick off the sale season much earlier than July.”

load comments
blog comments powered by Disqus