The caravanserai of bosses, buyers, influencers, journalists, models and more has descended on the city for London Fashion Week (LFW), which begins today.
This year, some designers’ shows will take place in a controversial context. As David Bowie said in his song Fashion, this can be a world “full of tension and fear.”
As usual, it will focus on trends that appeal to the wealthy. But there will be even more soul-searching over which British and other luxury clothing, accessories and jewelery brands can thrive in the current difficult climate.
The source of anxiety is the decline in post-pandemic revenge spending on accessories and clothing, caused by higher inflation. The unwillingness to spend money among China’s millions of fashion fans is a major concern.
Susannah Streeter, of Hargreaves Lansdown, comments: ‘China, long the engine of growth for luxury brands, has been faltering.
Splash of color: Burberry models on the catwalk. There have been falls of more than 40% in the shares of three British houses: Burberry, Mulberry and Swiss Watches
Its economy has been hampered by slow growth, and the fragile housing market affects perceptions of wealth and curbs the willingness to spend big.’
Streeter says the fashion industry is crucial to the British economy, supporting 1.3 million jobs and contributing around £53 billion to GDP.
As a result, hopes are high at LFW for a change of heart on the ‘tourist tax’ in next month’s budget. Since 2020, visitors cannot reclaim VAT on UK purchases.
This has deterred around 2 million people from coming here and cost Britain £11.1 billion a year, says the Center for Economics and Business Research.
Helen Brocklebank, chief executive of Walpole, which promotes luxury goods businesses in Britain, says removing the tourist tax would give the Treasury £1.56 in other taxes for every £1 refunded in VAT to international visitors, thanks to the economic effects of visitor spending.
Even if the Chancellor were listening, fashion faces some unprecedented challenges, represented by the 27 per cent rise over the past 12 months in the shares of Hermes, the French maker of Birkin and Kelly bags.
Meanwhile, there have been falls of more than 40 percent in the shares of three British houses: Burberry, worn by Leomie Anderson, model and television presenter, Mulberry and Watches of Switzerland.
Trendsetter: model and TV presenter Leomie Anderson (pictured) in Burberry
Hermes boss Axel Dumas describes the sector as “polarized” between aspirational consumers and the enormously wealthy.
The first opt for the catwalk examples offered by Zara. Another beneficiary has been Uniqlo, part of the Japanese group Fast Retailing whose shares have soared.
Meanwhile, among the most loaded, the demand for Hermes bags does not decrease.
This week Christian McCaffrey, an American footballer for the San Francisco 49ers, arrived at the Super Bowl wearing a black Birkin worth £60,000. Dumas is so confident that Hermes will increase prices by 8 to 9 percent this year.
Luxury goods giant LVMH is also optimistic, thanks to its Sephora handbags and beauty stores, where applicants reach for their wallets.
But they are less willing to invest in a Burberry coat, a Mulberry bag or a watch from Watches of Switzerland, and set aside spare funds for vacations.
This may be good news, as Streeter points out, for Essilor Luxottica, the French-Italian owner of Ray-Ban sunglasses, whose shares have risen 9 percent in a year.
But the aspirational’s altered spending patterns increase pressure on Burberry, whose LFW show is on Monday.
Will designer Daniel Lee’s creations pack enough of a punch to drown out last month’s earnings warning?
Part of chief executive Jonathan Akeroyd’s turnaround plan is the Knight slouchy bag (yours, for around £2,500).
In the coming months, investors’ attention will focus on the attractiveness of this sector and the Chinese economy.
LMVH claims that Chinese tourists are returning to Europe.
But it will take inventiveness to attract these and other buyers.
Retail consultant Jonathan De Mello says luxury brands are “elevating” the retail experience in New York, London and elsewhere by creating VIP “lounge” areas in exclusive stores.
This can increase sales by 50 percent or more, especially if there is art on the walls.
Bernard Arnault, head of LVMH, says he sells culture, not bags.
Since he’s the industry guru, perhaps we can expect a lot of quirky British style at LFW, making shoppers fall in love all over again with Burberry, Mulberry and Watches of Switzerland.
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