Virtual fashion technology booms in China

Shanghai Fashion Week’s online runway show was viewed by 800 million active users.

Amongst the worst hit consumer goods industries by the pandemic and subsequent lockdowns, many fashion players in Asia quickly embraced online channels and the use of virtual fashion technology. This was especially the case in China, Euromonitor International’s consultant Radhika Singal told Retail Asia.

For instance, Shanghai Fashion Week teamed up with Tmall to broadcast its runway show online, where consumers could buy items as they watched and commented in real time. Sportswear players likewise took the opportunity, with Nike moving to leverage the digital app ecosystem and an expert trainer network to inspire consumers across China to stay active and connected whilst staying at home.

And these events saw success—the runway show was notably attended by 800 million active users, and weekly active users for all of Nike activity apps in China surged 80% by the end of Q3 versus the beginning of the quarter

This reflected an overall trend in the retail scene moving to online. “Shut-in consumers turned to digital channels to obtain products, forcing companies to rethink or launch digital strategies for the first time. Whilst the pandemic may put many players out of business, it will certainly accelerate much needed innovation, digitalisation and sensible cadence of production and consumption,” Singal said.

With these, e-commerce, as well as immersive technologies such as augmented reality (AR) and virtual reality (VR), are expected to thrive within the context of social distancing. Physical retail would be reimagined with the use of conversational commerce, 3D fitting rooms and livestreaming within the store.

“The severity of the downturn and its global nature should encourage fashion players to consider bold strategies to survive, including never before considered collaboration with competitors, partnerships with suppliers or agreements with landlords on a mutually beneficial basis, building on the sense of community COVID-19 has unlocked,” Singal noted.

However, whilst companies with existing e-commerce operations have an avenue to remain operating, a report from Fitch Solutions noted that some third-party retailers have placed greater focus on the delivery of priority products, causing delivery disruption for the fashion sector. Further, sales of fashion in China for online avenues still recorded an 18.1% fall in the first two months of 2020, albeit not as steep as the drop in brick-and-mortar sales of 30.9%.

There is still recovery in sight for the segment, according to Jefferies analyst Anne Ling, with stronger brands and stronger subsegments like sportswear and lux and cosmetics recovering faster. “Government’s coupon has helped and there was some pent-up demand in our view. Part of this demand might normalise. We believe one of the key factors for consumption to recover steadily is in controlling the unemployment rate,” she said.

Fitch Solutions expects a decline in consumer spending on fashion, both in China and globally, driven by supply and demand factors, with effects possibly extending beyond lockdowns, over the rest of 2020 and into the medium term. Singal cited high-end designer apparel and luxury goods to likely be the worst hit, given its heavy reliance on foreign spend. Meanwhile, more essential and affordable categories, such as loungewear, are set to benefit as consumers are spending longer hours at home.

“Frugal consumption and off-price retail will gain ground with mid-price brands suffering the most as consumers shift behaviour towards increasing savings to secure their future. Sportswear will suffer as well, but because of the health/leisure component, is likely to suffer less in comparison,” Singal noted.