The war crisis in Ukraine has made the critical issues triggered by the pandemic structural. For example inflation and the energy crisis. Brands, signs, and the fashion and luxury industry face yet another emergency. A situation that is redefining scenarios in a more structural way than one might think. Here, then, are the strategies to put in place and the mistakes to avoid in order not to be put out of the game, especially by panic
In collaboration with Altavia
In the months leading up to the war crisis in Ukraine, threats such as the energy crisis and inflation were already threatening the hoped-for recovery of fashion brands. With the onset of hostilities and the deterioration of the geopolitical balance, many problems were structural. These affect every aspect of the business, from production to distribution. And they have once again forced the fashion system to rethink its models in their entirety and face new criticalities. Therefore, we have selected three possible strategies and three mistakes not to be made by those operating in the fashion world at a time like this, dominated by market uncertainty and changing geopolitical balances.
Three possible strategies
1 > Take a clear position and act accordingly
People need to identify with their brands. Even if sanctions do not directly affect the big brands still operating in Russia, it is essential to take a clear position and act consistently. Brands, through their communities, can communicate a message and contribute to information by reaching the younger generations. Today, many brands have suspended sales and production in Russia or are participating in fundraising and support actions for the Ukrainian population. Taking a stand is necessary to maintain a link on which to build when hostilities cease.
2 > Considering the opportunities of a reshoring policy
The return to domestic production was seen by many until a few months ago as counterproductive due to high entry and production costs. Today it could become a necessity. Crises often give rise to opportunities for those who do not panic. Opportunities that today could translate into reshoring or nearshoring.
3 > Exploring emerging and growth markets
As the balance of power between world powers changes, so do market opportunities. Western supremacy is increasingly in question, and the purchasing powers we are used to are being jeopardised in a systemic way. It was evident that the fashion world will no longer be able to rely as much as before on Russia, a market that in recent years has represented an essential part of the turnover of luxury brands. We have repeatedly mentioned the rapid growth of the Asian market, with China in the lead, but not only there.
We are also witnessing an increasing interest in luxury in countries such as South Korea or India. It may be necessary to review one’s development strategies in Beijing in the face of possible new tensions. Brands will have to know and be able to interpret the peculiarities of each market (whether new or consolidated) with constantly updated proposals and effective revisions of distribution channels. In the West, on the other hand, we are seeing a return to the importance of local shopping and a renaissance of the physical store. Brands need to rethink their relationship with retail in the domestic market. The point of sale must be able to transform itself into a highly experiential place, an expression of brand identity.
3 mistakes not to make
1 > Underestimating the risks of the Asian market
Although the Asian market undoubtedly represents a great opportunity, operating within it is not without risks and possible difficulties. For example, in recent months, a feeling of identity has developed in China, particularly among young people. Something akin to “shopping nationalism“, with a growing interest in local designers and brands that risks taking away space from Western brands. And that’s not all: it is also necessary to bear in mind that the “zero Covid” policy of many Asian countries inevitably entails a greater risk of closures and disruptions to the production chain, as it is happening in China.
2 > Neglecting cybersecurity
The war crisis in Ukraine shows the world the importance of “cyber resilience”. In 2021, KPMG reported a significant increase in cyber-attacks and digital security breaches due to the Covid-driven digitisation drive in many companies. E-commerce is expected to grow further in the coming years, which will pose risks to the successful completion of transactions. Moreover, companies are becoming more and more ‘data driven’, and fashion brands need to protect themselves against cyberattacks that threaten the security of ultra-sensitive data. For example, those relating to patents, customers, or, much more banally, the company’s internal information privacy.
3 > Don’t panic
The right attitude in these cases is to assess your strategic options carefully. Perhaps by getting support in the rapid implementation of short-term tactical measures. For example: increasing the tools for listening and dialogue with the market and with the actors of change. Or: remain agile and proactive, do not fear moments of study and reflection, prepare for rapid action. And again: avoid stagnation and the repetition of behaviour that is no longer functional. Standing still does not pay because the context changes too quickly. Decision-makers must care about people who work in and depend on companies. The current generation of leaders may not be used to the emotional management of people who today – inevitably – fear for their future more than in the past.