Europe’s luxury stores making few sales with no tourists visiting and local shoppers thin on the ground
- Countries in Europe are coming out of lockdown, and luxury shops are reopening in the continent’s fashion capitals
- With no big-spending tourists and few local shoppers coming through their doors, expect the mother of all end-of-season sales to move on unsold inventory
As European luxury shopping capitals, from Paris to Milan, slowly emerge from coronavirus lockdown, stores are reopening to a trickle of customers, and virtually no tourists.
The absence of big-spending travellers, particularly from China, the Middle East and the United States, is a major drag on sales as, depending on the brand, they provide between 35 per cent and 55 per cent of revenues in Europe.
With a global recession looming, and fears of a second wave of infections, there seems little prospect of a big influx of tourists soon – or of local buyers making up the shortfall.
“It’s quiet. I think it will be like this for weeks to come – hopefully not months,” said a shop assistant at the Gucci stand in the upscale Rinascente department store.
Renato Borghi, head of fashion trade at Italian business lobby Confcommercio, said a straw poll of around 100 retailers in Milan showed an average 30 per cent year-on-year drop in sales in the first week since shops there reopened on May 18.
Borghi said for luxury stores in the city centre things were likely to have been worse since they rely so much on tourists and also because many locals are still working from home.
A shop assistant at a high-end shoe store, which he asked not to identify because he is not allowed to disclose sales data, said that on Saturday he sold four pair of shoes compared to 10 in normal times. A store manager at a jeweller in Rome said first-week sales were down almost 70 per cent on the previous year.
Business appeared brisker in Paris, where stores have been open for just over two weeks. On Monday afternoon, 17 people queued outside the flagship Louis Vuitton store on the Champs-Élysées, with white floor markings to keep them spaced out.
Despite that, consultancy Bain expects global sales of high-end clothing, handbags, jewellery and cosmetics to fall between 50 per cent and 60 per cent in the second quarter.
Gucci’s star designer Alessandro Michele, who announced this week he will move to just two, seasonless, fashion shows a year from five, said he wanted garments to stay in shops for longer.
Luca Solca, a luxury goods analyst at Bernstein, expects the “mother of all end-of-season sales” to offload excess stock.
In a sign shoppers are becoming more cautious as economies falter, the European Commission forecasts households in the euro area will save 19 per cent of their income this year – the highest since the start of monetary union, and up from 13 per cent in 2019.
With stores in London, another major European shopping hub, not due to reopen until June 15, “40 to 50 per cent of (luxury) sales have vanished in Europe and they won’t come back for a while”, said Jefferies analyst Flavio Cereda.
“Young people and the middle class – the engines of growth for the sector – have less money to spend. The core wealthy customers are coming back, but that’s not enough.”