ITALIAN FASHION INDUSTRY TOOK HARD HIT FROM CORONAVIRUS

Milan’s first Digital Fashion Week kicked off on Tuesday with a digital press conference hosted by Carlo Capasa, president of the Camera Nazionale della Moda Italiana, Milan mayor Giuseppe Sala, and Carlo Ferro, chairman of the Italian Trade Agency (ITA).

While the press conference was mostly positive, the hosts touched on the newly-released Fashion Economic Trends report by the Camera Nazionale della Moda Italiana, which reflected the unfortunate hit the Italian fashion industry endured due to Coronavirus.

In April alone, sales plummeted 78 percent, and in the first four months of the year, they decreased 28 percent, compared with the same period of 2019.

The contraction occurred on both domestic and foreign markets, due to the lockdown and the general world trade drop of 7 percent.

According to the trend report, the negative impact of the lockdown was greater on fashion than on the rest of Italian manufacturing, with the automotive industry also largely affected.

While the size of the drop recorded in the past months is now clear, a big question mark remains about the companies’ capacity to survive the shock and to react.

Another study just published by the Italian National Institute of Statistics (ISTAT) shows that fashion is in a peculiar situation, characterized by a strong polarization: on the one hand, it is the manufacturing sector with the highest share of businesses at risk of survival (48.2 percent), and on the other hand, it is the sector with the highest percentage of companies that claim to have initiated reorganization and change strategies (38.4 percent).

The figures that are now available up to April only slightly worsens the forecasts presented in the update noting May sales. Provisional estimations point towards a drop in sales of around 30 percent in the first half compared to the same months of 2019. The developments in the second half of the year are difficult to predict; two extreme scenarios can be assumed.

Scenario 1: September reopening in Italy without a second outbreak of the virus, complete lifting of movements and shop restrictions, resumption of international trade flows. In this case, the overall reduction in sales in 2020 would be close to 15 percent.

Scenario 2: September reopening in Italy with new outbreaks of the virus, further tightening of movements and shop restrictions, failure to resume international trade flows. In this case, the overall reduction in sales in 2020 would be over 18 percent.

For both scenarios, it is assumed that the financial support measures will prevent the crisis of 48 percent of fashion companies deemed at risk by ISTAT.