Hello BoF Professionals, welcome to our latest members-only briefing: The Week Ahead. Think of it as your “cheat sheet” to what everyone will be talking about on Monday.
THE CHEAT SHEET
Sustainability Takes Center Stage at Davos
- The World Economic Forum’s annual gathering of global leaders from business and politics, convenes in Davos, Switzerland from January 22-25
- Global Fashion Agenda, which advocates for sustainability, will announce their 2019 priorities for the industry
- Climate change ranked as business and political leaders’ second-biggest risk for 2019 in a WEF survey, the highest ranking ever
The fashion industry normally takes a back seat at the annual World Economic Forum in Davos, best known for bringing together powerful figures in finance and politics. This year is shaping up to be different. A host of fashion power players will be attending, including executives from H&M, Asos and Levi Strauss & Co. as part of the Global Fashion Agenda’s CEO Agenda 2019, which aims to set industry priorities for taking action on sustainability. Fashion’s moment in the Alpine sun comes as global leaders’ attention shifts from the economic matters and security threats that dominated past confabs to confront the looming threat of climate change. It’s a topic that’s become increasingly urgent for many brands, as the apparel industry is a major source of pollution – from plastic waste to carbon emissions – and faces disruptions to cotton and other key materials should global temperatures rise.
The Bottom Line: The growing consensus that drastic action is needed to stave off devastating climate change offers a rare opportunity for the fashion industry to steer the global agenda – if it can move beyond calls for action and toward implementing meaningful change.
Paris Couture Week in Good Times and Bad
- Paris Couture Week, limited to 17 sanctioned houses and invited guest designers, runs January 21-24
- Balmain returns after 16 years; Lebanese designer Rabih Kayrouz received an official haute couture designation
- Couture sales have been strong but low oil prices and China’s slowing economy may reduce the number of buyers
For much of the last decade, couturiers have been riding high. After all, what better way for the global elite to celebrate an economic boom than attending Paris Couture Week and dropping six figures on a gown? But the good times may be coming to a close: China’s slowing economy, America’s shaky stock market and plunging oil prices may have the 0.01 percent watching their spending more closely this year. To be sure, this is hardly 2009, when Christian Lacroix went into administration and other haute couture designers came close to shutting their doors. But if sales dip, the appeal of lavishing resources on a niche market, despite the marketing halo it provides, may dim.
The Bottom Line: Couture’s hand-made nature, intimate pool of buyers and marketing value give the week’s shows a compelling reason to exist at a time when some are questioning the purpose of traditional fashion weeks. But even the makers of $150,000 pearl-encrusted dresses aren’t immune to global economic forces.
Luxury’s China Problem Comes to the Fore
- Analysts predict China’s economy grew 6.4 percent in the fourth quarter; data is due out 10 am Monday in Beijing (9 pm ET Sunday)
- Anything slower would hammer shares of luxury brands, many of which depend on China for growth
- Luxury apparel brands still broadly predict strong 2019 sales in China; watch and jewellery brands are less sanguine
It’s been three months since whispers of a Chinese economic slowdown first spooked the luxury market. Now it’s starting to look like a possible crisis. The country’s economy is seen growing at its slowest pace since 2009, and the Swiss watch industry, among others, have reported slower sales. Luxury brands are locked into this roller coaster; China’s share of luxury growth is so huge that there isn’t an alternative market to tap if things go south. The news isn’t all bad: 6 percent growth is nothing to sneeze at, and China and US trade officials appear to be working on a deal that would stave off new tariffs on some luxury goods.
The Bottom Line: Smart inventory forecasting and dextrous marketing can go a long way toward mitigating the impact of a slowdown. Brands must also continue to invest. Even in a less-vibrant China, the country is a critical growth engine and consumers there are doing more luxury shopping at home rather than on trips abroad.
COMMENTS OF THE WEEK
BoF readers reacted strongly to our report “Why Hasn’t #MeToo Come for Ian Connor?“:
“Ethical fashion also applies to the behavior & vibes of a brand. Educate yourself before you spend your money with a company.” @radiantshade
“This has to stop, I’m exhausted from seeing women being treated like this. Stop glamourising this man please.” @madeleineholth
“His survivors are women of colour and it’s been made clear throughout history and in the present day that society cares less (or not at all) when survivors are women of colour.” @ramona.winning
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