Retail sales dropped 15% in the June 2020 quarter in New Zealand due to COVID-19 and the first lockdown.
But shoe designer Kathryn Wilson is optimistic about the future of retail and says her online sales saw 28% growth in June, compared to June 2019.
The luxury brand’s in-store retail sales in June were lower than last year’s, but the growth in online business meant that Wilson’s overall figures weren’t as low as expected.
Retail strategist and First Retail managing director Chris Wilkinson says we’re seeing contradictory trends happening in the market.
“Luxury retailers are missing out on the visitor and tourist market, hence the 15% drop in retail sales.
“However, they have been buoyed by domestic spending with New Zealand consumers treating themselves and redirecting spend that would otherwise have happened during overseas holidays.
Wilson’s footwear sales show the ability for luxury products to stay afloat during the COVID crisis due to their ability to “lighten up someone’s mood”, she says.
“During the second lockdown in Auckland we had three stores shut, which we were still paying the lease on, but we’re really fortunate that our online store has been super busy,” Wilson says.
“We relaunched our digital platform a year ago with new links to our social media accounts and Electronic Direct Mail (EDMs).
“We're a year into the new system along with a new digital strategy and advertising,” she says.
Chris Wilkinson says consumers have been busy 'nesting' - making sure they have nice things in their lives in the face of the COVID challenge.
“That's translated into apparel and footwear, jewellery, homeware and home improvement and even luxury cars.
“It would be true to say that many businesses in the luxury segment have been pleasantly surprised and grateful for this boost, however, there is an equal realism that this may not continue indefinitely, as the economy continues to slow down,” Wilkinson says.
The strategist says that COVID has also pushed many consumers toward e-commerce, some for the first time with larger purchases.
“The frequency of online spending has jumped as shoppers increasingly opt for this channel for convenience and safety.
“We'll likely see this continue with consumers increasingly 'blending' their relationships with retailers between physical and digital channels,” he says.
Kathryn Wilson sees a merge between the physical and digital retail platforms in the future, which she has already seen in Hong Kong.
“I think that in-store service and the emotion of walking into a space with an ambiance will still be needed.
“There is now more of a digital focus, but I do feel passionate about showrooms for the brand alongside that digital presence in-store.
“There is some movement for that in Hong Kong already with Harvey Nichols within the shoe department.
“They have an integration of technology in the physical showroom and then they email the customer a shopping list for a full possible wardrobe list,” she says.
Despite the upturn in online sales, Kathryn Wilson has still been weathering the COVID storm as other businesses have, which has hit her international manufacturing and shipment processes.
We spoke to the designer about how she has been impacted by the pandemic.
REDnews Q&A with Kathryn Wilson
How was business during Auckland’s second lockdown?
“Last time it felt like we were in crisis control, but the second time I feel like we just had to push through it. Our online store has been super busy, but I have three stores in Auckland which are shut that we’re paying leases on. We do seem to have comradery with our customers for being a New Zealand brand though. People have even been buying vouchers for future use.”
How has your business changed since COVID?
“In January we started to pivot because our manufacturing is offshore. Wuhan is just an eight-hour drive from where we manufacture in Guangzhou – so we halted manufacturing.
“Immediately that impacted and delayed our manufacturing. We were also making production in bulk and we had delays at the port.
“By March, the Italian factories we also work with were shut, so we quickly had to look at other partnerships like Spain, Portugal, Turkey and Brazil – it was crisis control. The cost of air freight to deliver product doubled overnight. We usually use sea freight but had to switch to air freight to fulfill wholesale orders, so our costs doubled, and profits halved.
“We have 80 stockists around NZ that needed stock on time, because that also impacts their turnover.
“By the time NZ was impacted with COVID in March/April, we had to look more on the consumer level rather than manufacturing. So, we focused on our digital strategy and spent more money on digital marketing, as that would be our only stream of revenue.
“There are still major delays at ports and there’s a backlog with sea freight.
“Our financial planners say we just need to stay afloat to get through this year.
“We are still about to launch our new collection called Silver Linings, which was inspired by the silver lining of this crisis.”
What are your predictions for the future of retail?
"I think it’ll be a while until retail confidence returns. But I'm an internal optimist so I think we’re lucky being a luxury product that can lighten someone’s mood.
What have you learnt from this crisis?
“After 17 years in business, this crisis has taught me some new lessons. I have had to really look at our balance sheet and look at every single fixed cost. It’s also good to think outside of my comfort zone to develop new strategies. New ideas come out of crisis and recessions.”
You spoke at the Women of Influence Virtual Speaker Series... how important is it for you to inspire other women in business?
“It is important to me, especially now that I’m a mum of two girls. It has always been front of mind for me though because so many people have helped me in my career. I would love to nurture the next generation of designers and inspire entrepreneurship.”
Who inspires you?
“I'm driven by people around me that show ambition, like my peers, colleagues, friends and family. I’m inspired by anyone who’s doing something they love, thinking big and being brave.”