As per the Collins English Dictionary, non-essential means not absolutely necessary. Some of the synonyms of non-essential are unnecessary, superfluous, and peripheral. The disproportionate distribution of wealth and resources in the world and within countries has contributed in forming wasteful habits. A section of modern consumers feel a sense of accomplishment when they splurge on their urge. Every individual has a threshold for defining what is essential for them. Material possessions have made us the most comfortable generation ever. Desire sustains life on Earth, and it is important for the world to define what makes them happy and what keeps them alive.
FOMO and YOLO
Anyone who is someone works to procure basic necessities of life. Those who transition from being have-nots to haves, set their sights on bigger goals. These aspirations give rise to opportunities for people who turn producers and providers of these objects and services, respectively. The wish to differentiate is one of the core contributors to human evolution. This article is not a pessimistic prophecy or coaching on life skills. Rather, the intention of this article is to highlight the impact of consumer behaviour in the aftermath of COVID-19, especially on the travel and fashion industry. People shunned excesses and made optimal use of resources in order meet ends.
Affluence is life goal: lets stick to it, but more responsibly. Apparel, fashion and luxury goods industry along with travel are some of the examples of excesses that got a jolt after the COVID-19 pandemic caused unprecedented disruption in the world. Almost every fortnight, the travel and fashion industry are redefining their new normal. No one seems to have a clue about when the 2019 levels will be reached, but projections have to made because it is an important aspect of running a commercial venture.
The Rock of Travel Turns to Gravel
“Looking further ahead, most experts do not to see a return to pre-pandemic levels happening before 2023. In fact, 43% of respondents point to 2023, while 41% expect a return to 2019 levels will only happen in 2024 or later. UNWTO’s extended scenarios for 2021-2024 indicate that it could take two-and-a-half to four years for international tourism to return to 2019 levels.” This is an observation from a report published by United Nations World Tourism Organization. A billion less arrivals made 2020 the worst year in tourism history.
There is lack of consensus among industry players with respect to the timeline of recovery. Most surveys have set a realistic target of attaining pre-COVID-19 levels in second half of 2021 or early 2022. The crisis may have bottomed out, but the uphill task of scaling past highs will take concerted efforts.
Globetrotting became increasingly easier in pre-pandemic era. Cheap air tickets and affordable home stays aided in the expansion of travel industry. Both business and leisure travel grew at a healthy rate. Country specific border restrictions made travel increasingly tougher in the early days of pandemic. By some estimates, more than a trillion dollars were lost in revenue; to put things into perspective, it was 6.5 percent of global exports. The tourism industry employed 330 million (33 crore) people in 2019, of which more than half were women.
Pre-COVID-19, three out of five international travelers arrived by air. As per International Air Transport Association (IATA), international air travel shrunk by 75 percent in 2020. The overall size of global airline industry is $800 billion and it suffered a loss of $120 billion in 2020. As a whole, the borrowing of airlines across the world grew by $220 billion due to the pandemic. Cargo shipments might be a cash positive stop-gap arrangement, but it is not a long-term alternative. Not every country was in a position to give financial aid to its travel and airline companies; it led to some companies facing bankruptcy or takeover.
Data: UNWTO Chart: The Know-How Journal
Business travel is the lifeblood of airline industry. By some estimates, its ten percent of seating capacity, 40 percent of revenue, and 80 percent of profits. Low-cost carriers are trying to boost revenue by charging a fee for better leg room, window seat, preferred baggage claim at arrival etc. A fundamental rethink for the airline industry is the need of the hour and it can no longer make projections of feasibility and viability with support from excesses of business travel. Crisis brings the best out of few and if legacy companies cannot keep up with times, the opportunity for new no-frills carriers to enter the market will arise.
Airline companies with good balance sheet, low debt and piles of cash are on a buying spree. They are grabbing the opportunities from ashes of fallen down competitors. Most important airports are privatized and are under pressure to meet revenue targets. Curtailed air travel has resulted in empty slots at airports and airlines are being wooed with medium- and long-term discounted deals.
We may witness necessary consolidation in the airline industry and there is no doubt about the fact that the future of travel is air. As per IATA, with only 50 cases of onboard COVID-19 transmission, air travel has proven to be the safest mode of transport during the pandemic. Countries have to get their vaccination strategy right and desist from 7–10-day quarantine for international arrivals; such quarantine requirements are as good as a travel ban.
Fashion Losing Traction
The fashion industry registered record low profits in 2020. There is a direct correlation between high-end fashion and travel. Formal wear was already on the decline in 2019, but the pandemic made the contraction steeper . Lower disposable income has made the young and mobile rethink priorities. Athleisure and casual wear managed to hold ground, but could not save itself from the overall trend of decline in the market.
Fashion is at the crossroads and a digital presence has become necessary. Brick-and-mortar fashion retail will survive, but it will become weaker as compared to pre-COVID-19 levels. Collaborations with social media influencers and personalised fashion can be key drivers of growth in the years to come. The new generation of consumers are socially aware and have an inclination towards minimalism. Responsible sourcing of merchandise and lower carbon footprint make a brand more attractive for the environmentally conscious consumer.
Fashion brands have made important changes to their operations; reducing number of collections, adopting supply chain agility and improving analytics for consumer insights are few common examples. Consumers are always looking for deep discounts and delay their purchases to the end of a season. This tug-of-war between retailers and consumers has reduced sales at marked price.
Fate of Pre-owned Clothing Market
The global used clothing market has an annual revenue of a billion dollars. Two-thirds of the donated garments land in Africa. Economic factors play a big role in why such a high proportion ends up in a single continent. Clothes recycling releases the pressure of fast fashion. Mountains of garments are piling up outside stores in well-to-do countries.
Disruption in logistics and overwhelming supply of recycled clothes has brought new challenges for those involved in the second-hand garment trade. Africa is lagging in the vaccination drive because nations which have developed vaccines are either inoculating their frontline workers or sending goodwill consignments to friendly nations. Some of the poor and strife-torn nations in Africa are staring at a bleak and uncertain future.