Ludovica Cesareo on COVID-19 Fashion and Holiday Shopping

In this episode of Lehigh University’s College of Business IlLUminate podcast, we are speaking with Ludovica Cesareo about trends in a holiday shopping season unlike any we’ve seen before. In addition to forecasts for retail sales and the hottest items, Cesareo also discussed the new category of COVID fashion, and how luxury brands are moving in to meet demand.

Cesareo is an assistant professor of marketing in Lehigh's College of Business. Her research focuses primarily on the psychological processes that influence consumer behavior toward authentic and counterfeit luxury products, as well as the integral role emotions play in consumer decision-making and marketing related outcomes.

She spoke with Jack Croft, host of the ilLUminate podcast. Listen to the podcast here and subscribe and download Lehigh Business on Apple Podcasts or wherever you get your podcasts.

Below is an edited excerpt from that conversation. Read the complete podcast transcript. 

Jack Croft: We're in the peak of the holiday shopping season, which the song says is the most wonderful time of the year. I'm not sure how true that is for most people this year. … How are things looking?

Ludovica Cesareo: Just like everything else this year, I think holiday shopping will be a little bit different. The latest estimates actually say that relative to last year, we're going to be up about 1 to 1.5 percent. But if you think about the growth we had last year for the same time period, which was around 4%, clearly it's a bit dampened. I think there's a few trends and a few things we're going to be seeing in the coming weeks as we gear up towards Christmas. Some things you've already probably noticed is that shopping for the holidays has started much earlier, right? In the last few years, the big holiday shopping started on Black Friday. This year, companies started putting out sales way back in October. And I think they decided to do that especially given the social distancing rules we're living under and just to have safer shopping practices.

The second big change for this year is that most holiday shopping will happen online. If you think about occupancy restrictions that are in place in most states and limited store hours, it makes sense that consumers are staying home, are doing most of the shopping via e-commerce. And e-commerce is supposed to do really well for the coming holiday season. It's supposed to be up 35%.

If you think about the explosive numbers that we saw Thanksgiving weekend, meaning Thanksgiving Day to Cyber Monday, I think we're going to be seeing something similar. It was the biggest Cyber Monday-- I don't know if you know, but it was the largest online sales day ever. Overall, online sales for that weekend rose 36% and consumers spent around $25 billion for that weekend. So it was really a very fruitful weekend for retail, which has been suffering because of COVID—because of rising unemployment and consumer spending is much stricter, it has been suffering overall for the year.

And then in terms of what are the hottest items for this holiday season? Of course, clothes, shoes, electronics—those are typical. But because we are under stay-at-home orders and because we are spending so much more time at home, the categories that will do well are gaming, subscription services, health and beauty gifts to pamper yourself, to take care of yourself. At-home fitness equipment has seen a huge rise this year, and then just home decor. So those are the main categories that consumers are going to be focusing on this holiday season.

Croft: One of the other, unexpected to me at least, trends that has come up as a result of the pandemic is COVID fashion, COVID merchandise. We saw after several months of uncertainty, new stores popping up [called] COVID Essentials in malls around the country that are specializing in COVID-related products. What do you think about that?

Cesareo: I think it's a really interesting retail idea. And just how well they've been doing clearly signifies that it's something that consumers wanted. So as you mentioned, there's this chain called COVID-19 Essentials, which is this chain of retail stores. They have eight so far that have opened in high-end malls around the country like New York City, New Jersey, here in Philly, Las Vegas. And I think it's so fascinating. First, I find it absolutely interesting that they opened in high-end malls, meaning next to the traditional luxury stores, like the Louis Vuitton and the Gucci. And what it is, is a store that only sells COVID-related merchandise. So from cloth masks, which are the core of their business, and then, of course, all other COVID-related accessories. Think of door openers. Think of portable UV lights to clean surfaces.

Why I think this is interesting is because they are charging premium prices for their products, and because cloth masks are the core of their businesses they're giving consumers the opportunity to personalize the masks themselves. So while a basic mask can cost $20, they charge $10 for each addition you put on it. You can put rhinestones. And I think it's just fascinating because masks have really become a fashion accessory. I know in a little bit we'll talk about the importance of signaling, but the fact that we have to wear this piece of material over our face has really become an opportunity for brands of all types, whether it's traditional retail fashion or also high-end luxury brands, to give consumers a way to express something about themselves via this item that they now have to wear for safety purposes. And so I think it just totally makes sense that they saw a retail opportunity and they took it. And the fact that they're doing so well, again, speaks to the fact that consumers were looking for this kind of offering.

Croft: Right. I know a lot of your research focuses on specifically the luxury brand market and also this idea of signaling that you mentioned. Can you explain to us what signaling is and why it's important, particularly in terms of your research with the fashion industry?

Cesareo: Yes. So signaling theory is this theory of communication which deals with the transmission of information from one individual, who is the sender, to another individual, who is the receiver. And there is plenty of research that looks at how products and brands are vehicles to signal identity, relevant information about oneself, but also status—the desire for status as this fundamental human motive, which refers to the respect and admiration and deference that we are afforded by others. Why I care about status and signaling is that a common status signal across society is conspicuous consumption—the idea that you purchase expensive products in order to signal wealth and to signal status.

Croft: Over the course of this year, then, the luxury brands kind of have transitioned into this new COVID fashion market as well, is that correct?

Cesareo: Yes. If you remember, at the very beginning [of the pandemic in March], there was a shortage of PPE, personal protective equipment. And so many luxury brands actually stepped up in order to help make this equipment that was in high demand. I remember Ralph Lauren and Louis Vuitton and Giorgio Armani, they all transformed their design house and their factories into manufacturing hubs for masks and for gowns, right? Those who manufactured perfume and cosmetics used the production lines to make hand sanitizer. And so I think there was this come together moment, this doing good beyond revenue. … Luxury, after doing good back in March and making the PPE and donating it, realized that there was an interesting market opportunity in the face mask market. And so many brands have started making their own luxury face masks.

I think one that got a lot of hype and also a lot of criticism was Louis Vuitton, that back in September, as part of their 2021 Cruise collection, launched this face shield that cost almost $1,000. Actually, $961, to be specific. And it was interesting because it had this elastic monogram strap around the head and it had this movable shield which was attached by these golden studs with the Louis Vuitton logo, and the shield itself on the rim had the monogram print and you could flip it upwards and use it as a peaked hat. And the neat thing I think is that it came with this transition technology, so it could go from clear to dark depending on the sunlight. And it was eye catching, it was unique, it was stylish, and it was protective, and the consumer loved it. It was for sale on their website and it sold out almost immediately.

Most luxury brands, of course, saw it as an opportunity to (A) make masks, and also (B), put their logo on the mask itself. So not just Louis Vuitton, but other brands like Fendi, like Burberry, like Marni, like Dolce & Gabbana, like Missoni, all started making these masks. And I think it's interesting because the mask market itself is exploding. There's some estimates that say that by next year the market for just masks will be worth around $6 billion. And so I think companies just saw this as an opportunity that was too good to pass up on.