Coronavirus – how it is affecting the global apparel industry
We are currently in the middle of a pandemic, with the coronavirus (or COVID-19 to give it its official name) rapidly spreading around the globe.
The extent of the damage the virus is causing across the world is hard to quantify at the moment, but already billions of dollars of revenue has been lost across all industries.
From global brands to self-employed entrepreneurs, everyone has been affected by this viral outbreak.
For the fashion industry, COVID-19 has hit right at the start of the fashion season.
As the coronavirus started in China, logically it was here that the first cancellations began to happen. These included the Beijing and Shanghai fashion weeks, and the major denim trade fair Kingpins in Hong Kong.
Italy, the home of fashion, saw its headliners cancelling shows soon after, devastating for Italy’s $100 billion-plus fashion industry.
Held in the spring, the “cruise” season is one of fashion’s most lucrative. Usually it brings editors, influencers, and, perhaps most importantly, major clients to locations across the world, allowing everyone to meet and do business, resulting in millions of dollars in purchases in the coming months.
Top designers have already cancelled their cruise shows, including Gucci, Burberry, and Prada. Giorgio Armani cancelled its Milan Fashion Week show, while Versace cancelled their May event.
The source of the supply chain
Like most other trades, the apparel industry has long embraced China as a source of cheap manufacturing, but now production has come to a standstill, companies are discovering that cost-efficiency isn’t the only thing to consider.
China is by far the world’s largest producer of textiles, and it creates many of the other elements that go into clothes, including buttons, zippers, and thread.
Even if clothes aren’t made there and are cut and sewn in Thailand or Bangladesh for example, those other countries still rely on China for the fabric.
In short, China is the foundation on which the apparel industry is based, and now that the entire country has downed tools, the rest of the world is affected.
Effect on businesses
Big name brands are taking enormous hits.
Capri Holdings, which owns Versace, Michael Kors and Jimmy Choo, experienced a revenue loss of 100 million dollars, with Ralph Lauren reporting a decrease in sales of up to 70 million dollars.
Adidas announced they are expecting sales to drop by a billion euros, while Nike have closed their factories in China indefinitely.
But even with those enormous losses, the big names of the industry will almost certainly survive. It’s the small to medium business which may not be able to stay above water during this typhoon.
Many retailers have contracts with less established, young or independent designers, who rely almost entirely on wholesale partners for revenue. If the disruption to the supply chain and the global economy is big enough, then they’ll be out of business within months.
Of course, it’s not just the fashion and apparel industry which is dependent on China.
A wide range of industries rely on the nation as both a manufacturing giant and a consumer market with over a billion potential clients.
What coronavirus means for the future of fashion
We’ve talked before about Fast Fashion, and how it is devastating to the environment, but ironically, the coronavirus might have an overall benefit for the planet.
For many residents in the major cities of China, there were blue skies for the first time as pollution levels dropped considerably.
NASA and the European Space Agency released satellite images of China before and after production stopped, showing a dramatic reduction in nitrogen dioxide emissions as well as CO2 emissions.
China is the world’s biggest polluter, contributing 30% of the planet’s Carbon Dioxide gases, so even over a few weeks the difference is noticeable.
Fast Fashion itself might be in peril, with the timeline from design to delivery greatly compressed, there’s no room for disruption. The havoc we’re seeing in the supply chain might be too much for many manufacturers, suppliers and retailers to handle.
Bizarrely, this is exactly the kind of point that the sustainability movement has been begging the industry to take seriously for the past few years.
Uncertain times ahead
The apparel and fashion industry can be unpredictable at the best of times, but when something like the coronavirus changes the world, what happens next is anyone’s guess.
But for small and medium enterprises, the future doesn’t have to look so dark.
We have decades of experience in this industry, and we’ve seen – and survived – a lot of global disruption.
Our experience, our connections, and our professionalism can help guide you through the most trying times, ensuring you come out the other side with your business intact.
If you would like to know more about how we can help you and your business, then contact us today and speak to one of our friendly and professional staff members.