Impact of C19 on the Apparels industry

Apparels
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The possibility of a ‘reset and reshape’ cannot be overruled with greater innovation in the form of Omnichannel sales in the apparel industry as well as the digital acceleration of trade practices.

Ever since the Coronavirus emerged, speculations have been rife about its impact on the apparel industry. As far back as January 2020, speculators and analysts had significant doubts about the future of the apparel industry since the origin point, China was also a sourcing point for many brands the world over.

However, the expectation was that yes supply chains would be disrupted and neighbouring countries like Vietnam would step in but what no one expected was that the virus would blow out of proportion and take a pandemic form with far-reaching consequences. The expectation at that time was, this production shift would only be temporary but things took a different turn altogether and the apparel industry has hit a new low from which it will take some time to recover.

To the American apparel industry, this virus has made a huge impact because 41% of its apparels are sourced from China and it has probably taken the biggest hit. Besides this there were many other closures like Levis which closed 50 % of its stores across China, the Shanghai textile fair was postponed, polyester production dropped along with disruptions in supply chain and all this even before it was declared as a pandemic, it was only considered an epidemic at that point.

By February Nike had closed 50 % of its stores in China and many countries were thinking of turning to Turkey for their apparel requirements. Retailers and brands like Tapestry, Capri Holdings, started suffering massive losses and took to closing stores to look elsewhere hardly realising that the Coronavirus’ impact would have far-reaching consequences that were unimaginable. The negative impact did not just stop there, the Hong Kong Denim fair was cancelled and soon alternate sourcing of apparel in South East Asia began to dry up too as more countries were hit by the Coronavirus.

Besides this apparel companies had started anticipating a falling growth rate as early as February and rightly so. Ralph Lauren warned that its sales could drop by as much as $70 million while the US Sportswear brand Under Armour expected a drop of $60 million in the first quarter.

By the end of February, garment factories in Myanmar took a hit as did cotton markets globally. Countries like the UK started looking closer to home for suppliers so that retailers would not be in short supply. Raw materials were in short supply even for Vietnamese and Cambodian garment makers and many were turning hopefully to India. But these were still early days and the pandemic had yet to play out its real effects!

In March, the Copenhagen fashion summit was postponed and Sri Lankan apparel makers had started to feel the heat too. The denim giant Kingpins had to cancel their shows all over from HK to Japan and Amsterdam. So the impact of the Corona was already being felt far and wide, the virus had crept in slow and steady, the hydra making its calculated journey to destroy! Casting its shadow over the Central American apparel industry the Corona caused Nicaragua to declare a whole year of decline in exports and Guatemala to also acknowledge its adverse effect on the garment industry in the form of delays caused by disruptions in the supply chain; a major fall out of the Coronavirus pandemic.

Experts opine that reshoring is however not the answer to the negative impact of the Coronavirus, rather companies should become resilient to face all eventualities. The Columbian apparel industry in this scenario had hoped that its exports to the US apparel industry would rise, as they say, one man’s gain is another man’s loss. However, the virus kept making slow and steady inroads worldwide and by mid-March, not just Myanmar, Vietnam and Cambodia but Indian apparel makers were all hit hard due to fall in exports and concerns over working capital.

In the meantime, labour rights groups started insisting upon protection package for workers to minimise the impact of the virus on their lives. This was followed by a closing of retail doors and apparel factories despite trying to protest and insist that they came under essential goods as all nations announced lockdown measures to curb the spread of the virus. In Bangladesh, the industry started facing a severe financial crunch as orders got cancelled with the supply chain having collapsed although the local arm of the HSBC Bank promised them bail-out while the Central American countries too were forced to shut shop as demand slumped.

Amidst all the crisis, rays of hope have come in the form of H&M the Spanish retailer promising to pay and take delivery of all orders placed by it. Assistance also came to countries in the trade with the World Bank fast-tracking a $41.9 billion emergency fund to countries like India, Cambodia, Haiti, Vietnam, Kenya, Pakistan, Sri Lanka and Morocco. Primark did its bit by setting up a fund to cover the wage equivalent to the factory workers of Bangladesh where it cancelled its orders while Levis is supporting workers in the apparel supply chain.

Indian garment exporters have lost to the tune of $43 billion due to the pandemic and the idea should be to “do commerce with compassion” in these critical times as the Indian Textile Minister rightly appealed to global apparel buyers.
For where it is allowed and those who have started selling online in April like Next Plc, to remain relevant, brands must make use of software as 3D Virtual Design as well as Fit and Prototyping software. With brand value tipped to tumble by 20%, all those who are involved in the apparel trade from raw material to manufacturing must strive hard and innovate to stay afloat.

Spending has declined and so have sales the world over. With rising stock crisis and no way to replenish, the apparel industry faces worldwide losses all because they had no buffer planned as this pandemic was unprecedented. Life went topsy turvy for the apparel industry and perhaps the only hope can be of better times to come in the post-Covid era.

The possibility of a ‘reset and reshape’ cannot be overruled with greater innovation in the form of Omnichannel sales in the apparel industry as well as the digital acceleration of trade practices.

At Eunimart, we offer a plethora of services to help brands establish their Omnichannel sales and this is the right time to sell online wherever possible. If stocks cannot be replenished the other side of the story is that stocks have piled up and what better way to break even than to start selling online.

At Eunimart we offer you customised solutions to meet your needs and definitely, there is no time to be wasted because the virus could be here to stay. So plan for your business accordingly to be up and about at the earliest.