How Coronavirus is Affecting the Global Apparel Trade

This article is written by Charm Rammandala 

Affects of Corona Virus in the apparel industry

Currently, almost all the countries in the world are in a lockdown or under mandatory quarantine. This article looks at the current situation in the apparel manufacturing sector and the possible impact on the industry in the near future.

Let's start with what's happening with the end customers. They're all stuck at home. Clothing falls into non-essential categories, therefore almost all the retailers are closed by choice or due to regulations. This means sales are at all-time low, and practically nothing gets sold, compared to the Pre- Corona period. Inevitably this means inventories are not moving, and warehouses are full of goods which should have sold yesterday.

Numerous global brands, including Nike, Gap, Uniqlo, and John Lewis, closed store operations across many parts of the world following the coronavirus outbreak. This has already made an impact on sales. Ralph Lauren reported a decrease in sales by an estimate of 55 to 70 million dollars. Capri Holdings, which owns Versace, Michael Kors, and Jimmy Choo, experienced a revenue loss of 100 million dollars, according to CNBC. New York Times reported, Macy's, which owns Bloomingdale's, plans to furlough most of its 130,000 staff. All the stores have already closed since last week due to the lockdown.

Fashion events scheduled to take place in this spring are already canceled, and summer events are on the verge of cancelations. This included fashion shows, fabric shows, and apparel trade shows. Javits Centre in New York, one of the premier venues used for fashion trade shows in New York is actually turned into a field hospital to treat patients

As cases of the virus began to appear in Italy last month, Giorgio Armani canceled its Milan Fashion Week show. Most other brands and designers followed suit with canceling shows scheduled in the coming weeks and months in various locations. Prada canceled its May 21 presentation, which was meant to take place in Japan. Gucci's San Francisco cruise show, which had been planned for May 18, was also cancelled, as was Versace's May 16 event. Max Mara announced on March 10 that it would withdraw its upcoming cruise show, scheduled for May 25 in St. Petersburg.

Many buyers are predicting the inevitable and started canceling orders worth hundreds of millions. Marks and Spencer of the UK already projected that they would have to cancel clothing and homeware orders, worth around one hundred million dollars due to the highly probable downward demand in the coming months. Similar measures are considered by many other large clothing buyers such as Gap, Nike, Walmart, and C&A. Already it is noted that Bangladesh received order cancellation totaling over US$150 million so far, according to the BD apparel export association.

Sri Lanka will be in a much more difficult situation to regain the lost businesses as they have to rely on raw materials brought in from overseas to the function of the manufacturing sector. Most fabric mills in India, China and other countries will struggle to get back to pre-Corona productivity and efficiency levels, once back in operation. This primarily due to manpower issues. It would take months for workers to get settled in after the virus threat is over. Catering to domestic manufacturers will be a priority hence manufacturers offshore who rely on imported fabrics and accessories will have to come to agreements with mills and other suppliers to ensure the supply chain. This is apparent currently as many of my manufacturing plants requesting extended lead times due to issues related to raw material delays.

Looking at the current situation and the many expert projections, Covid-19 would be lurking around for at least the next 3 months. This means Summer, Fall & Winter 2020 orders are going to be cancelled if not already cancelled. The best approach is to start focusing on Spring 2021 onwards and plan accordingly.

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