Covid-19 had affected all industries, which are responding in various ways. CEO Consult takes a look at how Covid-19 has affected the fashion industry and how they are reacting.
No industry untouched
Health services, grocery stores, hairdressers, restaurants—the fallout from Covid-19 has left no industry untouched. The effects of Covid-19 on all businesses range from major to extreme, with grocery stores struggling to maintain stocks and manage customer flows to meet social distancing requirements, non-essential businesses needing to temporarily—if not permanently—close and health services working under extreme pressure. The fashion industry has also been affected in major ways, and the industry has taken varying steps to ensure it survives and ideally emerges with a new strength.
Some may view the fashion industry as frivolous, particularly during a global pandemic when industries that work to save lives and keep people fed and healthy take centre stage. Despite this, those in the know are very aware that the fashion industry plays a major—and I would argue essential—role in our lives. It is a mecca for creativity and a very important player in the world’s financial wellbeing. If the fashion industry were to fail, this would not only have a major impact on the global economy, it would also take away the ability for passionate artists, designers and seamstress to be employed in an area they love. No less importantly, without a fashion industry, consumers’ access to fashion items they love, that make them feel good, that allow them to express themselves and revel in beauty, taste and design would be greatly reduced.
Covid-19 moves across the globe
Back to Covid-19 which, as we all know, has moved through all countries at varying rates and has impacted each country differently. For example, while the UK is currently easing lockdown measures, allowing more free time outside and encouraging those who cannot work from home to return to their located workplaces, they are also encouraging people who can work from home to continue doing so.
Many other countries are also relaxing lockdowns. Even countries that had some of the longest and most severe lockdowns in place, such as France, are relaxing and lifting some aspects of their lockdowns. Despite this, the pandemic continues, and with no vaccination in sight, the fashion industry’s fate is still unknown.
The Fashion Industry adapts
So how is the fashion industry adapting? How is the fashion industry handling the Covid-19 fallout, which includes a potential humanitarian crisis in Bangladesh as a result of fashion suppliers cancelling orders?
As fashion shops across the globe reopen, shoppers are there. Opening on 11 May after France’s eight-week lockdown, shops such as Zara and Louis Vuitton in Paris had queues of shoppers waiting for the stores to open. But this in no way is a return to normal, as shoppers are greeted with hand gel and given face masks to wear.
While many find it distasteful for so many shoppers to return to fashion stores so soon after opening, there are nevertheless a range of requirements and controls that need to be met to ensure Covid-19 is kept at bay. Although just one example, France’s reopening may give the European fashion industry some helpful insights into how shoppers may react in the coming months.
Fashion fights Covid-19
And what about the influencers and celebrities who promote fashion? How are they handling these Covid-19 times? Well, they seem to have no problem finding ways to contribute to the fashion industry. Take stylists Anna Rosa Vitiello and Bettina Looney, who got together and used their Instagram accounts to hold charitable wardrobe clean ups to raise money to donate to the Doctors Without Borders and Help them Help us charities. Their love of fashion provided them with the perfect way to give back something. They plan to host weekly sales so they can keep earning money and raising awareness for their charities, and they are involving their favourite small brands as well.
Other good work includes that of Vestiaire Collective, a French site specialising in luxury resale. Vestiaire Collective has received clothing donations from Kate Moss, Thandie Newton and Camille Charriere, which are then resold to provide funds for local charities such as Fondation Hôpitaux de France-Paris, the World Health Organisation and Lombardy Regional Fundraising.
The negative results of Covid-19 on the fashion industry include western fashion brands cancelling more than $2.8 (£2.26) billion in orders from suppliers in Bangladesh as lockdowns and consumer lack of confidence led to falls in sales and store closures.
The effects of this on Bangladesh are feared to become a humanitarian crisis, with more than 1.2 million Bangladeshi workers directly impacted by order cancellations as thousands of factories and suppliers have lost their contracts. The workers are in dire straits as more than 70% of these employers are unable to provide any income support to their workers when they are laid off—even temporarily, and more than 80% cannot provide any redundancy pay when order cancellations meant workers had to be dismissed.
But CEO Consult wants to stress that the fashion industry is not just sitting back. For example, Techstyler, the digital publishing platform that shares the latest from the crossroads of fashion, technology and sustainability, shows that companies, including H&M KIABI and Marks & Spencer have committed to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to honour a range of orders that had been cancelled due to Covid-19.
Even the high-end fashion houses are stepping forward to make much-needed donations despite the dire predictions that Covid-19 will adversely affect luxury goods globally. For example, the Tiffany & Co. Foundation has financially supported the COVID-19 Solidarity Response Fund for the World Health Organisation and the New York Community Trust’s NYC COVID-19 Response & Impact Fund to the tune of $1,000,000 (£808, 470) for both. In addition, Tiffany & Co. will match any donations that their employees provide to qualified Covid-19 organisations.
Another luxury goods company, LVMH, has donated a large sum $2.2 million (£1.78M) to China’s Red Cross. They also refitted their perfume and cosmetics units to allow for the manufacture of much-needed hydroalcoholic gel. Joining LVMH are Prada and Kering, producing surgical masks and other medical equipment needed to fight Covid-19.
Like LMVH, Kering and its houses also donated to a Chinese Red Cross Foundation (this time in Hubei). They also donated to four major foundation hospitals in Italy, while Prada’s co-CEOs and chairman have donated intensive care and resuscitation units to hospitals in Milan.
The list goes on. Dolce and Gabbana, Moncler, Versace and Giorgio Armani have all been active in supporting the battle against Covid-19, donating to various hospitals, institutions, universities and the Red Cross. The choices of donations are carefully made. The donors are fully aware of the devastation caused by Covid-19 and are determined to put their money where most good can be done.
However, it is not just companies that are doing what they can to fight the Covid-19 pandemic. In France, almost a hundred of Lacoste’s factory employees volunteered to manufacture washable, reusable masks for people who work in essential businesses, and employees in other brand factories have volunteered to produce personal protective equipment such as gowns and masks for local hospitals.
Dealing with continuing cancellations
While sporting events, concerts, festivals and art shows have either been cancelled or postponed due to Covid-19, the fashion industry is doing what it can to keep everyone connected, up-to-date and inspired online.
A good example of this is Shanghai Fashion Week, which ran as scheduled using a fully digital format. Using the talent support platform ‘Labelhood’ 31, designers unveiled their collections on social channels and websites. Other labels showcased their Autumn/Winter collections via short films and live streaming.
While many of the aforementioned labels are large and globally well known, smaller, independent brands are also working hard to combat the fallout of Covid-19 despite their own financial downturns. Some examples of these brands are Three Graces, which gave all of their sales to 8 April to Crisis, a charity fighting to end homelessness. Another brand contributing to ease the effects of Covid-19 is Sleep Society. They are donating 15 percent of their sales to Mind, an organisation that provides advice and support to anyone with mental health issues and campaign to raise awareness and promote understanding.
Other smaller contributors are Paula Knorr, Holzweiler, Veronica Beard and LoveShackFancy. Their assistance during this time includes donating percentages of profits to food banks and charities such as the Red Cross, working with others to raise awareness of the impacts of loneliness during this time, providing essentials for caregivers and people on low incomes and employing seamstresses who lost work as a result of Covid-19 to make facemasks to be donated to hospitals and frontline workers.
Toward the very end of the Autumn/Winter 2020 season, the Coronavirus had arrived in Europe from Asia, with Chinese brands pulling out of European shows. Milan Fashion Week was hit, with Chinese brands calling off their plans to go as soon as they were aware of the virus’ presence. Paris was hit next, with six Chinese brands cancelling Paris Fashion Week. While Chanel, LV, Dries van Noten and Paco Rabanne’s shows went on in Paris, some banned US staff from attending and others provided guests with facemasks. Some smaller independents did not show their fashions, while the jeweler Maison Cartier stopped its presentation.
Other cancellations include Chanel and Armani making cancellations in February, with Chanel cancelling their May Métiers d’Art collection planned for Beijing and Giorgio Armani cancelling with less than a day’s notice, providing a live-streamed show instead.
The cancellations continued, with Gucci announcing in March the cancellation of its May San Francisco Cruise 2021 show and Chanel and Dior cancelling their Italian May shows. And it certainly didn’t end there, with world-wide Resort/Cruise shows cancelled, including Armani’s in Dubai, Prada’s in Japan, Max Mara’s in St Petersburg and Hermés’ in London. The cancellation of International Fashion Weeks in Tokyo, Beijing, Shanghai, Los Angeles, Sao Paolo and Sydney meant a very lean March, April and May for fashion.
British High Street woes
Back on the British High Street, the financial fallout from Covid-19 has served to accelerate the reduced consumer spending that has been seen in recent years. Prior to Covid-19, the change in consumer habits led to reduced footfall in bricks and mortar shops. This, combined with an increase in the day-to-day costs of running physical shops, has been seen as ushering in High Street’s decline. Now with the additional financial woes brought on by Covid-19, no one is sure just how many already shaky bricks and mortar shops will survive.
The severity of the situation can be seen in the closures of Primark, H&M, Topshop, Miss Selfridge, Zara and Arcadia, with each of these brands closing—or announcing the closure of—a number of stores even before the government’s lockdown was announced on 23 March. Many well-known British department stores, including Harvey Nichols, Harrods, Selfridges and Liberty have also closed down for the time being. Another major upset was John Lewis, which, through two world wars and the 2008 financial crisis, had remained open but announced (on the same day the UK lockdown was announced) that it would close its doors for the first time in its 155-year history.
Taking steps to ensure the pain was minimised as much as possible for employees, Selfridges was first to announce that although they would shut their doors on 18 March, contracted employees would continue to receive pay. This approach was soon followed by Harvey Nichols, Liberty and Harrods.
Most of these well-known physical UK stores of course are focusing on their online stores, taking care to ensure that they are doing all they can to see that their businesses continue to serve their customers as well as they had in their bricks and mortar stores, although the new online normal includes potential delivery delays and extended times to make returns. There has not yet been any indication as to when the physical stores may reopen.
The fallout from Covid-19 is enormous. According to the Department for Work and Pensions, almost 1 million successful applications for universal credit claims were made between 16 March and the end of the month. This is almost 10 times the usual number of claims received in a two-week period. It is easy to see why fashion brands are extremely likely to suffer major financial losses because of the Covid-19 pandemic.
The decline in luxury fashion brands’ sales is expected to be in the range of €10 (£8.78) billion this year. The Chinese, who have accounted for approximately 70% of global growth since 2012, are a major consumer of luxury brands, and it is China that was most affected during the earlier months of the Covid-19 pandemic.
And it now appears to be the British High Street’s turn, and they are bracing for what could be continuing devastating losses. At least the fashion industry is doing what it can to help battle Covid-19 and to protect the workers in the fashion industry. Hopefully this will help the industry survive a crisis that is worse than any other in living memory.
