Blog: Michelle RussellPandemic continues to wreak havok on industry

Michelle Russell | 23 March 2020

The ongoing impact of the coronavirus (Covid-19) pandemic on the global apparel industry and its supply chain continued to dominate content on just-style over the past week.

While clothing manufacturers in Italy have not been told to close outright in the country's bid to fight the Covid-19 virus, many have been subject to major disruption during this health emergency.

Garment manufacturers in Bangladesh are seeing an influx of requests for payment delays from buyers as a result of the ongoing global coronavirus outbreak. In some cases, garment buyers are asking if payment for products can be pushed back by 30 days – sometimes more – as clothing retailers around the world are seeing significantly lower footfall due to country lockdowns limiting people's movement.

Concerns are rising among Vietnamese garment producers about whether they have enough raw materials to be able to continue production into the second quarter. While subdued demand in key markets due to the rapid spread of Covid-19 is weighing on Indian apparel and cotton exporters, with concerns over working capital and liquidity as orders are postponed.

Small and medium-sized enterprises (SMEs) in Myanmar's garment sector are feeling the impact as a result of raw material shortages but concern over a fall in orders is now spreading across the sector as the US teeters on the brink of recession.

Techtextil North America and Texprocess Americas are among a raft of events in the garment and textile industry calendar to be postponed or cancelled as a result of the worldwide spread of Covid-19. Click here for other exhibitions and conferences that have been forced to change their plans.

There are two possible situations when it comes to the impact of the coronavirus on retail and fashion companies, how they will fare coming out of the crisis, and any longer-term impacts on social trends and behaviour.

Three-quarters of US companies polled in a recent survey say they are experiencing supply chain disruption in some shape or form due to the coronavirus outbreak.

In the UK, Marks & Spencer (M&S) has warned trading over the next nine to 12 months in its clothing and homewares business is likely to be severely impacted by the coronavirus (Covid-19) outbreak and that it is "taking all possible steps" to defer supply ahead of what it expects to be a prolonged downturn in demand.

A slump in global trade transactions across the Tradeshift platform reveals the scale of disruption to supply chains globally as a result of Covid-19 – and points to significant pressures on liquidity. According to the latest data from Tradeshift, which helps buyers and suppliers digitise their trade transactions, global business to business transactions have dropped by 62% in the week beginning 8 March.

Click here for additional insight on the coronavirus outbreak: Is coronavirus a threat to the clothing industry?

Meanwhile, Guatemala's apparel and textile industry is looking to technology to boost output and efficiency and offset a rise in production costs. The country’s textile and clothing industry represents 8.9% of its gross domestic product (GDP), but higher costs are jeopardising the industry's overseas sales competitiveness.

Global sourcing and logistics giant Li & Fung has received an offer worth US$930.7m to take the company private by a group controlled by the founding Fung family. The move comes as the Hong-Kong based supply chain solutions provider is being buffeted by the US-China trade war and the global coronavirus pandemic.

Love it or hate it, fast fashion is the great success story of the contemporary apparel industry, with a value system centred around inclusivity, representation, gender-neutrality, body positivity and racial equality. But as the visual virtual world tightens its grip, fast fashion's future may not be as unwavering as it initially appears.

In other news, a number of US trade bodies are urging the US government to scrap tariffs on Chinese goods to fight the negative impact to the US economy of the coronavirus impact; Laura Ashley has called in administrators; and Next Plc has warned it could lose up to GBP1bn in sales, but says it is armed with various measures that could help control costs and conserve cash.

Until next time...

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