Impact of Covid-19 on global and domestic market of textile and fashion industry

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The global spread of the coronavirus is continuously impacting the fashion industry. As the coronavirus pandemic spreads, so does its impact. COVID-19 has steadily spread across the world since it originated in Wuhan City in the Hubei Province of China, with roughly 425,600 cases and 19,301 deaths globally as of March 25, according to the New York Times.

Beyond the devastating human cost, businesses are also feeling the deep impact of the ongoing outbreak. The Chinese economy is already taking a hit.

Made in China

China is deeply embedded in all aspects of fashion’s supply chain. The World Trade Statistical Review found that in 2018 – the most recent data available – China exported $118.5bn (£91.1bn) of textiles and $157.8bn (£121.5bn) of clothing, making it the world’s biggest exporter of these categories.

Impacting the Fashion, Beauty and Retail Industries

1.Fashion Stocks Plummet:

The stock market has experienced significant declines for the last few weeks as COVID-19 has rapidly spread across the globe.

On March 16, trading was halted shortly after markets opened and the Dow Jones Industrial Average fell 1,820.41 points (or 7.9 percent) to 21,365.21, further pushing the market into bear territory.

2.Fashion Week Disruptions:

COVID-19 hit Italy in the midst of Milan Fashion Week in late February, causing a number of designs — including Giorgio Armani, who barred a public audience to view his fall 2020 runway show — to rethink their show formats.

The virus has now caused many design houses to cancel or postpone their international resort 2021 shows, including Armani, Dior, Gucci, Hermès, Max Mara, Prada, Chanel and Versace.

The restaging of Chanel’s Métiers d’Art show, Ralph Lauren’s fall 2020 show and Burberry’s fall 2020 show are also being postponed due to the virus. New York Bridal Week, which was scheduled for April 16 to 20, is going virtual, with designers encouraged to use Zoom and Join.me platforms to present their collections.

3.Major Events Canceled:                               

 

A number of high-profile events have been canceled over the last few weeks as the Centers for Disease Control and Prevention enacted more stringent guidelines on large group gatherings.

These canceled events span virtually every industry, including fashion, film, technology and sports, among others. Among those canceled are the Coachella Valley Music and Arts Festival, SXSW, the Tribeca Film Festival, Beautycon, the Boston Marathon and the 2020 Summer Olympics, among others.

Recent cancellations include the Met Gala, which Vogue editor in chief Anna Wintour announced on March 16 will be postponed indefinitely, the CFDA Awards, which would have been held at the New York Public Library on June 8, and the 2020 Cannes Film Festival.

4. Other Events Go Virtual:

As several major events are being canceled due to COVID-19, others are going virtual to go forward with their pre-planned summits and trade shows.

The Girlboss Rally in Los Angeles is just one event to go digital, now offering free online streaming to a global audience. Attendees who already purchased a ticket — which ranged from $375 to $725 — for the initial event on April 25 will be receiving refunds. A date for the live-stream has not yet been revealed.

Other events going digital in light of COVID-19 are Zero Waste Summit, a two-day event on sustainability, the Fair Trade Campaigns National Conference and the Google Cloud Next: Digital Connect conference.

5.Retail Stores Shutter:

Retailers have responded to the COVID-19 pandemic by shuttering their doors. In the last few days, a number of major retailers and brands announced their temporary closures in the U.S., including Nordstrom, Saks Fifth Avenue, Macy’s, H&M, Chanel, Ralph Lauren, Sephora, Nike, Apple, Walmart, Urban Outfitters, Madewell, Everlane, Lululemon, Glossier, Reformation and Anthropologie, among others.

Major shopping malls, including New Jersey’s supersized mall American Dream and California’s South Coast Plaza and Rodeo Drive have also closed.

A few retailers are also closing their e-commerce sites temporarily, including Victoria’s Secret, Pink and TJX.

Impact on the Apparel Industry

                             

“There are two ways of looking at the COVID-19 situation and its impact on the apparel industry. The short or near-term impact is that as the country is going through a COVID-19 scare and potential health risk, we’ll witness a fall in apparel sales on account of malls/stores being closed. More importantly, the mental bandwidth of consumers will also shift from purchasing lifestyle needs such as apparel to daily needs such as food and beverages. For the upcoming year, assuming things start picking up, the apparel industry will still see two levels of implications. One: The Spring Summer 20 sale cycle will take a hit as inventories have already been planned and will get piled up, given it’s going to take some time for demand to recover. Secondly, the supply chain of the upcoming Autumn Winter 20 collections will take a hit because the planning has already begun, and the current disruption will have a significant impact on the supply side in the apparel industry”

The fashion industry is facing calls to step in and protect the wages of the 40 million garment workers in their supply chains around the world who face destitution as factories close and orders dry up in the wake of the Covid-19 epidemic.

Many factories in garment-producing countries including Bangladesh, Cambodia and Vietnam are already closing due to a shortage of raw materials from China and declining orders from western clothing brands.

Quarantine and self-isolation measures being rapidly imposed by governments across the world are likely to see the wide-scale closure of thousands more factories in the days and week to come.

Campaigners are demanding that brands take responsibility for the millions of workers in their supply chains who are likely to fall into crippling poverty as they lose their jobs and struggle to provide for their families.Major western brands pay Indian garment workers 11p an hour

The Clean Clothes Campaign, a coalition of campaigning groups, is also calling on brands to ensure that workers who contract the virus are allowed to take sick leave without repercussions from the factories and continue to receive their wages throughout their period of self-isolation.

Scott Nova, executive director at the Worker Rights Consortium, part of the Clean Clothes Campaign, said that poverty wages, unsafe and unsanitary workplaces and poor health already makes the garment workforce highly vulnerable to the worst effects of the Covid-19 virus

“The fashion industry has evolved in a way that makes it hard in normal times for the people who actually make the clothes we all wear every day to survive on the poverty wages they are paid,” he said.

Slowdown in demand & supply

Coronavirus has disrupted the demand and supply chain across the country and with this disruption, As the consumption of any product or services goes down, it leads to an impact on the workforce. In the current scenario, with all the retailers closing down their services, the jobs of the employees are at a huge risk.

The financial market has experienced uncertainty about the future course and repercussions of COVID-19. An estimated Rs 10 lakh crore of market cap was reportedly wiped off due to the fall of sensex in the second week of March 2020. The fall has continued till date as investors resorted to relentless selling amid rising cases of coronavirus.

India on roads

Thousands of domestic migrant workers continue to walk hundreds of kilometers to their home towns. The vast majority of workers do not have paid sick leave and many workers are left stranded and without resources. According to media reports, at least 22 people have died on the walk home. Reports also coming in of migrant workers having to undergo disinfecting measures on the way, including potentially with hazardous chemicals.

Social distancing a luxury that workers on Rs 152 a day can’t afford

A survey of factory owners in Bangladesh found that major fashion retailers that are closing shops and laying off workers in Europe and the U.S. are also canceling their sometimes already completed orders, as workers often go unpaid.

About 4.1 million people work in apparel factories in Bangladesh, the world’s No. 2 garment exporter after China. The South Asian country is just beginning to feel the direct impact of the pandemic. But the shocks to its export markets have been cascading into its economy for weeks.

The damage is not limited to the garments sector. The International Labor Organization has estimated that 25 million jobs may be lost due to the virus outbreak.

Indian apparel firms gear up to face COVID-19 impact.

Several Indian apparel brands, e-commerce firms and textile bodies have geared up to face the impact of the COVID-19 pandemic by implementing measures, including ‘work from home’ option for staff, ensure proper communication related to the new coronavirus, assessing earlier revenue targets. Most industry experts feel it is too early to project or predict.

Coimbatore-based Indian Texpreneurs Federation (ITF) is taking measures to get more market information from members and share with entrepreneurs to allow them to take a call on production, its convener Prabhu Dhamodaran. He feels better awareness on the trends will reduce the panic.

Buyers from Europe and the United States are either postponing or cancelling orders. Apart from that there is a working capital shortage due to liquidity issues in the market due to current crisis, Dhamodaran said.

According to Yogesh Kabra, founder of Surat-headquartered menswear brand XYXX, lack of correct and all-encompassing information is primarily the issue that ends up creating panic. His company is trying its best to filter and communicate scientific and authentic information to employees to ensure their safety. It is too early to project anything now, he said.

Menswear brand Cambridge is implementing a half-day work policy for employees in two batches to avoid peak-hour travel using public transport, according to its brand custodian Prashant Bhatia, who said getting right hand sanitisers and face masks is a problem. As sales at the retail outlets have already been hit, it will push the company back by at least three months and will also affect the Festive/Winter sale this year.

The sales team of Bengaluru-based Yashram Brands Unlimited (YBU) is the most affected by the pandemic with a reduction in sales, while its online business continues as before, said its founder-chief executive officer (CEO) Deepa Kumar. Employees come to work in turns and the company has started to cut back a little in purchases and expenditure

E-commerce firm NorthMist has offered the ‘work from home’ option to employees and has sanitised its offices, according to co-founder and CEO Arijit Mazumdar. Its sales numbers have dipped significantly. Though the company’s business-to-business orders have come to a halt, its business-to-consumer orders have been increasing rapidly. It expects losses to rise.

The retail sector is at a very high risk of exposure, said Saurabh Gupta, director, Mustard Clothing Company, New Delhi, which has offered ‘work from home’ option to its employees.

As orders have dropped by only 5 per cent, Styched does not expect more than ₹10 lakh loss over two months.

Filatex India continues working at full capacity, but requests for cancellation or delay in shipments from foreign buyers will definitely hit the company, said its chairman and managing director Madhu Sudhan Bhageria. Outsiders are not being allowed inside the plants, people are being screened and thermal check-ups are being conducted.

The company has supplies for the next month, but if the crisis continues, then production would be affected, he added.

Styched CEO Soumajit Bhowmik said his company is relatively less affected as most of the materials or components in its set-up are sourced within India or made in-house. There was a nearly 35 per cent drop in conversion rate last week from the company’s e-commerce site and app, he said, as the pandemic has thrown up challenges in shipping, raising delivery time.

Textile industry body seeks relief package to mitigate COVID-19 pandemic impact

The Confederation of Indian Textile Industry (CITI) has requested the government to immediately announce a relief package for the textile and apparel sector to mitigate the crisis being faced by the capital and labour-intensive textile Industry, post the corona virus spread.

Apart from reduction in bank interest rate, extension of soft loans the industry has asked for moratorium for repayment of principal and interest amount to the banks for four quarters.

The textile and clothing Industry employs over 105 million people and also earn around US $ 40 billion forex, apart from substantial revenue under GST and other taxes.

T Rajkumar, chairman, CITI said that the demand for the textile products and also the domestic sales have come down to a grinding halt due to the panic situation created by the outbreak of COVID-19 . “The spread of the virus in China and which later got spread to EU and USA has majorly impacted us as they are huge markets for Indian textile products,”he said in a press statement on Tuesday.

The CITI chairman further stated that they understood the gravity of the pandemic and the government’s directions to close all the malls and retail outlets with a view to control the situation at an early stage, but it has resulted in the substantial reduction in the sales of the domestic textiles and clothing.

Hence he said that they have asked the government for moratorium for repayment of principal and interest amount to the banks for four quarters (1st April 2020 to 31st March 2021). Further, they have asked for exemption of all raw materials, dyes and chemicals, intermediaries, spares, accessories, etc., from anti-dumping duty and basic customs duty.

Battling COVID-19: What the industry wants

CII has suggested a bouquet of measures to help businesses battling the 21-day shutdown

  • Extend 0% interest loans equivalent to Government dues
  • Wage subsidy up to 50% for registered workers for 2 quarters
  • Exempt raw materials from anti-dumping duties
  • Working capital at max 7% from April-Dec 2020

INDUSTRY REVIEWS

Rahul Mehta, CMAI (chief mentor).

India’s Garment Industry is currently going through its worst ever crisis. And this is across the board – both Exports as well as Domestic.

The Domestic Industry is largely consisting of manufacturers in the MSME Sector, and even within this sector, the Micro and Small units would form the majority. These units would typically be operating on wafer thin margins, surviving on a day to day basis, with little or no safety network in terms of capital or savings. Any disruption of business of an extended period would typically result in massive cut downs, laying off of labour, and ultimately closure of the units.

The current lockdown of the country – it is expected that the lock down would continue till end April at the very least – is a death blow to these smaller units. Most of them will simply not have the resources of surviving for any length of time even after the markets reopen. This is because even after they reopen, markets are highly unlikely to return to its normal buoyancy for at least another 10 to 12 months, if not more. Payments against current dues are likely to be delayed by Retailers, who are fighting their own battles for survival. Pending orders, even of goods

That were ready to be shipped when the lockdown was announced, are also going to be cancelled, or, in the best case scenario, going to be taken delivery of in a delayed and staggered manner.

This season is a goner in any case. I don’t think anyone is even looking at it. What worries me is the ability of many of the members to handle the situation going ahead.

I estimate the markets to show a minimum of 30-40% drop in business till at least August, and then take another 10 to 12 months to come back to where it was prior to March 2020.

I anticipate massive job losses, especially at the production floor level and Marketing departments.

The only way to avoid this blood bath is massive Government support. Some good measures have been announced, but much more needs to be done. Government has to realize that unless business is supported, economic conditions cannot be improved.

The virus can be seen as a representation of our conscience

Are we supposed to blame the virus for what’s happening to the industry and people involved in it………….not really. The answer is right here in front us its high time we change our attitude towards everything wrong if it’s not now then never indeed.

The way we dress is closely pegged to how we live. As Covid-19 alters day-to-day life for millions, it may also leave its mark on the clothes we wear.

The biggest shifts in fashion have historically not come from runway trends but followed events such as wars that disrupt society on a huge scale, says Kimberly Chrisman-Campbell, a fashion historian and author of Worn on This Day: The Clothes That Made History. Their effects ripple through supply chains, the economy, social behavior, and daily life, often accelerating and normalizing changes already underway.   

‘Put Earth first’ can a greener, fairer fashion industry emerge from crisis?

While sections of the fashion industry already knew they could not continue on their current trajectory, it was inconceivable that brands could be forced to slow down, let alone stop production altogether. But that is what has happened as famous names from Prada to Zara have turned their production lines to making medical gowns and masks, and luxury houses have changed from making perfume to sanitisers. It’s an unprecedented interruption of an industry that has relied on speeding from one season’s sales to the next. And it is bringing with it a new sense of contentedness, responsibility and empathy.

                       

Sustainable clothing is the answer to all our problems and maintaining a minimal wardrobe .

How can you make an impact on the current scenario?

If there is one thing that the difficult times taught us to be grateful for everything that we have a roof on our head, meals to eat and the resources to survive this difficult period but think about those who are not that grateful as we are the daily wage workers and all those low income groups. Here is how you can do your part.

The relief fund announced by Prime Minister Narendra Modi to fight the coronavirus pandemic has got wholehearted support from political leaders, corporates, defence personnel, employees of PSUs such as Railways and Bollywood personalities, along with people from all other quarters of life.

There’s nothing big or little. Every single contribution matters. It shows our collective resolve to defeat COVID-19.

Article written by bhavika gulrajani B.Sc in Textile and Apparel Designing from Sir Vithaldas Thackersey College of Home Science. Textile Value Chain intern.