The COVID-19 pandemic and then the resulting social and economic shutdowns required to contain it present the apparel, footwear and textile industries with unprecedented challenges. But while the crisis strains their commitment to sustainability, it simultaneously demands that companies accelerate their progress on sustainable initiatives soon be competitive within the market which can emerge after the pandemic. The pandemic is delivering a shock to the worldwide economy and to the broader fashion businesses, retail brands that are temporarily closed adjusting to declining customer spending, and workers in countries like India, Bangladesh and China are furloughed due to reduced or cancelled orders. And an impending depression is predicted to wipe out quite 30% of the style industry business in 2020 alone. Keep with a recent survey of Sustainable Apparel Coalition members, one third of decision makers within fashion brands, retailers and manufacturers felt much unprepared for the COVID-19 crisis. The secondary concern is gaining so much importance about businesses scramble to manage short-term economic distress that the primary concern where once dominant within the industry from sustainable materials sourcing to carbon reduction to workers rights are relegated to now decreasing the value. However, if the fashion industries abandon sustainability and value chain partnerships within the face of COVID-19 it will cause an irrecoverable self-inflicted wound. While sustainability is in danger in some areas of the industry, companies that embrace it’ll be among the leaders of a resurgent fashion business on the other side of the pandemic. Today, business decision makers and sustainability professionals need practical and actionable guidance to avoid backsliding on progress and to actively steel oneself for a changing industry.
Protect critical assets to survive the depression, fashion companies must safeguard workers, employees, capita, value chain partnerships, channels, and also the trust and support of their customers.
Accelerate transparency while increasing sustainability ambitions, companies must make the most of digitalization, innovative business models, and end-to-end solutions with transparency playing a central role so on assess and demonstrate positive environmental and social impact to stakeholders.
Once when the crisis will end the companies will achieve a durable business advantage and rebuild a more sustainable industry as they are maintaining their sustainability programs as of now.
Sustainable fashion before the pandemic
The ambitious sustainability programs and commitments were becoming the norm within the fashion industries across varied segments like luxury, sport, fast fashion and value retail due to the COVID-19 crisis. The industry sustainability efforts encompassed both environmental and social aspect, including water, carbon and chemicals consumptions, responsible sourcing, utilization and disposition of cloth inputs, and workforce health, safety, well-being and compensation. These fast-growing initiatives were driven by many overlapping factors consumer preferences have significantly shifted over the last decade. With increased awareness and interest among consumers in sustainability of their clothing choices raised expectations regarding the social and environmental responsibility of fashion brands. Keep with recent research, over half consumers would choose more sustainable brand over non sustainable alternatives. This can be very true among young consumers, who desire brands that not only minimize their global temperature change impact but actually put sustainability and transparency at the center of their brand and products strategies. Around 50% of the employees are under pressure providing employment to people in between the age of 20-35 giving more value to figure companies they are more sustainable. And climate disruption has made the fashion business model itself vulnerable, with supply chains threatened by natural disasters, and thus the provision and pricing of raw materials at risk. These targets often include carbon reduction, sustainable material use, improvements in social and labor practices, and circular economy models. Efforts had scaled in measurement yet, leading to improved performance. in step with data from the Higg Index, which standardizes measurement for social and environmental impacts for brands and manufacturers, average scores from participating facilities demonstrated a year-over-year increase of 15-19% this metrics driven approach has helped companies demonstrate the tangible value of their environmental, social and company governance efforts. As a result, investors have more regularly required ESG/sustainability credentials from companies, realizing the price and return opportunities from investing in additional sustainable business. governments were also moving forward with mandatory reporting and transparency requirements, as seen in France, Germany and also the European commission, and multilateral institutions rather like the OECD were releasing mandatory guidelines for due diligence. Within venues a bit like the globe Economic Forum, sustainability was variety one priority on the worldwide agenda and had become a big consider executive decision-making and point of conversation among top management. Before COVID-19, sustainability was gaining momentum as a vital consideration for consumers, companies and investors.
The Fashion Industry during the Crisis
COVID-19 has put the apparel, footwear and textile industries sustainability transformations on pause, as businesses reel in response this pandemic. Per the international fund, 2020 is maybe visiting be the worst year for the global economy since the great depression. The manufacturing facilities and supply chains within fashion delay, closure, and disrupt during the initial outbreak in China created. Lock-downs and shelter-in-place orders within the west have suspended large swaths of economic activity. And since the virus and associated shut-downs measures have spread to further countries, the scale of economic impact has extended still. Forecasts anticipate that the worldwide GDP are visiting be 3% not up to the planned in 2020. In March, retail sells within the U.S. the fashion industry during the crisis plunged 8.7%, the foremost important monthly declined ever. And in China,
Nationwide retail sells of commodity experienced a year-over-year decline of 19% during the first quarter. After travel and tourism, fashion and luxury together are the foremost negatively impacted of all artifact and services, as retail stores shutters and consumer purchasing shifts to necessities. From April to May, sells decreased by 60 to 70% within the worldwide fashion and luxury industry with footfall in retail and recreation stores down by 44% within the U.S., 52% in Germany, 78% in India and 59% in Brazil. Using wave traffic as a proxy indicator, volume in mid-March has drastically decreased by 55% in France, Italy, the U.K. and Spain, compared to the pre-crisis months.
Looking ahead towards the reminder of 2020, Fashion and Luxury can expect a call sales of a minimum of 28 to 38%, in step with a BCG analysis conducted in March. Half fashion and luxury executives believe that the impact of crisis will last about 12 months, which their companies will disappoint of pre crisis targets. And while an increase in online sells could also be expected to persist after this shock relaxes, this offers only small reliefs. Within a market that depends around 80% on online sells, the impact of continued shelter-in-place orders in stores closures are tremendous. As a result, liquidity and cash preservation are now top priorities among all fashion companies, even finally strong ones. Current response measures include cut, staff furloughs. Capital optimization and sell purchase. For several brands non-essential spending in currently frozen or being reevaluated, this in many cases includes their sustainability programs and teams. In circumstances where sustainability teams are furloughed, there’s chance that selective rehiring or permanent departures will end in a hamper current. And without budget prioritization and leadership, the industry could face significant knowledge gapes within the long run. Currently, manufacturers everywhere the glove face cancelations of completed and near-complete orders, which is already causing devastating repel effects. In keeping with a survey of over 500 facilities across all main production regions, 86% of these facilities are impacted by canceled or suspended orders. As a immediately consequences, 40% now struggle with paying employees, which is leading to layoffs and factory closures. With livelihoods jeopardized in a very number of the poorest nations within the globe, the human tall of the pandemic is expending out further, eliminating incomes and threatening food, shelter and security for those at the start of the value chain. And on condition that the expansion of textile and garment manufacturing sector is historically a fundamental early step within the economic maturation of developing countries, the closure of textile factories could even have devastating long-term consequences for the final economic stability and growth of these countries. Meanwhile, funding for sustainability-focused star-ups will likely become more precarious over the course of 2020. Within the primary three months of 2020, VC funding has dramatically decreased, down approximately 20%. 20 Financing for growth-stage companies is extremely hit, with the majority of investors-suggesting that COVID-19 will have a negative32% or somewhat negative 36% impact. And while government-sponsored loan programs may provide a lifeline to some business, it anticipated that lots of start-ups won’t have the financial resources to form it through the crisis. This will unfortunately occur in fashion innovation still, because the financing gap won’t close fast enough for several. However, the news is all bad. During this crisis many within the industry are stepping up to contribute to immediate COVID-19 response and public health needs. There are some Brands which are finding resourceful ways to distribute PPE to the needy frontlines.For example, Barbour is repurposing facilities to manufacture medical gowns, Mgrolio is producing free face masks on behalf of the Italian government, and LVMH is producing hand sanitizer within their perfume facilities. At the ability level, ten sneaker factories in Putian are now producing over 200,000 breathing masks per day, instead of the footwear they previously manufactured for brands like Nike and Puma. Efforts like these are particularly noteworthy, considering what proportion strain individual companies and thus the industry face. The priority now has been to require care of income as our facilities haven’t been able to operate and therefore the customer’s stores are closed. Since the commencement of the pandemic we’ve focused on addressing the social needs of our associates. We’ve got also been gearing up our facilities with the health and safety requirements which can now be necessary. The metrics we use to measure the health of our businesses should also include the health of our planet. All folks have to double-down on sustainability, reducing environmental impacts, and increase social justice.
The COVID-19 means for Sustainability
Currently most apparel and footwear companies are focused on the urgent business challenges like manufacturing, sourcing, inventory management, and order fulfillment as priority concerns but as we have got seen over the last century, periods of worldwide crisis have consistently accelerated transformational societal shifts, and may be strategic inflection points for business. The 1918 flu epidemic transformed personal hygiene and cleanliness habits, increasing the frequency of garment washing and use of electrical washers. Women’s domestic employment during warfare 2 changed the character of female workforce participation even after the war. health events such as 2003 SARS outbreak drove lasting changes in retail consumption patterns, only if much of the population hesitated to venture out doors and instead shifted to online shopping. Accordingly, the recovery from COVID-19 will hasten previously emerging trends across industries from the prevalence of remote work, to adoption of e-commerce and residential delivery services, to the importance of purpose and values in major brands. And specifically for attire, footwear, textile, all trends point to sustainability solidifying as a basic expectation across the industry. Early signals suggest that a worldwide health crisis will increase overall consumer demand for products closely related to trust, well-being, and therefore the collective good particularly in categories like food, nutrition and also beauty and fashion the things which are considered as ‘close to the body’, as the consumers spend less money more consciously, the expectation for sustainability, fair working conditions, and ethical action within supply chains will become absolute fundamental expectation. The consumers across different countries are raising their expectations of apparel brands during the pandemic, as well as shifting their eyes towards social responsibility, repay to communities in need, and prioritize environmental sustainability.
After the pandemic, factors like quality sturdiness will become more important, given expected economic uncertainty and high levels of unemployment among consumers. It is also important to notice that the underlying drivers for environmental transformation on the manufacturing side will persist throughout the present crisis. The reduction in human mobility and consumption caused by shelter-in-place and lockdowns shows the advantages of environmental renewal, as cleaner air and restored waterways. Despite the struggles of the instant, macro trends demand significant action for sustainability within the industry. After COVID-19, fashion leaders will reshape what it means to be a sustainable business with a unified approach that integrates environmental, social and buying considerations into core business practices, with the event of sustainable products as vicinity of innovation. Across all parts of the worth chain expectations for the complete industry are reset around greater collaboration, more equitable partnerships, and collective responsibility. COVID is not any excuse to go into reverse from sustainability. Moreover, sustainability is among key product priorities, along with quality and sturdiness.
Sustainability didn’t come easily for several companies in fashion even before the COVID-19 crisis. One must incorporate sustainability within stabilization and new grown strategies, rather than retreat from commitments to survive this pandemic and emerge stronger leaders in the fashion industry. The post-COVID consumer will prioritize trust and purpose, and may likely evaluate companies supported how they acted during and after the crisis. Sustainability is enabled by technology and should be leveraged to drive innovation across design, supply chain management, and new business models. Scale, integration and industry dexterity will demand collaboration and standardization. This crisis is also rare chance to accelerate and devolve on collective efforts. There are companies that haven’t yet prioritized sustainability must use this moment to transition, because the best method to see competitive advantage during a recovering economy with refreshed consumer priorities. For those further along on the journey, now could be the time to safeguard progress, maintain essential practices, and recommit to central goals and for the pioneers who encourage collaboration and lead industry-wide sustainability initiatives, their vision and action will hasten transformation within the entire sector. While the road ahead isn’t yet clear and open questions remain as government and society navigate the pandemic, a significant lesson of the COVID-19 era are that healthy and safety and prosperity are intrinsically collective pursuits rather than individual once. Also the apparel, footwear, textile and fashion industries aren’t different. It won’t be easy to manage a once-in-a-generation slump while taking aggressive action on behalf of environmental and social concerns. Leaders who successfully weave sustainability in to their business strategies will leave a permanent legacy that of a rebuilt and more sustainable industry.
- Sustainable Apparel Coalition Member Survey. April, 2020.
2 .Pulse of the Fashion Industry Report 2019; BCG Sustainability Survey March 2019, N=703 (US), 703 (UK), 529 (FR), 523 (BR).
3 .of the Fashion Industry Report 2019; BCG Sustainability Survey March 2019, N=703 (US), 703 (UK), 529 (FR), 523 (BR).
- Pulse of the Fashion Industry Report 2018 and 2019; interviews with 52 fashion companies in 2019.
- Collective commitments include Fashion Pact, UNFCCC Fashion Industry Charter for Climate Action, Circular Fashion System Commitment, and ACT MOU on Living Wages.