This report examines the short-term impact of Coronavirus (COVID-19) on apparel and footwear and the immediate strategies deployed by key players as a result. With consumption at a standstill and inventory piling up in warehouses, business priorities have shifted to liquidation strategies and inventory management, while weighing up post-pandemic consumer habit shifts. COVID-19 has emerged as the ultimate disruptor with the potential to overhaul the entire industry.
The expansion of the COVID-19 outbreak into a global pandemic in March 2020 has shifted the global Economic Outlook into a recession. At the beginning of April, Euromonitor International downgraded the baseline global real GDP growth forecast for 2020 to a range of -1.5% to 0.0% (compared to 2.6-3.4% growth forecast as of January 2020).
The discretionary nature of apparel and footwear, is making these some of the most heavily affected by the pandemic, considering the compound effect of retail closures and frugality as a result of the rapidly deteriorating economic environment.
Manufacturing hubs around the world are facing a double impact. First, the halt of operations as a result of the pandemic. And then, the rising number of order cancellations from overseas clients unable to sell or stockpile merchandise.
While the abrupt reduction of consumption is having a global effect, certain categories (leisurewear) and channels (e-commerce, modern grocery retailers, etc) are set to benefit from a growing number of hours at home and a reduction of available channels to shop from.
With most markets heading towards recession, the industry is looking back to 2008 in preparation for a recessionary consumer mindset and very frugal approach to apparel and footwear shopping that will likely follow after the pandemic.
COVID-19 is going to be the catalyst the industry needs to accelerate ongoing, yet marginal, business efforts towards: a more reasonable fashion calendar, a more digital-savvy (and probably consolidated) competitive landscape, and more ethical, sustainable and localised outsourcing of manufacturing.
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