The Impact of Coronavirus on Apparel and Footwear

April 2020

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.

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Key findings

Global economy dives into recession

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).

Severe reduction in retail sales

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.

Supply chains in chaos

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.

Few pockets of growth

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.

Recession-like “recovery”

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 as a catalyst

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.

Scope
Key findings
Apparel and footwear and COVID-19
COVID-19 in context
Global GDP is likely to contract in 2020 under the baseline scenario
The COVID-19 pandemic impacts both supply and demand
In our baseline view, the pandemic peaks in June 2020
Three scenarios examine the impact of a more severe outbreak
Our view in short
Forecasts for Real GDP growth in 2020 under different scenarios
Financial markets on risk-off mode as COVID-19 entered Italy
China: An early glimpse into the economic cost of the virus
COVID-19 highlights need for supply chain diversification
Fiscal stimulus a challenge with restrictions on expenditure
What could alleviate the economic effects of the pandemic?
What could exacerbate the economic impact of the pandemic?
Fashion consumption in quarantine
COVID-19 impact at a glance
Routes to disruption
Macroeconomic indicators and forecasts are grim
Ripple effect on supply chains worldwide
E-commerce is not immune to COVID-19
Consumer behaviour and consumption patterns to change radically…
…putting many at risk of bankruptcy already
Early lessons from China
China takes the lead on forward-looking trend-setting and innovation
Impact spreads from East to West
New York City among the hardest hit by COVID-19
Manufacturing hubs in Asia Pacific to suffer the most
Discretionary goods companies face greater risk exposure
Corporate COVID-19 strategy playbook
Sportswear bets on virtual connections for engagement
Discounting galore to push accrued stock
Corporate social responsibility tackling COVID-19
Challenges and opportunities ahead
Key takeaways
About Euromonitor International’s Macro Model

Apparel and Footwear

Apparel is the aggregation of clothing and footwear. This dataset covers retail sales of apparel through both store-based retailers and non-store retailers. Excludes black market sales (i.e. untaxed, generated within informal retailing)and duty free sales (travel retail). Items must be new when sold to the consumer; second-hand/used items are excluded. Antique and/or vintage clothing and footwear is also excluded.

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