COVID Update: Reset, Recover Responsibly with Radical Change

Is the industry doing that? 

Lady Gaga has said ‘fashion doesn’t need to go together; it just needs to be upsetting’.  She was referencing her dismissal of wearing designer clothing from head to toe.

That’s just one aspect of the control culture or out-of-control culture that the fashion industry emits. 

Overall, it’s at a crossroad [has been stuck here for some time], coming and going in so many directions that a collision was inevitable.  The pandemic has aired all the wrongs and rights of the system, finally yielding a right of way to the future.

Where are we now with fallout from the pandemic?  Here’s what you need to know. . .

7 months after the COVID-19 virus stay-at-home orders, many communities have reopened.  Is the industry hitting the reset button with plans and strategies [or strategic goals] to recover responsibly and implement transformative models for the post-pandemic era?

Seeing and listening to consumer micro-level shifts will help fuel the path to a macro-level, more seismic shift that is needed.

Depending on your location from January – July 2020, the virus outbreak closed down economies across the globe starting in China, each country’s shut-down and reopening were dependent on guidelines from public health care authorities, government leadership, and the will of the people. Now with the outbreak continuing to rise in parts of the world and most of the economies opened, the outlook on the fashion industry is not promising.  Although the idea of a new path to doing business is receptive, survival and self-regarding methods are what’s in place. Seeing and listening to consumer micro-level shifts will help fuel the path to a macro-level, more seismic shift that is needed.  It’s a time to listen, rethink, and redo.  In addition, the BLM movement, has unpacked decades of inequalities within the employment structure of BIPOC communities.  Another reset and rethink part of the system that’s the path to a better future.

What the world is learning is that a successful control of the virus is key to unlocking the economy.  Consumers are not confident to re-engage.  McKinsey & Co reports “countries that have successfully controlled the coronavirus (“near zero” countries), economic activity (in the form of discretionary mobility) has returned to normal; in those that have not (“balancing act”), it is still about 40 percent lower than before the pandemic”.

Here’s what’s happening:  Consumption is changing.  E-commerce revenue in many cases have doubled, to no surprise, given stay and work-at-home measures.  Many consumers are seeking purpose and sustainability in what they wear and resisting the urge to buy ‘just because’.

Even though consumer consumption is starting to shift, the industry just can’t let go of what was normal.  Some fashion weeks have continued, digitally, of course, but without clothes.  With no time to produce new collections, the shows were primarily content driven – collaborations, special projects, film, and talks – a more engagement with the brand. Was this even necessary in a pandemic?  Copenhagen Fashion Week was the first to offer a hybrid fashion week with pre-produced and live in-person events – runway shows, presentations, films, exhibitions, and installations.  The response was mixed with most audiences not as interested.  Traackr, an influencer marketing and management platform, found an 87% drop in social engagement – less engagement from influencers.  Earlier this month, Louis Vuitton’s Spring/Summer 2021 menswear collection was showcased in a live runway event in Shanghai.  Parent company LVMH, which also owns other high-end brands like Christian Dior, reported a 46% year-on-year drop in profits for the first half of 2020.  The show was coined ‘returning to normalcy’.  Is this normalcy responsible recovery with radical change or is it returning to the old normal?  Does the industry – buyers, media, celebrity tokens – want to get back to this normal of 1000’s of yearly fashion events?  Didn’t the pandemic teach us how excessive the industry is?  How much do we really need?

COVID-19 Stores Re-open,

Facts will paint a better picture of the impact of COVID-19:

Excess inventory and unsold inventory in the supply chain whether at the factory or in the stores, continues to be a problem.  To manage liquidity, companies canceled June and July orders, many are liquidating through discount sales. Some brands are donating unsold clothes to companies like good360.  Others are packing away a portion of their unsold inventory for next year.

  • According to the data of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a total of 1150 garment factories in the country have had to cancel or suspend orders worth 3.18 billion US dollars, affecting around 2.28 million workers, permanently closing 100 garment factories in Bangladesh.
  • Remake’s #PayUp campaign has seen 19 brands commit to paying in full for orders completed and in production.  An estimated $1 billion dollars have been unlocked in Bangladesh and an estimated $22 billion globally, accounting for approximately one-half of the $40 billion worth of wages owed to garment workers at the start of COVID-19.

Layoffs are at all levels – factory laborers, retail clerks, managers, executives.

  • According to British Fashion Council, data from Oxford Economics suggests there will be 350,000 U.K. fashion industry job losses both direct and indirect supply chain jobs due to the pandemic.
  • U.S. Bureau of Labor Statistics reports, as of May 2020, a 64.8% retail women’s clothing job loss and 69.3% retail Men’s clothing job loss.
  • Marks and Spencer to eliminate 7,000 jobs
  • Beginning October, Nike to cut 500 jobs at their headquarters in Beaverton, Oregon
  • Levi Strauss & Co will cut about 15% of its non-retail and non-manufacturing positions, or about 700 jobs, in 2020
  • Burberry to cut about 500 jobs globally, including 150 British-based office positions.

How has the pandemic impacted revenue?

  • British Fashion Council projects U.K. fashion industry to drop 25% in revenue in 2020.
  • Burberry reports comparable retail sales in June fell 20% and sales in the second quarter, which ends in September, would fall 15%-20%.
  • MarketWatch reported March to May 2020, clothing sales were down by 66.6% over same period 2019.
  • TJX Companies Inc. reports strong sales at re-opening of stores across all countries, due primarily to pent-up demand.  Sales have slowed in the 2nd quarter and their expectation of 3rd quarter open-only comp store sales to decrease in the range of 10 percent to 20 percent. 
  • Online fashion retailers have seen a sales bump ranging from 10% to over 100%.

The number of bankruptcies keeps growing and permanent store closings is unprecedented.

  • 43 bankruptcy retailers as of this date; inclusive of these clothing brands – J. Crew; Diane von Fürstenberg; Lucky Brand; True Religion, Neiman Marcus, J.C. Penney; Ann Taylor, Loft, Brooks Brothers; Tailored Brands, owner of Men’s Wearhouse and Jos. A. Bank; New York & Company; G-Star Raw; Aldo.
  • Coresight Research estimates that 20,000 to 25,000 stores could permanently close in the U.S. this year, with 55% to 60% of those closures in malls.  GreenStreet Advisors said in April that more than half of mall-based department stores could potentially close by the end of 2021. 

The jury is still out on what players are really making progress on sustainable commitments, plans for a circular business model? For those not in the space, this is the time to double down and get it done.  For those already in the space, like Levi Strauss & Co, Stella McCartney, Patagonia, Looptworks, RÆBURN, and many brands who have been doing the work for so long, their recovery efforts will be at an advantage.  Twenty EDGE designers have been making the case, and countless small brands not on the radar. 

Consumers are shifting their priorities on what’s important to them.  An April 2020 McKinsey and Co. survey of UK and Germany consumers says that consumers want fashion brands to act more responsibly to the social and environmental impacts of their businesses.

  • 67% consider the use of sustainable materials to be an important purchasing factor, and 63% consider a brand’s promotion of sustainability in the same way.
  • Two-thirds of surveyed consumers state that it has become even more important to limit impacts on climate change.
  • 88% of respondents believe that more attention should be paid to reducing pollution.

More sustainable collaborations and partnerships are forming such as Ganni and Levi’s rentable upcycled collection; adidas and Parley upcycling ocean plastics into sneakers; and Gucci’s partnership with ECONYL® for their close-the-loop, 100% regenerated nylon Off The Grid collection.

COVID-19 New Normal,

What’s next. . . a look forward:

First of all, let’s be clear, the fall-out from the pandemic will get worse.  September will mark the ninth month.  Dr. Michael T. Osterholm, an American epidemiologist, says in a New York Times opinion article that “the path of the virus will determine the path of the economy. There won’t be a robust economic recovery until we get control of the virus.”  Although the United States has failed in its containment efforts compared to other developed countries, there’s not a green light for any country for ‘business as usual’.  The recovery will be much slower with more businesses failing and high unemployment.

Mckinsey forecasts revenues for the global fashion industry (apparel and footwear sectors) will contract by –27 to –30 percent in 2020 year-on-year.  How does the industry address this with plans to reset?  The #rewiringfashion campaign, facilitated by Business of Fashion, pledges to reset the fashion calendar, particularly the fashion show format that is outdated and seasonally out of sync with the customer’s needs.  2,113 independent designers and well-known brands have signed on to support this change, but September fashion weeks, digital or live audience, are scheduled to present Spring/Summer 2021 collections.  Is this a reset?

Recovering responsibly is for the better of both people and planet.

Black lives are starting to matter, in regards to untapped talent in the industry at all levels.  It’s one thing to post solidarity statements [of which everyone on the planet has done] and another to take real action.  During this time of social unrest, groups and initiatives have formed to demand changes to systemic racism.  For example, the Kelly Initiative, led by black professionals such as Victor Glemaud and Martine Rose, is designed to hold the fashion media sector accountable for inequality and discrimination while advancing blacks in higher positions.

On the sustainable front, there are numerous initiatives, coalitions, institutions, and organizations like the MacArthur Foundation and United Nations Alliance for Sustainable Fashion at the helm of this movement towards a circular fashion system, and they have been for some time.  Radical change and accelerating at fast speed can only happen when the entire industry starts to rethink an unsustainable structure.

Old normal is not new normal, so let it go.

I can’t predict the outcome and won’t try to.  The journey is an experience of lesson, listening, and learning and we all should welcome it.  We started this piece with Lady Gaga’s quote that fashion should be upsetting.  It is troublesome times, but radical change can happen if we seize the moment.  Old normal is not new normal, so let it go. Not everyone is on board with this blank-canvas opportunity, particularly those with the financial wherewithal.  The brave and courageous will reap the benefits of these transformative times, recover responsibly with radical change. Those that take the loss, bear the risk, and invest will carve out their narrative of being on the progressive, conscious, and culturally astute side of these historical times.

Mask up, wash your hands, and practice social distancing.  Keep creating meaningful work and policies, leaving your mark on history.

To the 800,000+ lives lost to COVID-19, I extend my heartfelt condolences to the families.  May these heroic souls rest in peace.  For the rest of us, we carry the torch for a better tomorrow.
Rhonda P. Hill

Founder, Publishing Editor