Fashion Industry on global level suffers massive drop in sales as deadly coronavirus continues to create havoc around the world.
A recent report looks at the impact on fashion Industry, supply chains, how retailers are responding and how the shut-down in China could lead to long-term changes to sourcing habits.
Towns, cities and entire regions across the world are on lockdown, and in China have been for weeks.
Offices and factories are closed, private vehicles banned and movement restricted in a bid to curtail the spread of a deadly new virus. Covid-19 – popularly known as coronavirus – has caused tragedy and chaos since it emerged in the Chinese city of Wuhan at the end of 2019.
Thousands of cases of the potentially deadly respiratory infection are still being reported, and on 26 February it emerged the virus was growing faster outside China than inside for the first time. The World Health Organization has cautioned against assuming the worst is over.
Beyond the devastating human cost, businesses are also feeling the deep impact of the ongoing outbreak. The Chinese economy is already taking a hit.
The government has sought to ease pressure on financial markets by offering huge cash injections to help market stability.
An outbreak of SARS – a similar respiratory infection – in 2003 led to a 1.1% reduction in GDP that year.
The new coronavirus is already more deadly and infectious than SARS and is impacting a Chinese economy that has grown much larger in the intervening years.
Short-term sales drops are already slowing growth for brands and retailers, particularly in the luxury space, where the booming Chinese market is key.
Burberry, Apple, Moncler and Nike have temporarily closed stores and warned on the shutdown’s impact on sales.
Nike has said it has closed more than half of its stores in the country and Moncler has reported footfall down 80% at its 55 Chinese stores.
It is too early to divine the long-term impact of the outbreak on the global fashion industry.
This will largely be determined by if and when factories are able to return to full capacity.
At present, some remain closed in the worst-impacted areas, centred in Hubei province, part of China’s central manufacturing belt.
Factories that are open face staff shortages, as employees are still unable to return following the Lunar New Year holiday at the end of January.