The Fashion industry is one of the sectors that got severely hit by the pandemic.
In 2020, more than 48 countries were put under lockdown. In most places, all the non-essential businesses remained closed and unable to operate. Fashion retailers and boutiques, being considered as non-essential, were closed which resulted in huge losses of sales and an accumulation of inventory.
Covid-19 definitely had an economic impact on the fashion industry but also contributed to reshape the way we work in Fashion. Things are changing and so shall we. Let’s see how.
- How did the Pandemic affect the clothing industry throughout the world?
- How can you, as an independent fashion designer, navigate and survive through this pandemic?
- The pandemic and its consequences might last longer than we think/ and would like to
- Consumers’ tastes changed
- The power of digital
- Having a clear, coherent and distinct message is key
- Adapting the communication
- Is mid-range clothing still a positioning to consider?
- Reevaluate the distribution channels
- Pandemic Management Cheatsheet
- What doesn’t kill you make you stronger
How did the Pandemic affect the clothing industry throughout the world ?
Covid-19 is a global phenomenon that involves almost all countries in the world. While the impact is not similar in each country, there are some global trends that we can notice here and there.
Many Fashion brands and retailers are closing or going bankrupt
When you are a fashion retailer, you have huge fixed charges: the rent and all the costs affiliated with running a shop like the employees’ wages or the electricity. You also have inventory and taxes to pay. In other words, everyday you don’t sell, you are losing money.
Similarly, a fashion brand may have employees they need to pay, some fixed costs linked to production or logistics and investments to make for the next season.
With that being said, it’s no wonder why the number of bankruptcies and closures increased these past months. As a matter of fact, even if you can benefit from the governments’ subsidies, if you are in a just-in-time distribution logic and cash flow doesn’t come in, it’s hard to keep the business afloat.
In the USA, many brands and retailers filed for bankruptcy : Century 21, Muji, Brooks Brothers, Aldo, J Crew, True Religion. In France, historical actors of the clothing and shoe industry, Naf naf, Camaieu, la Halle and André also filed for bankruptcy. The fashion men brand, Celio, closed down most of its stores in Europe.
Zara, Guess, H&M and even the luxury brand, Diane Von Furstenberg, are shutting down stores across the world.
The supply chain is also suffering from this pandemic
A lot of factories had to close down because of Covid-19. The Pandemic started in China, so it’s natural that this country was profoundly impacted.
According to Apparel Resources, China’s market share in the US apparel import market alone fell to a mere 21.3% this February. Many factories were forced to close. They couldn’t operate and couldn’t even ship the garments that were ordered.
And it’s not only the case in China. The same situation has been seen in Europe or in the Usa. Many brands failed to show their new collections because the fabrics didn’t arrive in time or the prototypes were just stopped.
On top of that, many buyers, seeing the situation, canceled orders or didn’t pay for orders that didn’t get shipped. And when retailers and fashion brands are struggling to survive, they are unlikely to invest massively in research and development. When the distribution is suffering, so is the production.
It also takes time for a factory to restart. It’s like a vicious circle where everything is intertwined and has a sort of ripple effect.
A wave of discounts
Obviously, every actor of the clothing industry accumulated inventory. Covid-19 was unexpected and no one predicted that shops would completely have to close.
Clothes are not a necessary item in your daily life. On a daily basis, you need new food, new electricity but do you need new clothes every day? Statistics show that people wear only ⅓ of their closet and some garments are bought and will never be worn.
Since people were confined at home, they didn’t need to change clothes. And when life is uncertain and you are not even sure you will have a job tomorrow, you just avoid making unnecessary expenses.
So during the lockdown, sales plummeted.
As a result, many brands and shops were left with most of their winter/ spring/ summer inventory. To get rid of the stock, many actors massively discounted the items. On the internet, you could see ads, during the whole spring summer, promoting a -50 or -70% discount.
However, the flash promotions didn’t always translate into conversion as consumers were bombarded with the same types of ads during this period of time.
How can you, as an independent fashion designer, navigate and survive through this pandemic?
As we could all see, the clothing industry overall is not doing so well. And if it’s the case for major brands, what can smaller fashion brands with less media power do? Does it mean it’s over and we should shut down our brands? I don’t think so.
We just need to assess the situation, understand the changes and take the appropriate measures.
The pandemic and its consequences might last longer than we think/ and would like to
As we can all see, no one really knows how long it’s going to last. As a matter of fact, most countries are undergoing a second lockdown. The virus was said to die during summer but apparently it did not and it came back stronger.
So, we must now live with the “new normal”. In other words, we can’t just pause and think it will pass. It might not. We might have to live with this situation longer than we’d like to.
Given, it’s not easy because we must think both short term and medium term. In the short run, we need to think about what we can do to survivre right now. But, we also need to think on the medium term about what we need to implement in case the situation lasts longer.
For example, If the shops are closed, it might be time to rethink the distribution and the logistics. We might have to train the sales people how to reassure clients regarding the new practices. Finally, we might need to implement stricter sanitary measures in our process.
Consumers’ tastes changed
Working remotely has become common practice in many companies. Some workers are already asked to work from home until the end of the year. Meetings now take place on Zoom or Teams. Finally under lockdown, people are not supposed to leave home or meet with friends.
Obviously, you won’t have the same needs if you are to stay at home all day. Why wear a suit when you don’t need to physically see your managers or your clients? Because they were at home, people tend to favor comfort over looks. They were looking for coziness. Casual clothes, jogging, pajamas, sleepwear were pieces of items that were in demand during the pandemic.
Two other fashion segments were on the rise this year. The first one is athleisure, because people were working out at home in order to relax and release the stress and fear from the situation (and because they didn’t have much to do).
The second is lingerie. During the pandemic, people, influencers, brands and retailers were promoting the importance of self-care and wellness. There was a sort of “cocooning effect” that gave people the desire to treat themselves. Lingerie definitely responds to that need as you mainly buy lingerie to feel better.
The power of digital
The web traffic has never been as high as during the pandemic. With the rise of social distancing, people are seeking to connect with friends and family one way or another. The use of video chat and social media has increased exponentially. So more than ever, it’s time to be online. If clients can’t come to you, just go to where they are : online.
Of course, this pandemic benefited a lot to the GAFA. These giants are digital born and have all the logistics and communication power to easily capture clients online. As a matter of fact, Amazon doubled its profits in the second quarter and they said that third-party sales increased by 53%.
However, it’s never too late to start building a community that will favor you over Amazon, Asos or Zalando. If you are clever in the way you communicate and act, people will stick with you. That leads me directly to the next point.
Having a clear, coherent and distinct message is key
Competition online is really big. People are bombarded with promotional messages. It takes at least 7 messages to get a potential client online and you only have 3 seconds to grab someone’s attention.
And when you are an independant fashion designer going online, you are not only competing with other fashion brands but also retailers, marketplaces and other types of brands and services like food delivery, cosmetics or home decor.
So it’s vital to differentiate your brand and to make sure that the message you are showing is:
- easy to understand,
- can be explained within 3 seconds,
- and is original enough to stand out of the crowd.
Adapting the communication
Social distancing and media is definitely provoking fear, stress and anxiety to many people. Therefore, having a reassuring voice (in terms of message and tone) in your communication is crucial. No need to add fuel to fire.
More than ever, people needs dreams and transparency. They are either looking for something that will help them evade from their dark day-to-day or for honest and reliable brands.
If sustainable development was not part of your strategies, it should now be. Ethical practices are rarely the trigger for a purchase but it could be a good additional argument to close a sale. More and more consumers want to know where their clothes are made and how they were made.They want to back brands that pushes for positive messages and values. Beyond clothes, people are buying a philosophy and a way of living.
Is mid-range clothing still a positioning to consider?
That is just my analysis but I believe that the mid-range market in the clothing industry might suffer the most from this pandemic. People fear the future and many are being dismissed because of the lack of business and sales. In some cases, the crisis is just an excuse to get rid of somebody. Whatever the reasons, uncertainty and anxiety is in the air. And generally speaking, middle-class spending tends to slow down during this kind of situation. People prefer to save rather than to spend.
In my opinion and in regards to this situation, there are 2 ways people can react. They will either go for very low-priced products or high-end ones. Low-priced because they want to treat themselves but can’t afford making unreasonable purchases considering the situation. Expensive pieces because people would rather buy something they think will last or that they truly love than low quality products.
In addition to that, you need to have sufficient cash flow to resist the crisis and make the necessary investments that will help you get out of it as fast as possible. When you are selling low-priced clothes, you can count on the volumes that will be generated by the sales. And when you have highly priced clothes, you have the margins that make it up.
However, the in-between is not the most comfortable place because you are always tight on money to pay your suppliers or even your employees. Production costs are still high because you don’t have the volume, yet, the margins aren’t that great either. You are in survival mode all the time and that can be tiring over time.
Reevaluate the distribution channels
Knowing what we know, are all business models still valid? Is going wholesale still an option? Does having your own boutique still a good strategy? How would you approach your retail strategy if the situation lasts longer? What about next year’ events? Should you participate in trade fairs? Are you investing enough on digital channels? What products or assets are more profitable right now for your brand?
Now, more than ever, is the time to ask ourselves (and our team if we are lucky enough to have one) the right questions.
Business models and strategies are not supposed to stay frozen. What was true yesterday might not be true today. The context and the needs changed. So, it’s important to remain flexible and to adapt the strategies.
Pandemic Management cheatsheet
What doesn’t kill you make you stronger
Again, I’m not an expert but this is my humble point of view regarding the situation.
As far as I am concerned, I believe that crises are always an opportunity to shine. You might need to reevaluate yourself and to undergo many changes (in your life or your business) but if you keep working hard, great things will eventually arrive.
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