As the world continues to battle Covid-19, more information is coming out about how retailers and brands are faring and the resulting positive environmental impact from the overall ‘slow-down’ that the virus is causing. This begs the questions: should retail stay this slow? And what will happen to the industry once the dust settles?
Every aspect of the supply chain is affected by the virus. From people who gather raw materials to those who finish garments in factories, to those who sell the pieces in a retail store, health risks and potential poverty are the unfortunate results of store closures. Those who remain in factories or distribution centres have cited poor health standards within the facilities, furthering criticism of already questionable employee safety. Business of Fashion claims that key garment-making countries like Bangladesh, India and Cambodia will face these realities more than most.
Neiman Marcus has recently filed for bankruptcy. This depicts how an industry that already was financially challenged is now in complete peril. LVMH and Kering are both reportedly facing a Q1 15% drop in revenue. This shows how crucial the Asia-Pacific market is to these groups. The Asia-Pacific market is the largest money-maker for most luxury brands, and as key-players like China start to re-open, there is hope for revenue to recover. Some companies are continuing to thrive during this time: Hermès has recently cited a $2.7 million sales day at their Guangzhou flagship. Brands like Hermès are surviving due to the fact that their model for success is based on selling a minimal amount of high-priced items to a group of consumers who are less likely to be financially affected by the virus. These types of brands are, of course, the minority.
Fashion weeks were canceled and brands are forced to take a hard look at how much they produce. Canceling fashion week alone positively impacts the environment through less flights, no flamboyant sets are created for catwalks, energy for hair, lights, air-conditioning, etc. also is saved. Designers have been trying to continue their creative visions digitally. This saves industry professionals time, money and environmental impact. Some designer brands also make money from wholesaling. This practice was already on the decline, but since sales are smaller these days, it will be even more important for brands to consolidate production.
Brands are also going to have to tailor their attitudes as Covid-19 begins to settle down. Sales are a plenty as retailers struggle to off-load product. Online retailers are offering perks like free-shipping or alternate discounts to encourage spending. This is a true depiction of how little demand there currently appears to be as consumer financial stress is on high alert.
Consumer attitudes are predicted to remain discount-minded, sustainability driven and expectant towards transparency. Consumer shifts will dictate which brands are strong enough to weather this storm. According to Business of Fashion, this is an era of weeding out the weak in a sort of Darwinian retail battle. Those who emerge successful within the ‘new normal’ will flourish even more through new supply chain structures, increasing finances into environmental and social values and perhaps, slowing down a bit.