COVID-19 hit fashion – and the millions of those employed by the industry – hard, but it’s about more than damage control: there needs to be lasting structural change.
In the same way that it has relentlessly and indiscriminately torn through the world – bringing both loss of life and financial ruin – the COVID-19 pandemic has also affected the fashion industry at every level. From the obvious economic impact of businesses having to close their doors and people prioritising the purchase of essentials, to the re-shaping of the fashion system as we know it. The structured fashion calendar, complex and opaque supply chains, collections that come too big and too often… these are all things which have been criticised before, but there is hope that this devastating crisis could be a catalyst for change.
Fashion leaders and professionals have already gathered over Zoom to discuss the future of the industry – dropping the phrase “in these unprecedented times” and “a new normal” a bit too often –, fashion photography has somewhat been replaced by FaceTime photoshoots and illustrations for the moment, and online deliveries have become more prevalent than ever as everyone keeps safe and tries to make sense of this new way of life. Even with lockdowns being loosened around the world, the impact of this pandemic on the industry is far from over.
Financial worries during this crisis are by no means unique to the fashion industry. But the combination of lockdown-necessitated store-shuttering, disrupted supply chains and customers keeping a tighter grip on their wallet for anything non-essential has hit retailers and designers hard. When the pandemic hit, “we lost one third of our sales overnight” said GANNI’s co-owner, Nicolaj Reffstrup. According to the projections of the Boston Consulting Group, the fashion and luxury sectors combined may face a loss of between $450 and $600 billion in sales. The pandemic poses a challenge for the fashion industry “even greater than the 2008 recession”, claims investment research and management consultancy Bernstein.
The blow to sales caused by the pandemic has naturally left companies with an abundance of unsold stock, and now the question will be how to shift it. Many brands have taken to 50% off online sales, hoping to unload their stock even if that means discounting and slashing profit margins. Sanjeev Bahl, CEO and Founder of SAITEX, predicted that the “pricing matrix is going to be a battlefield in the coming months”.
For some, this pandemic was the nail in the coffin for their suffering business, leading to a slew of fashion bankruptcies. (In May alone, Neiman Marcus Group, ALDO Group, John Varvatos, J. Hilburn and J. Crew all filed for bankruptcy.) The surge in popularity of online shopping in the last several years had already been sucking the life-force out of malls and brick-and-mortar retail, but COVID-19 has exacerbated this, with some businesses not even able to survive the store closures necessitated by lockdown.
There’s also the fact that many consumers won’t want the same things post-pandemic that they did before. The worldwide panic and grief caused by the disease – as well as the abundance of confined free time imposed upon many of us by lockdown – has given some the opportunity to re-evaluate their priorities and values, to re-assess what they stand for and (most importantly for businesses owners) what businesses they want to support. Namely, consumers are increasingly looking for sustainability and transparency. This will likely lead to a shift in consumer behaviour which will have an impact on the value of brands in the eyes of consumers. In fact, business valuation consultancy Brand Finance projects that companies globally are expected to lose a collective $1 trillion in “brand value” due to COVID-19.
Most brands were already aware that having an online retail presence would benefit them in the face of changing shopping trends, but the COVID-19 crisis has made it incredibly obvious. Whilst retailers such as H&M and Inditex (whose subsidiaries include Zara, Pull&Bear and Bershka) have naturally lost sales from in-store foot traffic, their online sales have grown, with H&M’s jumping almost a third in the March 1st – May 6th period. Zalando, Europe’s biggest online-only fashion retailer, said that in a span of 3 weeks it had signed up 50 new brands to its marketplace. In the long-term, consulting company Bain noted that the crisis will speed the shift to online shopping, estimated to reach 30% of sales by 2025 from 12% in 2019.
E-commerce giant Amazon has recently partnered up with A Common Thread (Vogue and the CFDA’s fashion fund initiative) to launch a digital storefront for designers, with the intention of helping those who were struggling with the shut-down of physical stores. Participating designers include Phillip Lim and Batsheva Hay, and though this seems to be a good opportunity for them, Jeff Bezos is arguably enjoying the bigger win. Amazon has tried to venture into the fashion world multiple times in the past, only to be largely shunned. This seal of approval from Vogue and the CFDA – two very important bodies in fashion – might just be the beginning of Amazon fashion becoming a real thing. However, luxury groups such as LVMH are not looking to work with Amazon in the foreseeable future, with the prevalence of counterfeits on the e-commerce site being one of the reasons.
And it’s not just retail that’s shifting online. With international travel and large gatherings being out of the question for a while, fashion shows will have to go digital. The world’s first entirely virtual fashion week already took place in March in Shanghai, and many other cities will follow, including London and Helsinki (though the latter was already planned to be virtual before the pandemic on account of the environment, with all collections to be created by a 3D artist).
Digital fashion has gained a lot more attention due to lockdown. Kerry Murphy, founder of digital fashion house The Fabricant, believes that it’s going to be “as big as retail”, since “everyone has a virtual identity, and that is only going to get bigger.” A digitalisation of manufacturing is also occurring, though this requires significant investment. Silk supplier BOMBYX is exploring automation to reduce energy consumption and increase output for each worker, as well as new technologies for recycling and achieving carbon neutrality.
Reforming supply chains
I’ve mentioned the problems faced by retailers whose clothing sales have dried up, but perhaps the worst hit are the garment workers who produce clothes for western fast fashion brands. The pandemic thrust the whole world into panic, and in an act of self-preservation many brands cancelled orders from factories, reportedly totalling over $2.8 billion. Brands leaving their contracts to suppliers unfulfilled despite orders being completed or materials already purchased has led to suppliers being unable to provide their workers with furlough or severance pay. This has jeopardised the livelihood of millions of garment workers, and demonstrates the unethical nature of a fragmented, opaque supply chain. A lot of brands don’t have a strong relationship with their suppliers, they don’t value the people who make the clothes but rather see them as cheap labour. COVID-19 has exposed this weakness in the supply chain, and is a warning to brands that they must reform their relationship with suppliers.
Supply chains also faced a big problem when the outbreak took over China, closed factories and halted manufacturing, since the country is responsible for one-third of global manufacturing. This made it painfully clear how reliant the rest of the world is on China and highlighted a need for greater diversification. Japan has already acted on this, committing $2 billion to help Japanese multinationals shift their manufacturing out of China.
Dr Hakan Karaosman, fashion supply chain and sustainability expert, calls for a restructuring across all tiers of fashion’s murky supply chain. According to him, simple and transparent supply chains have proved the most resilient during the crisis, and brands are likely to favour this model in the future.
The whirring hamster wheel of the novelty-driven fashion calendar has long been criticised. Its symbiotic relationship with capitalism and growing profit margins means that the fashion system both promotes and relies on overconsumption to survive. Not to mention the constant pressure to top yourself with each new collection and push out creativity on a tight schedule that has literally driven designers mad. It’s just not sustainable. A reform of the fashion calendar was already a conversation being had before COVID-19, but the need for social distancing accelerated this change. With brands such as Saint Laurent stepping back from the industry’s shows for the rest of the year and Gucci planning to scrap seasons and show only twice a year (post-crisis), it’s clear there’s a desire amongst designers to reshape the fashion schedule. Saint Laurent’s creative director, Anthony Vaccarello, told Women’s Wear Daily: “We have known for years that something has to change. The time is now. There is no good reason to follow a calendar developed years ago when everything was completely different.”
Eva Kruse, CEO of Global Fashion Agenda, says that now the industry is in “de-growth”, and it is a time for us to consider: “What is the perfect size of the industry in volume, considering planetary boundaries?” Kruse told Forbes that the industry can maintain profitability and high earnings without “just producing new products”, through utilising business models like rental and resale. Forbes also asked Founder of Slow Factory, Céline Semaan: what should the fashion industry change post-COVID-19? Semaan replied: “Everything. From the fast-paced fashion calendar to the overproduction of goods that encourage (and depend on) overconsumption to sustain its broken economic model; to the exploitation of land, labour and exotic animals, to the way it capitalises on movements such as Earth Day and all efforts around that day/month focussing on profit-driven initiatives. Everything.”
Besides changes within the industry, consumer mindset has shifted too. Karl-Hendrik Magnus, Senior Partner at McKinsey and Company and leader of the Apparel, Fashion & Luxury Group said that, “consumers have seen how vulnerable the entire world is, and the whole crisis has raised awareness for social and environmental sustainability, even among those that were not previously onto the topic.”
Although, there are naturally worries about some businesses tossing sustainability to the side for now whilst they simply fight for survival. The same can be said for customers who can’t afford to care about sustainability when facing the economic setbacks of the pandemic. In the long-term, however, it definitely seems as if a shift towards sustainability is a priority, with changing consumer sentiment due to the pandemic accelerating the already growing eco-consciousness amongst the public which has been evidenced by the boom in second-hand clothing sales in recent years.
Ending the fur trade?
China’s “wet markets”, believed to be the birthplace of the COVID-19 outbreak, keep and slaughter animals on-site to be used for a variety of purposes, from medicine to food. But the biggest sector of the Chinese wildlife trade is in fact fur production, according to a 2016 report by the Chinese Academy of Engineering. The animals used for their fur – such as raccoon dogs, foxes and mink – are potential hosts for coronavirus, and being kept in crowded, filthy, stressful conditions can’t help. The cruelty of wildlife markets and factory farms has brought them criticism before and caused some countries to phase out fur production. But now, with the added element of the health crisis, there’s a growing urgency to ban fur farming. Brands that have announced fur-free policies include Gucci, Prada, Chanel, Michael Kors, Versace, Armani, Macy’s, Bloomingdale’s, Burberry, Farfetch and Net-a-Porter. So, is it possible that fashion could go completely fur-free in the future?
Though business is difficult for many at the moment, there has been an uptick in activewear and loungewear (since lockdown has compelled many to either take up exercising or sit on their ass all day). Puma seems particularly confident, expecting business to recover by the end of the year and for growth to return in 2021. Their CEO Bjorn Gulden said, “Here in Germany, I have never seen so many people run again,” with running and walking products selling especially well. Luxury online retailer Moda Operandi published a report in late April which revealed that since March 9th (the date the World Health Organisation declared COVID-19 a pandemic), searches for “sweats” and “sweatpants” increased by 50 and 80%, respectively.
It’s plausible that face masks will be incorporated into our fashion looks in the future. In fact, over the recent years there have been more and more designer face masks popping up on the runway (Marine Serre’s or Off-White’s for example), which will likely only be accelerated by current circumstances. Many East Asians have long worn face masks on account of air pollution and to keep others safe from infection, which – considering how lucrative the Chinese luxury market is – no doubt influenced certain designers.
There’s also the question of whether minimalism will make another widespread resurgence, as it did in the late 00s and early 2010s as a result of the 2008 financial crisis. After the conspicuous consumption which characterised most of the 00s, the shock of the recession turned people off from buying logo-emblazoned accessories and pushed them towards the aesthetic of Phoebe Philo’s Céline and Acne’s Scandinavian minimalism. With another recession looming, it’s possible that minimalism will take us all by storm again.
COVID-19 has been described as a watershed moment, both for society in general and the fashion industry specifically. However, despite all the changes that are happening and the claims that the world will “never be the same”, there is the worry that industry professionals will be far too keen to return to “business as usual” once the dangers of the virus and the economically paralysing effect of the lockdown are forgotten. Eva Kruse, CEO of Global Fashion Agenda, had this to say on the nature of the pandemic as a catalyst for change: “If there is a green lining, it may be that we jointly have an opportunity to reset the (fashion) business. We have to rethink and rebuild the business and not try to go back to business-as-usual. If we fail to utilise this opportunity for change, we are going to see a crisis much bigger than coronavirus.”
Words by Anastasia Vartanian