This Past Month Has Revolutionized The Global Fashion Industry

Prior to the publication of this article, Milan Menswear Week has just been postponed, and London Menswear Week, Paris Menswear Week and Gao Ding Week have also been cancelled.

London, United Kingdom-When Sarah Leff boarded a flight from New York to Paris to attend Fashion Week, she felt a bit of an upcoming crisis.

On the way to the airport, the CEO and co-founder of the Jonathan Cohen brand received emails one after another from buyers and they were unable to reach their Showroom in New York. Some have shortened their travel time, while others have given up on week-long travel altogether. When she landed in Paris, she heard more of such news.

The reason is obvious: In the last days of Milan Fashion Week, the outbreak of the new crown virus in northern Italy was the first large-scale outbreak of this deadly virus in continental Europe. Giorgio Armani had to shut down to host his own fashion show.

One after the other, when we see large retailers withdrawing all employees, you know how big the impact is, ”Leff said. Brands can only set up a virtual Showroom for buyers who are not present through FaceTime, trying to convey the feeling and touch of clothing through pictures. This week, it seems to be normal.

Even earlier, the outbreak had worried Oyuna employees, in part because the cashmere brand's Chinese agent was based in Wuhan, the center of the first outbreak of the virus. During New York Fashion Week, the number of foreign visitors to the Oyuna showroom has decreased significantly, especially in foreign markets such as Japan. For these markets, the impact of the new crown virus is more direct.

Then Paris Fashion Week, the atmosphere became quite tense,” said Marie-Luca Harms, Oyuna's sales manager for women's clothing. Buyers are much more cautious. She said that some companies chose some but withdrew before the order deadline and decided to resell their existing inventory.

After arriving in Milan from Milan, Stefano Martinetto, CEO of fashion group Tomorrow London, was surprised to find that people didn't seem to care about the spread of the virus. No temperature detection is even needed at the airport.

TiMartinetto says the environment is full of "illusory security." His firm provides consulting, investment, manufacturing and marketing services for emerging designer brands. But there are signs that the economic crisis is coming and buyers from Asia and the United States have decreased significantly. When he returned to the UK, he began to isolate himself from the team and has never returned to the office since.

In the West, the experiences of Leff, Harms, and Martinetto are just early experiences of the upcoming outbreak. The impact on China was earlier. Since the beginning of this year, the Chinese market has been almost completely closed. The entire industry is ready to deal with the financial crisis. To what extent has it completely subverted the fashion industry.

Shops, factories and offices in Europe and North America are now closed. The only certainty is that in the future, we will never return to business as usual.

With the global economic recession and sharp decline in sales, companies are in a survival mode. For many, this past month has been a month of crazy phone calls and emails with retailers and suppliers. Every major brand is struggling to respond to the rapidly changing situation. There is still no insight into how long the current crisis will last or how deep the economic spiral will decline.

Exhibition crisis

"It's like living in a movie," said Umberto De Marco, the founder of Yatay, who runs a luxury vegan sports shoe brand focused on reducing environmental impact.

Yatay is headquartered in Italy and felt the impact earlier than most companies. During Milan Fashion Week, its Showroom "like a desert," De Marco said. About half of the expected audience did not show up. The situation is even worse in Paris, where visits have fallen by around 90%.

MarcoDe Marco's family also owns Coronet, a synthetic leather manufacturer that supplies raw materials for big names and Yatay. Both companies share a headquarters. As the situation in Italy deteriorated, they ordered 1,000 masks and installed a lot of hand sanitizer. The employees began to greet each other with their fists, and the customary morning coffee meeting was reduced to only two people at a time, standing very far from each other. As of March 9, Yatay had started working remotely, but its factory is still open.

Since Paris, more and more countries have begun to restrict personnel movement and trade, and the downward spiral of the economy has become rapid and shocking. As of last week, countries such as the United Kingdom, Italy, France, and Spain allowed only important stores to continue operating. This category did not include clothing and footwear stores. In the United States, New York and California are implementing similar measures.

Fengfeng City

On March 13, Mara Hoffman sent around 30 employees home, and she began to adapt to the strange new reality experience of Slack's online chat channel, video sign-in, and how to raise children while working. Once the norms for home work were established, Hoffman quickly turned to timely stop loss.

”Business is changing day by day. Our online sales have fallen, wholesalers have panicked, cancelled orders, and manufacturers cannot go to the factory to ship," Hoffman said. "This affects our entire supply chain."

The brand's spring collection is facing delays due to previous disruptions in production in Asia and recently its textile mill in Italy has also stopped working. Not long ago, Peru said it would close the border, which has caused Hoffman to worry about the origin of raw materials such as organic cotton and alpaca wool. Although retailers are closing down, this concern is becoming increasingly meaningless.

The impact of the factory shutdown has affected the entire industry, making some companies' supply chains at risk of severe disruption, while others are relatively unaffected for the time being. Government policies on how, when, and whether they need to close offices, stores, factories, and supply centers vary from country to country, and even from city to city. Orders are sometimes ambiguous, allowing individual companies to decide for themselves whether they can continue to operate.

By March 16, Leff said that Jonathan Cohen's Italian factory had ceased production. The brand is currently working to help its New York-based manufacturer convert medical supplies. A tailor in his workshop has now made 144 masks, which were delivered to the hospital last weekend.

Chloe Songer and Stuart Ahlum, founders of sneaker startup Thousand Fell, have planned tougher containment measures since at least early March. Songer used to live in Wuhan and now has friends there. So, they knew early on how bad things could get.

On March 9th, the two emailed their strategic partners and started discussing what the next four to eight weeks might look like and what emergency measures they might take once the situation escalates.

When the United States began to close the city, they spent seven hours answering calls, hoping to quickly control this growing situation. The company originally planned to host a series of large-scale events in April this year, and for the first time entered the large-scale wholesale channel. All this has been put on hold, some states have completely banned public gatherings, and policies to maintain social alienation are expected to last for weeks or even months. During the economic downturn, Thousand Fell could only focus on the existing digital community.

The brand opened a new warehouse in Los Angeles and moved inventory from Manhattan to Brooklyn to hedge the risk of stockpiling. Not long ago, Amazon temporarily closed a small warehouse in New York because of an employee infected with the new crown virus.

Sales decline

In Sweden, the same is true of Asket, the men's basics brand that faces consumers. The founders of the brand initially felt that they were in a good environment to deal with the crisis. The five-year-old company is expected to make a profit this year. To achieve further growth, it started increasing inventory and hiring third-party public relations companies to serve it.

Brands have built their business around transparency and traceability, which allows them to quickly identify vulnerable links in the supply chain. In the first few weeks of the global epidemic, this mainly meant that there would be problems with supplies from China's hemming, zipper and tags.

But when the World Health Organization declared the new crown virus epidemic a global pandemic and the global financial market was in chaos, Asket faced a problem with no obvious solution: consumers no longer have the mood to buy clothes. Online sales are beginning to decline. By last week, their sales had fallen by 50%.

"The situation is moving too fast," said August Bard Bringéus, co-founder of the brand.

In Malaysia, local designer Melinda Looi was notified only one day ago that all stores were closed.

"All fashion retail businesses are nil. Stores are closed. There is no revenue," CEO Dirk Luebbert said. "Online sales have also been greatly affected ... People don't want to look pretty now. Bright. "

The brand expects the negative effects to continue into Ramadan, which begins in late April. In Malaysia, this Muslim festival is a busier shopping season than Christmas.

In Paris, Marine Serre is fortunate to see an increase in online shopping over the past two weeks. At the fashion show in late February, she showed off her signature design, a mask. This season seemed particularly suitable under the shadow of the new crown virus epidemic. Nevertheless, the growth of e-commerce business is not enough to make up for the losses in the brand's main sales channels.

"What is happening now is really difficult for us," Serre said. The brand is still young, "so we still rely heavily on retailers."

There are signs that consumers in parts of Asia are starting to return, especially for global-focused brands. The week of March 9 was the best week Tomorrow had ever experienced, partly because of the return of Asian buyers. Oyuna saw an increase in orders from a Korean retailer from 8,000 euros to 20,000 euros, but a Singapore customer cut off the same amount of orders and the growth was offset.

Farfetch is working with boutiques in Italy and other regions that sell through its online platform, stepping up efforts to increase sales and online traffic for these companies, and achieve fast payments. It also provides free temporary warehouse operations to buyer stores to ensure continuous development. Goods, specially launched spring and summer new season promotional activities for buyer stores, and provided more and more timely marketing promotion for buyer stores. Its founder and global CEO José Neves mentioned in a recent customer letter: "Farfetch's products come from buyer stores and co-brands in 50 different countries and regions. Among these Farfetch partners, Many are small businesses and they have to close physical stores during the epidemic. We can imagine that this is a huge blow for them. "

But these efforts are just a drop in the ocean. For now, e-commerce is not a panacea, and online orders for many brands have fallen sharply in the past few weeks.

Yatay's De Marco said: "People are just going online to see what's going on in the world. Right now, luxury is not the focus of attention."

Survival mode

As brands adapt to the new normal, they face tough choices in the coming weeks and months. Currently, the sudden economic recession is reminiscent of the financial crisis of 2008, which destroyed many independent brands.

Even the biggest fashion retailers are losing money. Zara's parent company, fast fashion giant Inditex, said it would write down nearly $ 300 million in inventory value. Burberry said it expects fourth-quarter sales to fall about 30% from the same period last year.

Facing such a terrible prospect, the status of small independent brands in the fashion industry is particularly unstable. They are sandwiched between retailers and suppliers and often do not have much cash to rely on.

"The decline in sales will hit us," said Leff. "I sit on inventory and the factory requires full payment, but the store does not accept the product because it is closed. I don't know if I can sell directly to consumers, or if I will There are more losses. "

As more and more regions begin to blockade, major brands are taking inventory and preparing for difficult times. Strategies vary depending on the company's financial situation, but everyone is drawing on similar and limited practices.

"There are two ways to solve this problem: You can pause the shutdown, wait for the storm to pass, or take the initiative to attack," Martinetto said.

MorTomorrow will redouble its efforts to attract buyers using video and other digital tools. It's working overtime to shift customer inventory and bring inventory prepared for brick-and-mortar stores online. But it is also conducting due diligence on each project and postponing plans for large expenditures.

In extraordinary times, the company is trying to help them hedge their risks through planning and advice to customers. It advised designers to develop a new series of cross-season products, and focus on using stock fabrics to resell goods that were not sold in the spring and summer of 2020.

"We will not cut any orders, we will launch autumn and winter products, because we believe that when autumn and winter products are put on the market, everything will return to normal," Martinetto said, "We are a stable company with good balance sheets and a responsibility to protect Count on our SMEs. "

Melinda Looi has made landlords rent-free and department stores have become more forgiving of minimum deliveries and other requirements. A Chinese supplier of the brand sent her a batch of masks to show unity and fight the epidemic.

But for many people, it is now in survival mode.

Last week, Mara Hoffman spent hours on the phone with her management team to elaborate on the brand's collections and production strategies over the coming months. She launched an unscheduled sale offering 25% of select items in an effort to maintain cash inflows. With the stagnation of the physical retail industry, more and more brands are turning to this move, hoping to boost online sales.

 "We already have all these new products, and I know we must generate more revenue now," Hoffman said. "I won't lose without a fight. I have wages to pay."

But even this decision brings new challenges. Brands urgently need to maintain sales performance to sustain