FW
Bangladesh will sue factory owners that do not pay their staff during the lockdown, with thousands of garment workers struggling after factories shut without paying March wages. Workers have taken to the streets to demand they be paid, defying a mass lockdown that has seen thousands of factories shut as orders from Western retailers dry up.
The government has said at least 350 factory owners have not yet paid March wages, with more than 150,000 workers affected, though labor leaders say the true figure is much higher. Labor ministry official Shibnath Roy said businesses that did not pay staff would not receive any money from a $588 million rescue package that Bangladesh announced last month for its crucial export sector.
The head of the Bangladesh Garment Manufacturers and Exporters Association Rubana Huq said 98 of the 2,274 factories it represents had yet to pay workers. Millions of households in Bangladesh depend upon the garment sector, which has been hit hard by the cancellation of more than $3 billion-worth of orders as shops around the world shut down.
The International Labor Organization has urged governments to extend social protection to the industry and is advising on measures to promote employment retention, short-time work, paid leave and other subsidies. ILO recently stated that the coronavirus is triggering massive losses in output and jobs, with textiles and apparel particularly hard-hit. In Bangladesh, order cancellations have led to lost revenue of about $3 billion, affecting some 2.17 million workers.
ILO said in Bangladesh it is estimated that less than 20 per cent of firms are able to continue paying staff wages for more than 30 days under these circumstances. Similarly, in Vietnam, another major apparel exporting nation, the ILO estimated 440,000 to 880,000 workers could face reduced hours or unemployment.”
Alette van Leur, ILO director for sectoral policies says ILO member states are taking unprecedented measures to protect frontline workers and to lessen the impact on businesses, livelihoods and the most vulnerable. Indeed, Casper Edmonds, ILO director for manufacturing, told WWD that in a recent virtual meeting with Guy Ryder, ILO director-general, representatives from the International Apparel Federation, an employer’s umbrella grouping, called for solidarity across the global supply chain.
The ILO analysis notes that some major buyers have committed to paying for all orders already in production or completed. In Bangladesh, for example, H&M, Inditex, Kiabi, (with deferred payments) and Target and VF have committed to payment. But it added, many other major buyers have still not done so.
UBS retail analyst Michael Lasser predicts online retail penetration to hit 25 per cent by 2025, up from 15 per cent in 2019. By his calculations, this will result in closure of around 10,000 stores across the globe. Retailers with scale, such as Costco, The Home Depot, Lowe’s, Ross, Target, TJX, and Walmart, to name a few, will emerge winners in this scenario, capable of leveraging their resources and scale to survive tumult and upheaval.
Though store closure will vary by sector, apparel retail will be the biggest loser, with 24,000 doors expected to disappear from malls and main streets. Consumer electronics will lose 12,500 doors, while home furnishings will close 11,300 stores. Grocery retailers are predicted to close 11,000 locations. And as those doors close, Lasser expects enclosed malls will be under pressure as well.
Amazon’s dominant growth has ratcheted up pressure on the retail sector, especially for store-based brands. The online titan, Lasser says operated roughly 190 million square feet of U.S. fulfillment space in 2019, a meteoric rise from 12 million in 2009.
On the department store front, Lasser expects the channel to see more store closures ahead as store productivity has now plunged below peak levels from the second quarter of 2005 when sales per store averaged $18.6 million versus $10 million today.
Consolidated revenue of Kering in the first quarter of 2020:declined by 15.4 per cent on a comparable basis. The brand witnessed a quarter marked by strong disparities, with: o an exceptionally good start to the year in January, before the epidemic began to spread; o a contrasting month of February, reflecting store closures in Asia-Pacific; o a sharply deteriorating situation in March, due to the gradual closure of stores across Europe and the United States, the halt in tourism, and the partial closure of our production and logistics facilities towards the end of the quarter.
Revenue from the directly operated stores of the Luxury Houses retreated 19.5 per cent on a comparable basis, and was particularly affected by the significant slowdown in Asia-Pacific, followed by Europe later in the quarter.
During March, Kering began to see encouraging signs in Mainland China with the reopening of most of its stores. Sharp 21.1 per cent rise in e-commerce for all our Houses in the quarter. Comparable sales generated through the wholesale network declined by 6.8 per cent.
Manufacturers are turning to technology solutions such as the internet of things, 3D printing, robotics, data analysis and cloud computing as they onshore or nearshore production, with the end goal of creating more flexibility across their supply chains. These technologies will help companies to cut losses and inefficiencies that result from counterfeiting and parallel trade, adapt to shifts in demand or conditions and, produce more sustainably by improving reuse, resale and recycling rates for products and their components.
The coronavirus crisis has exposed a shocking lack of resilience across global supply chains as producers of critically needed healthcare equipment and personal protective garments to CPGs and apparel have been unable to respond quickly and adequately to the disruption caused by the global pandemic. The pandemic has also made brands realize their dependence on components besides exposing their inability to identify inventories of urgently needed emergency goods.
Lack of visibility makes brands vulnerable
Even manufacturers with detailed digital maps of their supply chains down to the lowest tiers were unable to procure needed components and ingredients. Others scrambled to create one in the midst of the outbreak. Without complete visibility into all tiers of their supply chains, companies have not been able to move with agility and speed if something goes wrong in a particular region
Manufacturers turn to digitization
The crisis is compelling many companies to turn to digitization to help them move more of their production closer to home, or to geographically diversify
their supply chains to a greater degree, in order to mitigate geopolitical, climate, pandemic and other risks.
Manufacturers are turning to technology solutions such as the internet of things, 3D printing, robotics, data analysis and cloud computing as they onshore or nearshore production, with the end goal of creating more flexibility across their supply chains. These technologies will help companies to cut losses and inefficiencies that result from counterfeiting and parallel trade, adapt to shifts in demand or conditions and, produce more sustainably by improving reuse, resale and recycling rates for products and their components.
However, it is still not easy to build elasticity and agility into somewhat opaque global supply chains. For example, if a CPG maker doesn’t have complete visibility into the lower tiers of its supply chain, may be caught flat-footed when it finds, that during a crisis, it can’t get the raw materials it needs to make its end products from the countries where those materials are made.
Upscaling e-commerce to meet growing demand
Another important factor that highlights the need for a globally connected supply chain is the shift of more purchases to the e-commerce channel. With all but essential retail stores closed for safety in most areas, consumers have rapidly shifted to online shopping. McKinsey has suggested that consumer goods e-commerce transactions would see a 700 per cent increase during the crisis.
By some estimates, by the time the pandemic is over, e-commerce will account for at least 200 per cent of the proportion of purchases it accounted for pre-pandemic. To meet increased demand for e-commerce, companies will have to bring more sections of their supply chains closer to their end customers. They’ll have to invest in factories, warehouses, digital technologies and last-mile logistics in order to build in more supply chain resiliency and agility.
Focus on digitization and regionalization
To achieve a globally connected supply chain, stakeholders will have to cooperate and communicate. Manufacturers, shipping providers, port operators, trucking companies, distributors, retailers and recyclers will need to work closely with one another, as well as with technology providers and government regulators, to ensure they don’t get caught again the next time a crisis hits. All parties will need to share previously siloed data to ensure transparency and efficiency.
Companies need to use this time to think about how digitization and regionalization can create more transparent, agile and sustainable supply chains. They will have to focus on building a global, adaptive system that networks data intelligence for every item flowing through it.
US has become both the biggest winner and loser in trade with China. While exports to China sky rocketed, those still facing hefty tariffs, are feeling the pain. Last month, more than 100 US businesses wrote to Trump urging him to suspend tariffs on Chinese-made goods and global steel imports, which according to them, could boost the US economy by $75 billion.
Though the first quarter data released by China recently indicates considerable pain inflicted by COVID-19 on the country's trade but it also highlights an increasingly diversified external market for Chinese products, with the Association of Southeast Asian Nations (ASEAN) becoming China's largest trading partner and trade with markets along the Belt and Road Initiative (BRI) steadily rising.
US emerges biggest winner and loser
The data reveals, the US has become both the biggest winner and loser in trade with China. While exports to China sky rocketed, those still facing hefty tariffs, are feeling the pain. As Gao Lingyun, an expert at the Chinese Academy of Social Sciences told the Global Times, there are two points to take away from this data: one, China has been implementing the phase one trade agreement as planned; two, the pandemic and remaining tariffs have caused major losses in bilateral trade.
While losses caused by the pandemic are out of control, tariffs are a man-made issue that should be addressed. Last month, more than 100 US businesses
wrote to Trump urging him to suspend tariffs on Chinese-made goods and global steel imports, which according to them, could boost the US economy by $75 billion. Such faltering domestic support for Trump in the trade war, coupled with improving signs for China's trade over the past three months sees Trump at a disadvantage in talks for a phase two agreement.
Diversifying markets add to China’s advantage
Also putting China in a more favorable place is increasingly diversifying export market in the first quarter; the ASEAN region overtook the EU as China's largest trading partner, with bilateral trade volume rising 6.1 per cent to 991.34 billion Yuan. Trade within ASEAN, China, Japan and South Korean, plus India, Australia and New Zealand, is bigger than that of other regions.
Apart from their geographically close proximity, major players in the region have continued to boost integration in recent years, though internal disagreements remain. China has free trade agreements with many of them, including ASEAN, Australia and New Zealand, with more underway, including -- the Regional Comprehensive Economic Partnership, or RCEP. In wake of the coronavirus pandemic, some in the region are eyeing even closer cooperation. Chinese Premier Li Keqiang called for joint efforts to revive economic development and push for regional economic integration, including reducing tariffs and removing trade barriers. Chinese According to him, if the countries join hands, they could not only be able to effectively stop the virus from returning to the region but also lead the global economy to recovery
Machinery, textile exports drop
In the first quarter, Chinese trade with countries along the BRI grew by 3.2 percent, 9.6 percentage points higher than the pace of overall growth. Still, the COVID-19 pandemic has proven to be extremely painful for many Chinese sectors, including machinery, electronics and textiles. In the first quarter, export of machinery and electronics, which account for nearly 60 percent of China's total exports, dropped 11.5 percent, while export of textiles, garments and other labor-intensive sectors fell 15.3 percent. The sharp losses were caused by weeks of closures due to the epidemic, but the fast pace of work resumption and a slew of policy support measures have already lifted exports in the last month of the quarter, according to Ming Ming, Chief Macroeconomic and Fixed-income Analyst at CITIC Securities.
Behind this rebound is an emerging reality that the world still needs China's manufacturing sector despite a few Western officials urging companies to relocate their production outside of China
The Council of Fashion Designers of America and Vogue have now successfully raised over $4 million in relief funding through A Common Thread, the initiative put together by the partners to support members of the American fashion community impacted by the Covid-19 pandemic. Over 800 applicants have submitted to receive aid from A Common Thread since applications opened on April 8, according to multiple reports. No individual grant will exceed $100,000.
First announced on March 24, contributors to the fund have included PVH Corp with a donation of $50,000; Ralph Lauren who donated $1 million; and Gucci parent company Kering. In addition, the Elaine Gold Launch Pad program, a program created in partnership with the Accessories Council and the CFDA to support companies between zero and three years of age, made a $250,000 donation to A Common Thread, and pledged an additional match of up to $250,000 in donations,.
According to reports, the committee hopes to have the first payments made by May. Globally, The CFDA and Vogue's effort to support its native fashion community have been shared by similar initiatives like the British Fashion Council’s BFC Foundation Fashion Fund for the Covid Crisis and the Camera della Moda fund in Milan
As per Team Apparel Resource, Vietnam may soon emerge as the largest apparel exporter to the USA once COVID-19 subsides. After analysing the apparel trade trend in the first two months of 2020 and forecasting for rest of the year. In January-February 2020, Vietnam exported apparels worth $2.38 billion to the US, marking 3.50 per cent growth. This accounted for 18.80 per cent of total apparel imports by the US.
Vietnam’s share in the US apparel market was 16.17 per cent in the corresponding period of 2019 and this indicates the share has significantly surged in 2020. On the other hand, China, the largest apparel exporter to the US, shipped apparels worth $2.69 billion with a drastic fall of 40.66 per cent. China accounted for 21.25 per cent of total apparel imported by USA in the first 2 months of 2020.
China’s share has reduced massively as it was 31.92 per cent in the same period a year earlier. COVID-19 outspread has caused a major setback for the Chinese shipment coupled with trade war which is collectively deciding the business remapping now. Adding to this, according to various reports, buyers are moving away from China and finding alternative destinations to place orders.
Not just buyers, a great number of US firms located in China have also decided to leave the country. The survey conducted by QIMA recently, about 80 per cent of the US companies will leave China.
Data analytics firm GlobalData reveals, the UK fashion sector is set to be among the worst hit industries by the coronavirus with clothing and footwear spend predicted to plummet this year, falling 26.1 per cent, or £14 billion. Analyst Chloe Collins said the lockdown will hit physical shops particularly hard. As the government has extended the UK lockdown for at least three more weeks, offline clothing & footwear sales in 2020 are likely to further contract, falling 33.6 per cent on the year, as the demand for fashion is increasingly decimated.
GlobalData also expects footfall to remain low even when stores reopen as consumers will be cautious about visiting crowded areas, and prioritize catching up with family and friends that they have been unable to see during lockdown. Consumers will also prefer to spend time outside enjoying the summer weather rather than browsing retail stores, and will focus spend on experiences over fashion items.
Online sales are predicted to decline by 7.9 per cent in 2020, even though online retail is the only option to access many product categories.
H&M has collaborated with UK-based illustrator and pattern designer Emma Jayne for a kid’s wear collection with designs featuring colourful wildlife prints. The H&M pieces feature vibrant and playful portrayals of lively wildlife for the summer season. The gouache illustrations capture the different characteristics of animals and greenery in a fun and quirky way and are printed onto a range of children’s daywear, swimwear, accessories and shoes.
Included are snappy scenes to allover prints, [with] tropical birds, tigers and marine life, along with palm trees, fantastic blooms and underwater foliage,on a range of T-shirts, tanks, shorts, dresses, jumpsuits and swimwear.
The pieces are made from woven viscose and cotton sourced hrough the Better Cotton Initiative. The colors used include bright green, turquoise and sunset shades such as coral and yellow, soft black, white and a touch of metallics.
