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The Spanish fashion retailer Mango will donate 1 per cent of its in-store sales revenue to WHO’s solidarity fund that has been set up to help the most vulnerable health groups in the world.
With more of the brand’s opening in various countries and cities, stores located in New York, Russia, Turkey and Europe will partake in the initiative.
The COVID-19 solidarity fund has been created to allow foundations, organisations or even individuals to help the WHO respond, prevent and detect the disease in different parts of the world.
Apart from the current donation, the brand has also provided 2 million face masks to medical workers along with making their distribution, logistics and production facilities available to the disposal of Spanish authorities for the manufacturing of surgical masks.
As more and more countries relax lockdowns and social distancing norms, Mango was able to open up some stores in Europe in April. Their website has been functional throughout to take orders.
Planned from May 14-18, 2020, Monte-Carlo Fashion Week will move to social media for launching its project 2020 MCFW Series. Federica Nardoni Spinetta, President of the CMM and creator of Monte-Carlo Fashion Week (MCFW), has scheduled a series of live streams to bring together key players of the event to offer an alternative way to celebrate fashion.
The event will be held on the CMM’s Instagram account @montecarlofashionweek on the weekend when the eighth edition would have taken place, replacing roughly 45 runway shows which would have taken place. Speakers at the event will discuss cultural and style-related themes, an exploration of the present and future state of the fashion industry. Participants will continue to highlight the importance of sustainability, ethics and eco-awareness.
The live stream sessions will begin with Pauline Ducruet, founder of the ready-to-wear unisex brand Alter. One of the highlights of the fashion week will be its awards night, which celebrates brands’ and designers’ commitment to the industry and sustainability. Adapted for the digital format, the award will go to the brand who has best distinguished itself in the online meetings and talks. The winner will display their vision and work in a short video which will be uploaded to the fashion week’s social media accounts and the YouTube account Fashion Channel. With 1.6 million subscribers, it proposes a true growth opportunity for the winning brand.
Excess unsold stock has become a multibillion-pound problem for fashion retailers whose trade is fast decimating as they are left with pounds of unsold spring and summer stock in their warehouses. Last week, UK-based brand Next recorded a steep decline in sales as more stocks are clogging up in its warehouses than was previously anticipated. To mitigate this risk, Next is using third-party storage facilities and holds some stock in source countries, at an estimated additional cost of £2 million. The brand has identified £330 million worth of spring 2020 stock comprising summer T-shirts and chinos – that can be carried over to next year.
Despite taking such initiatives, retailers are still likely to be left with a glut of seasonal, trend-led products that have a short shelf life. This may lead to aggressive discounting. Hence, they need to find a way to ear piled up stocks. Raffy Kassardjian, Founder, Parker Lane Group, advises retailers to take a strategic approach spanning different geographies and not flood a single international market with product, particularly as this is likely to be an issue that affects several seasons.
Selling through off-price channels A report on the impact of coronavirus on retail by management consultancy McKinsey & Company points out another
option for retailers. It says, retailers can now sell through off-price channels like Chinese ecommerce giant Tmall which recently launched an online outlet, Luxury Soho to promote its premium and luxury brands.
Some brands are also launching their own off-price platforms and flash sale events to move excess stock. For example, contemporary women’s wear brand Ganni launched a six-day pop-up digital sale at the end of April offering discounts of up to 70 per cent on 400 items. The brand will donate 20 per cent profits to UN Women projects that support female health workers on the frontline of the pandemic.
Another avenue open for these brands is sell their unwanted stock in countries that have been less affected by the pandemic. Business partners Sarah Curran-Usher, entrepreneur and a non-executive director at French Connection, and Nicola Mathews, a former brand director at Ted Baker and Pentland Brands, are collaborating with John Lau, founder of Chinese commerce specialist Ecargo, on a project to help brands and retailers move unsold stock from the UK into the Chinese market.
Re-evalute approach to unsold stock
However, while moving unsold stock to other countries, retailers have to think carefully about matching the stock to the right retail partner and the right consumer, views Dea Baker, founder Aqua Rock. According to her, the pandemic could provide the industry with a valuable opportunity to rethink its approach to stock.
Donating products to good causes is another option for retailers left with too much stock, argues Ronen Lazar, Co-founder and CEO of Inturn – a platform that helps retailers manage their inventory. Some brands are supporting charitable causes by moving their excess stock to social institutions. For example, Burberry has donated product to Smart Works, which provides free clothes and training for unemployed women with an upcoming job interview.
Sustainability from waste
Some smaller brands are also finding innovative solutions to help mop up excess stock in the market. Sustainable brand Aqua Rock has created a range of T-shirts made from cancelled stock produced by factories in Bangladesh.
Though in the current situation, heavy discounting is inevitable, retailers should look to the opportunities in off-price and international markets, to clear some of the stock without damaging their brand equity.
In the next 12 months, COVID-19 will overhaul the complete design, development, sourcing and manufacturing of clothes. As Jag Gill, CEO of Sundar, notes in an article in WWD, the pandemic will localize apparel manufacturing with large entities taking over Tier II and III suppliers. The diversity of supplier chain partners of brands and retailers will also change in coming months and years.
Supply chain to be carefully scrutinized
Gill points out another important change will be upstream consolidation by manufacturers which will enable them to become a strategic partner to international retailers and brands. These brands and retailers will de-risk product development with every step of the supply chain under scrutiny — from yarn spinning, weaving to dying to cut and sew. Retailers having liquidity will focus on investing into their core vendors and manufacturers or get into joint-ventures.
Inventory management will move from ‘just-in-time’ to ‘just-in-case.’ Companies with limited product offerings will have a greater control over the supply
chain output. Real-time visibility into the availability of raw materials, finished goods, work in progress, etc. will expose capacity constraints of the Tier I, II and III suppliers.
Focus to shift away from China
Gill argues the pandemic will also accelerate trade tensions between China and the rest of the world. The Japanese government has already announced over $2 billion aid to shift production out of China. Countries like Turkey, Jordan and India may bag larger orders as they carefully transit from post-pandemic to productivity. Investments into stringent employee health monitoring will become imperative as besides maximizing output, companies will also invest in screening their workers’ health.
Another change will come in the form of near-shoring, views McKinsey. New manufacturing hubs will encourage brands to design smaller capsule collections.
Sustainability to be the new way of life
Coronavirus is forcing consumers to adopt a more sustainable way of life. Hence, they will now make their choices based on the values of sustainability and transparency. However, not many apparel manufacturers have the resources to invest in transparent supply chains and responsible sourcing programs in a meaningful way. Hence, retailers and manufacturers will have to reinvent their supply chain as a cheaper, faster, better model driven by innovation and easy to adopt tech and transparency tools.
Fashion with function to rule
The needs of consumers will shift from conspicuous consumption to cautious conservatism as working from home will become new normal and video conferencing replace in-person meetings and business travel.
Fashion with function will rule consumers’ choice of apparel and accessories as they will emphasize on their garment’s ability to protect them not just from disease but also from cold and even from food stains. Consumers will value apparels that are not just durable but never go out of focus. They will look at nonessential apparels only as investment pieces to be worn on specific occasions.
Sustainable Textile Solutions (STS) by BluWin has been approved by the Zero Discharge for Hazardous Chemicals Foundation (ZDHC) to conduct Level 3 ZDHC Manufacturing Restricted Substances List (MRSL) conformance evaluations. After successful evaluation, chemical manufactures now can proof their product claims, mills can achieve cleaner production more confidently and brand and retailers make a step towards meeting their sustainability targets. STS by BluWin are on a mission to contribute to a better world and life quality by providing solutions which reduce the adverse effects of the fashion industry on our planet and the climate. The STS expert team is now helping companies taking control of the chemicals they use. Their unique skillset - marrying knowledge of chemical manufacturing with cleaner production practices for the fashion industry - is inevitable to create long-lasting change and making safe chemicals the norm for the fashion industry.
For more than a decade, the textile industry has been under scrutiny for the chemicals used in production. With fashion demanding sustainable textile production, programs on cleaner and greener chemistry have become strategic goals for brands and retailers. Multi-stakeholder organisation such as the ZDHC have been essential in creating a new way forward building an ecosystem to bring organisations together to develop solutions and guidelines which transform how chemicals are used.
STS has been involved from early days onwards while consulting wetprocessing units on cleaner production practices. The work revealed the basic phenomenon of complex value chains and chemistry being more than elements and compounds: composition, structure, properties and behaviour change during a reaction with other substances. This makes it intricate to take the right steps for everybody endeavouring cleaner textile production. For brands it has never been easy to report on the level of ZDHC MRSL conformance of chemical products of their business partners, for wet-processing units to clean up their dyeing recipes and for chemical suppliers, to proof their commitment towards achieving formulations which are compliant with the ZDHC MRSL 2.0.
A recent CARE Ratings shows, shutdown of manufacturing units and weak demand in India are expected to take a heavy toll on the cotton yarn industry in the next two quarters. This will lead to a drop in revenue and a fall in profit margins. Smaller companies with high debt levels, less access to bank funding and limited liquidity buffer are expected to be impacted the most.
The cotton spinning industry, which had already been facing multiple challenges — low demand, unfavorable duty structure and volatile cotton fiber prices — is confronting another trouble in the form of the Covid-19 pandemic. In the first 10 months of FY20, the average monthly exports of cotton yarn stood at Rs 1,616 crore, significantly lower than the monthly average of Rs 2,278 crore logged in the same period last year. China’s major cotton yarn demand is now being catered to by Vietnam, which enjoys duty-free access to China. In the last few years, Chinese companies have invested heavily in Vietnam to expand their spinning capacities, leveraging low labor cost in that country and favorable trade agreements. In 2019, China also allowed Pakistan to supply 3,50,000 tonne of yarn at nil rate of duty, while Indian cotton yarn attracts a duty of 3.5 per cent in China, making Indian cotton yarn less competitive in the Chinese market.
The already ailing handloom sector has been badly affected by the COVID-19 pandemic and subsequent lockdown. The priorities of fashion retailers have changed and their focus is now on the sustainability of the enterprise. It is expected that overseas orders will not be forthcoming for at least a few months.
Prabin Das, a handloom promoter from Goalpara, Assam advises government’s responses to the pandemic should consider both economic and social aspects and aim for increased reach while using a target-oriented approach. The government must prioritize women as most weavers and allied workers are women. Its interventions should be planned considering both short and long term impacts on the weaving community and the handloom sector. A relief fund may be announced with provisions of short-term measures in the form of subsistence allowance to weavers and allied workers along with awareness and health protection measures. As a medium-term measure, government may consider extending Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to handloom workers.
Das says, as the business environment is going to change, it is important to take measures to instil trust in handloom products and reposition it as a safe activity and product. It may require efficient supply chain management, brand building and marketing efforts.
Pakistan Textile Mills Association (Aptma) Sindh and Balochistan Region Chairman Zahid Mazhar has sought the Sindh government’s permission to restart textile production without further delay. Mazhar feels permission to only a few industries would not bring desired results for the economy until textile sub-sectors such as weaving, knitting, stitching and processing were also given permission to resume production. He argued that the sub-sectors provided intermediary material to complete the business cycle of the textile export industry, hence, it was vital for them to resume operations.
Mazhar said in the wake of a lockdown in Sindh, the industry was facing severe liquidity problem due to which it was not in a position to even pay utility bills and salaries of employees.
He reminded the provincial government that Karachi produced about 52 per cent of the country’s total exports and the lockdown was causing heavy losses to industries in the city. He recommended that in order to save Karachi, the government needed to adopt a smart lockdown policy allowing the complete textile value chain to operate while abiding with the SOPs.
AEPC has welcomed the government’s move to clear long-pending claims worth roughly Rs 3,000 crore since January under a so-called Rebate of State and Central Taxes & Levies (RoSCTL) scheme. The revenue department has approved the release of the RoSL benefits, which will, however, be in the form of scrips, instead of cash. Exporters will also be allowed to use the scrip for the payment of customs and central excise duties.
The revenue department has also asked the directorate general of foreign trade (DGFT) to release Rs 464 crore against pending claims under another scheme, Remission of State Levies, which was replaced with the RoSCTL programme — meant for compensating them for various state as well as central government impost — on March 7, 2019. Benefits under the RoSL were stuck for more than a year, triggering protests from the cash-strapped exporters.
The move comes at a time when the Covid-19 outbreak has already accentuated a slowdown in merchandise exports. Outbound shipments of garments shrank 4 per cent year-on-year in FY20 to $15.5 billion, aiding a decline in overall exports that contracted by close to 5 per cent in FY20.
However, to offer some relief to the exporters from the retrospective move, an earlier government order had said if the RoSCTL benefit between March 7 and December 31, 2019, was lower than the combined incentives under the MEIS and RoSL, the government would provide an “additional ad-hoc incentive” of up to 1 per cent of FoB value of exported products, with a cap of Rs 600 crore, for this period.
According to National Retail Federation (NRF) chief economist Jack Kleinhenz, economic recovery across the United States from the pandemic is likely to come gradually and may vary by location. After seeing growth at an annualized rate of 2.1 per cent at the end of 2019, US gross domestic product shrank by 4.8 per cent in the first quarter of this year, ending a record 10-year period of economic expansion. That was the largest drop since 8.4 per cent in the fourth quarter of 2008 during the Great Recession.
Considering the economy was buoyant through the middle of March, the first-quarter decline is likely just a murmur of how severely the pandemic has devastated many parts of the US economy. Retail sales saw their worst month-over-month drop on record in March, falling by 8.7 per cent from February. And consumer spending fell an annualized 7.6 per cent during the first quarter, the largest drop since the second quarter of 1980. Despite those declines, the pandemic has hit the retail industry unevenly.
Temporarily closed stores are bearing the brunt of the impact while stores that remain open have had customers lined up out the door to stock up on essential goods. Consumer confidence has also taken a hit. The Conference Board’s Consumer Confidence Index was at 86.9 in April, its lowest level since June 2014, and consumers’ view of current conditions saw a record 90-point monthly drop to 76.4. But consumers’ expectations for conditions six months in the future were more optimistic, rising seven points to 93.8.
