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Research by Confindustria Moda shows, in the first quarter of 2020, Italian fashion and textile companies lost more than €3.5 billion in revenues and their sales could decrease by a total of about €9 billion by the end of the year. The report analyzed the performances of companies represented by SMI — Sistema Moda Italia, and those that have been significantly impacted by the coronavirus outbreak in the country since February.
It showed, 42 per cent companies interviewed registered a loss between 20 and 50 per cent in revenues, while 28 per cent posted a decrease between 10 and 20 per cent. In addition, compared to the same period last year, for 49 per cent of the fashion and textile companies the number of collected orders decreased between 50 and 20 per cent.
As SMI president Marino Vago highlighted, in order to protect their workforce, 95 per cent companies included in the research used the wage support measures made available by the government and, to protect the safety of their employees, 80 per cent of them activated smart working.
Confindustria Moda’s research also focused on the fact that for the Italian fashion and textile companies, which took part to the survey the biggest issue they had to face during the emergency was the management of the relationships with clients. As Vago noticed, since most SMI associates operate in the textile sector, they were significantly affected by requests of clients, sometimes big fashion groups, to postpone payments or revise contracts.
In addition, the research highlighted how the companies in the Italian fashion and textile sector are suffering after a lack of liquidity due to the low capitalization rate of the medium and small-sized companies.
All Pakistan Textiles Mills Association (APTMA) has urged the Sindh government to allow the entire textile value chain to restart production activity without further delay or else the provincial industry would not survive, leading to total closure, bankruptcies, and mass unemployment.
Zahid Mazhar, APTMA Sindh-Balochistan Region chairman says APTMA appreciated the measures taken by the Murad Ali Shah, Chief Minister who leads Sindh government to control the spread of the new coronavirus, and assures its fullest cooperation to fight against the pandemic.
He said the textile industry in the province, which was allowed to resume operation recently, has already adopted all precautionary measures prescribed in the SOPs to prevent the spread of the virus. So far, textile industries that have export orders to ship consignments and those that have on-premises residential colonies have been given permission by Sindh government to start operating while following strict SOPs
However, there would be no positive impact on the provincial economy unless downstream textile industry, including sub-sectors of weaving, knitting, stitching, processing and garmenting that provide intermediary materials, did not restart to complete the business cycle of the export industry, he added. “In the present situation, the industry is not even running at 50 percent of its capacity.” He said that in the current shape of lockdown being observed in Sindh, industry was facing severe liquidity problem due to which it was not in a position to pay even the utility bills and the wages to its employees.
A recent survey by Textile Excellence reveals, saddled with high levels of inventory due to cancelled orders and dull domestic demand, weavers in China may cut production in May. Additionally, two units of Jilin Chemical Fiber will be shut for maintenance in May for about two months. This will lower operating ratio to 86 per cent-88 per cent.
The survey reveals inventory of weavers is significantly higher than in the same period of past years. This may force many weavers to shut down again for the holidays.
Spot cotton sales were frozen after intensive order cancellation around mid-March, and the situation worsened during the week from April 6-10, when traders basically saw no liquidity and large traders also witnessed dull transactions. From April 13, cotton transactions warmed up somewhat. Despite limited improvement, the downstream buying indication moved up somewhat, and when ZCE cotton futures market declined on April 21 and 22, on-call cotton sales were relatively good. On April 22, there were rumors that China would purchase one million ton of cotton into state warehouses, spot cotton transactions turned thinner again.
Downstream plants have export orders successively from last week, and some delayed orders have also restarted. According to the survey, new export orders are very limited, and domestic sales are also dull. Thus cotton purchases by mills are need based.
As competition is fierce in China’s local market, margins are squeezed, and cotton yarn prices are at a record low. Inventories are high. Most downstream plants worry that domestic demand may turn worse as wages in the country may go down on average, and seasonal demand shrinks.
Replying to Clean Cloth Campaigns allegations of cancelling orders and imposing conditions unable to fulfill, brands H&M and Bestseller have reiterated that they are supporting their vendors. Speaking to Apparel Resources, the brands revealed they have decided not to cancel delayed orders but instead, allow an extra month delay, or if the products are not seasonal, even more time. If as a last resort, the supplier cannot deliver orders, the brand will have an open dialogue with each affected supplier to see if it can come up with a solution.
H&M has also joined a global call-to-action to support garment workers and suppliers during the COVID-19 pandemic. It will work together with the ILO, IOE (International Organization of Employers), ITUC (International Trade Union Confederation), IndustriALL Global Union and other brands to tackle the immediate effects of COVID-19 and continue work towards a resilient garment industry for long-term. The retailer also added that it wants to help suppliers and garment workers, and ensure the future viability of the industry once the crisis has passed.
On the other hand, Bestseller says they are committed to accept all orders from Spring/Summer that have been produced or are in the process of being produced. The brand is still placing orders for autumn, though a reduction in some volumes is sought to prevent over-production.
Brand 7 For All Mankind has unveiled ‘Sustainable For All Mankind’, a new platform that provides transparency into its sustainability practices and lays out the company’s sustainability goals. The Los Angeles-based division of Delta Galil Industries has committed to ensure that more than 80 per cent of its product will have sustainable properties through measurable indexes by 2023.
Sustainable For All Mankind details how the brand will achieve its goals by prioritizing organic and recycled materials, adopting innovative manufacturing methods, ensuring ethical treatment of workers and reducing its in-house footprint. In an effort to be more sustainable, the brand is now a member of the Better Cotton Initiative (BCI) and requires strategic suppliers to submit to the Higg Facilities Environmental Module (FEM) and to go through third-party verification to ensure their commitment to responsible practices.
7 For All Mankind recently launched its 080 denim capsule 20th anniversary collection, which includes re-issued jean styles made with sustainable materials. The iconic low-rise bootcut jeans and trouser jeans are made with organic cotton denim and recycled elastane, washed using an eco-friendly process, and finished with recycled hardware.
The ongoing pandemic has turned Maslow’s Hierarchy of Needs upside down as shopping has shifted toward basics with many affluent experiencing online grocery shopping for the first time. An Affluent Perspective (AP) survey conducted by YouGov in early April reveals, for the first time these high net worth consumers are spending their time reserved for shopping doing other things like connecting with friends and family via digital devices, decluttering their homes, crafting or hobbies, spending time outdoors and exercising. This time that they spend in isolation is also forcing them to reset their priorities in life.
The sector that will benefit most from the reset would be the $4.5 trillion global wellness sector. Products and services offering real wellness benefits will gain in demand as mental and emotional wellness will become more important than ever. Luxury brands displaying their wealth and extravagance will fade away in a post-coronavirus world.
Luxury shopping to get modest
Post pandemic, one of the topmost priorities for luxury consumers would to be to secure a financially-healthy future. Though the financial status of the
ultra-affluent elites may remain immune to the aftermath of the coronavirus, the same would not be the case with the professional class.
The AP report states, as layoffs and pay cuts will impact may white-collar professions in America, around 30 million citizens are likely to be unemployed. Similarly, the revenues and incomes of around 31 small business owners will be cut dramatically. These people inevitably make up the high-earners-not-rich (HENRY) demographic.
These HENRYs comprise around 80 per cent of the target consumers for luxury brands. In future, these may not be able contribute to 80 per cent revenues of these luxury brands. However, their share in their annual incomes would be way too important to lose. However, the shopping habits of these HENRYs are likely to shift radically as they would have ample time to reflect on what’s most important to them now and in the future. They would now prefer to indulge in more modest, discreet luxury indulgences where high-quality and long-lasting utility take precedence.
Personal well-being to drive luxe sales
Luxury brands would now need to ponder how their consumers’ luxury values and lifestyles will change as a result of the reset they have experienced. Their goal for future should be to provide the true luxury of wellbeing to their customers.
As achieving their personal well-being would be on topmost priority of consumers, luxury brands would have to reset to their objectives to these new dimensions as they pursue their own post-coronavirus journey.
Year 2020 may prove to be one of the worst years for the fashion industry as consumers cut down on their discretionary expenses and focus on essential shopping. As a report titled ‘Time for Change’ by McKinsey & Company created in collaboration with Sourcing Journal notes, revenues for apparel and footwear sectors are likely to contract 27 to 30 per cent in 2020 year-on-year with even deeper declines in some sub-sectors and geographies.
Around 22 per cent of the supply chain stakeholders expect their sourcing volumes to be halved this quarter, though this shrinkage may ease in the back half of the year, with just 7 per cent of sourcing executives expecting their volumes to be cut by more than half. Almost 49 per cent expect sourcing volumes to contract between 20 and 50 per cent in the second half of 2020, making it a far cry from smooth sailing for all links in the supply chain.
The state of sourcing affairs
The survey reveals around 75 per cent respondents have already canceled existing production orders. This is severely impacting cash-poor manufacturers.
The liabilities of Bangladesh factories have already reached $10 billion, reveals BGMEA. While one-third of European companies haven’t cancelled orders, around 87 per cent of US businesses have. McKinsey says, this discrepancy could be due to the difference in structure of assortment between these two countries and their sourcing methods. The report reveals, smaller European players often draw on a more varied set of sourcing countries, including significant near- shoring options.
Many retailers are amending their payment terms. Around 71 per cent respondents reported paying less than half of their existing orders as agreed, and 18 per cent are not paying as agreed at all. As many as 41 per cent are renegotiating payment terms on more than half their orders, and 25 per cent are deferring payment on half of their orders.
The survey reveals, more than half fashion players are taking responsibility for goods already purchased, and in some cases, already used raw materials. Just 13 per cent have agreed to pay production workers’ wages for more than half of their orders.
And 56 per cent respondents from global fashion businesses have taken measures to manage operating costs: 18 per cent have reduced salaries, 26 per cent reported furloughing or temporarily layed off staff, and 9 per cent have shed some staff permanently.
Next normal in sourcing
Around 76 per cent international sourcing community believes the pandemic will propel speed and flexibility models for the industry, the survey found. Of that three-quarters collective, 52 per cent expect to see a “high acceleration” of flexible product development with shorter lead times and smaller batch sizes. Sixty percent think they’ll see an acceleration of on-demand production.
With coronavirus forcing consumers to reflect on essentials versus excess, many are emphasizing on consuming responsibly from businesses that embrace sustainability. In a separate McKinsey consumer survey conducted recently, more than 20 per cent expressed their desire to curb clothing consumption and spend more on local businesses. Almost 16 per cent European consumers and 13 per cent of their North American counterparts said they’ll be buying more “socially and ecologically sustainable clothing” in their post-pandemic lives.
In the survey with Sourcing Journal, 70 per cent respondents believe the pandemic will fuel closer partnerships between buyers and suppliers, while 60 percent think it will finally push sustainable materials into the mainstream.
After hosting a record breaking 543 exhibitors from 14 countries and regions, along with over 19,000 visitors from 93 countries and regions in 2019, Yarn Expo Autumn will return to Shanghai from September 23-25, 2020. Known within the industry as the leading fair for accessing the promising Chinese and Asian markets, the 2020 autumn edition will provide the perfect platform to help the industry rebound and recover from the worldwide COVID-19 disruption. The fair is expected to occupy 26,000 sqm of exhibition space at the National Exhibition and Convention Center in Shanghai.
When commenting on the upcoming fair and its benefits for the industry, Wendy Wen, Senior General Manager of Messe Frankfurt said: “The coronavirus pandemic has forced the industry to face unprecedented challenges and whilst a full recovery will take time, businesses around the world are already looking ahead to actively seek ways to prompt a market rebound.” She continued: “This autumn’s edition of Yarn Expo is therefore as vital as ever for the industry and its global supply chains. The fair offers a platform to help companies reconnect whilst supplying access to the rebounding market. With its extensive experience and understanding of the industry, Yarn Expo is in a strong position to support the overall recovery of the yarn and fibre sector.”
Yarn Expo Autumn has always provided fairgoers with a comprehensive outlook on the market themes and this year will be no exception. Trending eco-friendly and innovative products will be showcased amongst a diverse range of high-quality yarns and fibers, all under one roof.
By exhibiting at the show, companies position themselves in the heart of the ever-growing Chinese and Asian markets. Donatas Čerkevičius, Commercial Director of Naturalus Pluostas, Lithuania said: “Yarn Expo is the best place to meet professionals from spinning mills, trade buyers and even designers who come here to see trending textures and colors.”
Along with efficiency, buyers also appreciate the high quality level of products available and rely on the fair as a source to access the newest industry trends and technologies. Recognising the quality and quantity of Yarn Expo Autumn after attending the fair for the last six years, Rajiv Srivastava, Manager, Neman Brothers & Assoc, the US observed: “Suppliers display all kinds of products and are always keeping up with industry trends. This show is way beyond a sourcing channel – it’s more like a stage for high-quality products and innovative concepts. It gathers everybody in one place which is effective.”
The extensive fringe programme and dedicated product zones will enrich the experience for fairgoers. Market trends and information will be shared in forums such as the China Fibre Fashion Trends and seminar which will dive deep into the Chinese market. Meanwhile, the Fancy Yarn Vision zone will return amongst others, following its popularity in the previous edition. The area will gather creative fancy yarn and downstream application products to display the latest innovations from fancy yarn exhibitors.
Yarn Expo Autumn 2020 will be held concurrently with Intertextile Shanghai Apparel Fabrics – Autumn Edition, PH Value and CHIC, providing a concentrated overview of the latest trends and developments in the sector, all in one place. Yarn Expo is organised by Messe Frankfurt (HK) Ltd and the Sub-Council of Textile Industry, CCPIT.
Data from UK-based Columbus Consulting reveals, 64 per cent shoppers in the country are ready to purchase new fashion items within a month of the coronavirus lockdown’s end, with another 24 per cent expressing interest in buying within the following three months.
While 70 per cent shoppers admitted to tightening their purse strings amid the virus’ economic disruption, Columbus Consulting partner Charlotte Kula-Przezwanski was quite surprised to find that more than three-fifths of shoppers were already contemplating their next shopping excursion.
Despite being confined to their homes in the near-term, shoppers are likely getting antsy about returning to some semblance of their normal lives, she said. UK’s high street retailers and others have undoubtedly suffered, she admitted, pointing to popular department store Debenhams, which officially filed for administration, equivalent to bankruptcy, in early April. Nearly one-quarter of surveyed shoppers said they wouldn’t purchase any fashion items while the pandemic rages on, and about half said they might—but the purchases will be few and far between.
More than 70 percent of all consumers admitted to increased purchases via e-commerce channels, while 29 percent copped to significantly upping their online shopping game since the lockdown began.
Kula-Przezwanski touted sites like Boohoo, Missguided and PrettyLittleThing as winners with Gen Z and millennial shoppers ages 14-30. Brands are also bombarding young shoppers—who are glued to their mobile devices—with unbeatable deals.
With consumers relegated to their living rooms and home offices, comfortable, casual picks have resonated best, Kula-Przezwanski said. One-third of shoppers said casual wear would be their most likely purchase, while 19 per cent said active wear was their shopping priority.
Consumers are also placing a much larger emphasis on quality than they did before the crisis, with 80 percent of shoppers saying the global health event has prompted them to consider and appreciate their purchases more than they did in the past.
The South African fashion industry is evolving to meet the needs of those living under lockdown conditions by initiating the production of masks. For instance, Milliner Crystal Birch is producing a range of fabric face masks, as well as protective shield visors with transparent panels which cover the eyes, nose and mouth. Similarly, Sandy Rogers, a designer in Johannesburg’s Victoria Yards, is making face masks on behalf of Goodbye Malaria, which is donating them to the Solidarity Fund and to Nando’s, to protect its employees.
Polo South Africa recently pledged to provide 250,000 face masks which are being provided to at-risk commuters and essential-service providers. Polo is using its shirt factory in Atlantis, Cape Town, to generate these cotton masks. Like the others, they are not medical grade but they are washable and reusable and can help prevent people spreading infection and from touching their noses and mouths in the course of travel.
Indie brands The Watermelon Social Club and Klipa Denim are producing face masks for employees, customers and, hopefully, for hospital staff in the future. ERRE Fashion, a local luxe favourite, is making a range of masks, as well as producing scrubs for nurses in a collaborative venture with designers Isabel de Villiers and Jacques Bam.
