A report by GlobalData suggests, commercial credit crisis is threatening the recovery of clothing and footwear suppliers in the US. Although customers are returning to stores, these retailers have to depend on the revenue and cash flow from previous seasons to launch new products. COVID-19 has caused massive declines in their revenues and forced them to secure loans for designing new products, placing orders and shipping goods.

Compounding matters, credit terms have changed significantly due to the crisis, which has led insurers to reduce their coverage and services so as to avoid more risk. This may force many brands and retailers to cancel orders or attempt to negotiate reductions, actions which will put more pressure on suppliers, who have already been struggling with the impact of Covid-19 and may be pushed to the edge by further losses.

GlobalData also believes the disruption experienced by apparel and footwear retailers during the pandemic may push many of them to shift significant portions of their production closer to home.