The pandemic drove the $2.5 trillion fashion business into the abyss.
According to Business of Fashion and McKinsey, the global fashion sales will drop 30% in 2020, while a 40% drop in sales will hit the high-end part of the market. If stores are closed for two months, due to the emergency state, approximately 80% of public fashion companies will experience financial problems. If we were to compare the luxury goods market with the overall stock market, the first had a more significant drop than the whole stock market – a 40% decrease just in the first trimester of 2020.
For example, in the UK alone, analysts believe that high street fashion worth more than £10 billion gathers dust in warehouses because major British companies such as Primark, Arcadia, Peacocks stopped taking new deliveries.
MGFI – the McKinsey Global Fashion Index expects not only for the fashion companies to be disabled by the pandemic, but also for the department store giants, venture-backed startups, and high street brands: “We expect a large number of global fashion companies to go bankrupt in the next 12 to 18 months.”Burberry is on the suffering luxury goods companies list, alongside Coach’s Tapestry, because affluent buyers don't travel and spend anymore. Between 20%-30% of the industry's revenue comes from purchases outside the homeland.
The total workforce, which is higher than 300 million people, has been put on hold, not only the high street but also the cheaper garment workers found in Bangladesh, India, and Cambodia.
But the virus didn't only affect stores, but fashion shows as well. The world-renowned Armani held the Autumn-Winter 2020 show via a live stream, with no real audience. The Italian fashion house did this to "support national efforts in safeguarding public health."
In China, the Shanghai Fashion Week scheduled to take place between March 2 and April 1, has been postponed indefinitely. It is another hit for the fashion industry, as the Chinese consumers are the biggest buyers in the world – for last year alone, there are responsible for 90% of the luxury market growth.
The overall sales for the current spring season fell by 70% compared to the same period last year.
Sources: linkedin.com, theguardian.com, edition.cnn.com
