The Death of a Billion Dollar Industry

Has the Mecca of the mega malls, the most concrete and tangible example that capitalism works, the longest reigning billion dollar industry, that is Fashion, received its death blow?
The COVID-19 pandemic has had a colossal effect on almost every industry, whether that be unprecedented pressure on health services, shuttering of non-essential businesses, or supermarkets needing to consider their re-stocking tactics and opening hours. And so, it follows that the fashion industry has also been suffering from this global health crisis. While understandably viewed as less crucial than the front-line service industries fighting to keep people alive and fed, the fashion industry is still not only a creative mecca, but one of the world's most significant fiscal heavyweights, and it cannot be overstated that its deterioration will result in a serious impact on the global economy, not to mention forcing furloughs or straight unemployment for millions of artists, designers, seamstresses and more.

As we have seen, some of the most common retailers are shutting their doors and entire malls close around the world, encouraging customers to shop online instead. The reality is, as we are forced to live with these pandemic related lockdowns, staying in our homes more and more, many of us are also increasingly burdened financially by reduced pay, layoffs, or our new childcare responsibilities. With that, the desire to buy new clothes feels like a distant dream, or at least very low on our list of priorities. We also know that in the face of this significant and unexpected halt in retail manufacturing, our most vulnerable, the lowest paid people in the fashion supply chain, will be impacted most. IndustriALL, the global trade union which works to give workers around the world a voice, says that millions of garment makers have already lost their jobs as a result of the pandemic, and have little to no access to social or financial safety nets to help them weather the storm.

Additionally, global fashion industry brands typically pay their suppliers weeks or even months after delivery, rather than upon order. This means suppliers are normally paying upfront for the materials or fibers they use to manufacture their products. But these days, in response to the pandemic, many major fashion brands and retailers like H&M, Forever21, and Zara are cancelling orders or stopping payments for orders already placed, even as the work has already been done, and wherever they can, taking no responsibility for the impact this has on the companies and people working on their supply.
Factories are left with little choice but to keep hold of these unwanted goods, sell them at drastically reduced and unprofitable rates, or simply destroy them, all while also needing to lay off their workers in droves. Industrial reports that while many fashion brands are offering compensation packages for the retail and office workers facing layoffs, they are failing to protect the lower end workers in their supply chains, those who suffer most from the loss of income. The Solidarity Center, a non-profit organization aligned with the AFL-CIO labor federation, believes the growing inability for workers to meet together in-person will inevitably inhibit their ability to unionize, and subsequently, to collective bargain effectively for their much-deserved workplace rights.
Of course, fashion isn’t just created in factories. Fashion is craft, artisanship, often hand made in informal environments. According to the Artisan Alliance, an open-source library of resources for artisan businesses, social enterprises, and others working in the artisan sector in the United States and across the globe, artisanal craft is the second largest source of employment across the so-called developing world. The Women in Informal Employment: Globalizing and Organizing (WIEGO) group, a global network focused on empowering the working poor, estimates there are around two billion informal workers around the world that lack basic labor, social and health protections.

Furthermore, the pandemic has forced designers to re-think how they reach customers. Many brands like Louis Vuitton, Tory Burch, Ralph Lauren/ Polo and Kate Spade have chosen to cultivate a more direct digital relationship, selling them products directly through their online stores, and in addition,
maintaining the flexibility to decide what inventory to highlight. Since the beginning of American fashion, labels have sold their clothes through department stores and boutiques. But over the past decade, with traditional brick-and-mortar retail on the decline, this has been an increasingly losing strategy. When pandemic-related lockdowns went into effect in March, these retailers were dealt yet another blow, with the inevitable drops in revenue driving them to the verge of collapse.
While some iconic brands such as Lord & Taylor and Neiman Marcus have declared bankruptcy. That have brought most of the designers to their place of prominence, are now too, stuck with piles of unsold inventory at the end of the season. At this point, almost half of all fashion retailers have not adjusted their e-commerce approach since the start of COVID-19, despite a massive consumer shift toward online shopping. As consumers have grown wary of in-person shopping, and retailers are abiding by social distancing recommendations, online shopping offers a safer and more convenient alternative.
It’s a virtual (pun intended) coming-of-age for e-commerce, and by now it’s clear it’s here to stay. Businesses that were quick to adapt, by adding new features, expanding their websites, and changing their advertising methods towards social media audiences, like Facebook and Instagram, having been the most successful in converting former in-store foot traffic to online traffic. They understood early on their success depends on more than just enabling easy online purchases, it’s about customizing the entire experience to easily display the real value in adopting online shopping – from easy search, find, and buy, to very quick and often free shipping, to complete customer support and easy product returns.
The changes of these times to more and more remote work, constant video calls and virtual social gatherings has made consumers more pragmatic in their approach to fashion. And not surprisingly, fashion retailers are paying close attention to the endless stream of buying metrics to help with their product decisions. For instance, online retailers quickly realized an increase in sales of “waist-up” apparel, with a 27 percent uptick in sales of fashion tops, while sales of pants and skirts were down nearly the same proportion. Digital commerce means this kind of data is available now in real-time, allowing retailers to not only easily meet the consumers’ changing demands, but also to better focus their buying, selling, and advertising decisions for the changing fashion trends. And these COVID-19-related business pivots are not the only way retailers are meeting changes in consumer preferences. Almost half of fashion retailers selling “fast fashion” items, those products replicated quickly and inexpensively from the fashion runways to the storefront (almost always at the expense of the industry), have reported a decrease in customer purchases. Also, many retailers are getting creative as they seek to differentiate themselves from competitors - adding face masks to their lineups, offering shipping fees, creating virtual dressing rooms and more. Over half of fashion retailers say they are unsure whether in-person shoppers will use fitting rooms, so many are creating online alternatives, such as virtual fit or sizing tools, virtual showrooms, and virtual stylists.
Lastly, with pandemic induced economic strife also increasing the number of consumers like PayPal looking for more flexible ways to pay, many retailers are doing just that, expanding payment options to drive sales and sway customer choice. A study found that 42% of fashion retailers have adopted “buy now, pay later” options such as “Pay in 4”, where consumers have the option to pay for purchases using 4 separate payments every 2 weeks, while the retailers still get paid upfront.
So, while it’s clear there are significant challenges facing the fashion industry during these unprecedented times, what’s become surprisingly obvious is the fact we are still witnessing a re-birth, where our fashion entrepreneurs are re-learning secrets of survival, and with the most successful ones actually thriving. What’s become clear is the fashion consumer is always there, humankind will always aspire to looking fresh, no matter the economic climate. And by applying tried and true business methods, built around focus, sweat and ingenuity, the fashion industry will not be going anywhere but up, if ISABELLA has anything to do it with it!
~ Franceska Sityar 

Leave a comment

Please note, comments must be approved before they are published