As per the latest ‘Brand Finance Luxury & Premium 50 2020 report, world’s top luxury and premium brands could lose up to $35 billion of brand value cumulatively as a result of the COVID-19 pandemic. The report analyzes the three subsectors of apparel, automobiles and cosmetics and personal care within the luxury and premium ranking. These sub sectors are likely to be impacted differently by coronavirus, with apparel brands facing a 20 per cent loss of brand value, while automobile are set to be moderately impacted, facing a 10 per cent loss of brand value and cosmetics brands largely sheltered from the damage of the pandemic.

The report states, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated $1 trillion as a result of the coronavirus outbreak.

The report ranks Porsche as the world’s most valuable luxury and premium brand following a 16 per cent increase in its brand value to $33.9 billion. Givenchy has been ranked as the fastest-growing brand with its brand value growing by 74 per cent to $2 billion, simultaneously jumping 11 spots in the ranking from 37th to 26th.

Five French brands feature in the top 10 list with their brand values growing on average by 14 per cent. In third place in the top ten ranking, Louis Vuitton has been ranked as the fastest growing brand with 21 per cent increase in brand value to $16.5 billion, while fifth-ranking Chanel recorded a solid 20 per cent brand value growth to $13.7 billion.

In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation. According to these criteria, Ferrari has retained its position as the world’s strongest luxury and premium brand with a Brand Strength Index (BSI) score of 94.1 out of 100 and a corresponding elite AAA+ brand strength rating.

Amidst COVID-19 crisis, the Sri Lanka Chamber of Garment Exporters (SLCGE) has extended its support to the Brandix Group and its employees especially those working in the Yakahatuwa, Minuwangoda plant.

A responsible association representing the SMEs in the apparel industry, SLCGE has actively supported the health and law enforcement authorities to eradicate the impact of COVID-19. By doing this, it is helping the national economy to generate foreign exchange which is the need of the day.

With over 1,000 garment workers from the Minuwangoda factory testing positive for COVID-19, several allegations were levelled against the parent company – Brandix Apparel about how they handled the upsurge of cases. At the onset of the indefinite curfew period in March, many garment workers were at the receiving end of a challenging situation where many junior workers lost their jobs and those who went on leave weren’t paid.

Egypt’s readymade garment factories have reduced production of winter garments by 50 per cent due to the impact of the pandemic, said, Mohamed Abdel-Salem, Chairman, Egypt’s Readymade Garments Chamber. Factories expect demand for winter clothes to be low this season, as was the case with summer clothes earlier this year. Abdel Salem revealed that the prices for these winter garments will be the same as last year.

Amr Hassan, Head-Garments sector, Cairo Chamber of Commerce, attributed the decline in sales to the curfew imposed by the government to curb the spread of coronavirus, which decreased demand and forced shops to close early. Cairo Chamber of Commerce was the first Egyptian Chamber established in Cairo by Abdelkhalek Madkour Pasha in the name of the "Cairo Trade Secret " in1913 . The chamber includes a large number of traders representing about 60 per cent of those who are engaged in trade activities in the Arab Republic of Egypt.

COVID-19 outbreak and a no-deal Brexit may prove to be a double whammy for the UK fashion industry as domestic brands will face burdensome intellectual property laws and labeling requirements and the exit of the EU preferential trading zone will make nearshoring more expensive.

New for renegotiating supply terms

International brands operating in the UK currently face 8-12 per cent tariffs on their fashion imports while domestic brands face 6 -12 per cent duties, reports Vogue Business. Post Brexit, the government plans to scrap tax-free shopping for international visitors. As per estimates by the British Fashion Council and Oxford Economics, this may result in UK fashion industry’s revenue dipping by up to a quarter this year. It may also increase fashion prices across the country, crippling demand further. To avoid significant costs and delay, brands will have to negotiate with material suppliers, logistics firms and customs agents even though it may seem a bit overwhelming given the current economic pressures.

To continue trading with the EU post Brexit, UK brands will need to process new documents and follow new protocols, including obtaining a registration and identification number known as an EORI. Once they have an EORI, they would have to gather the relevant paperwork and forms to move goods across the border. For this, they would also have to collaborate with partners including suppliers and freight companies.

Monitoring contract terms

Besides tariff codes and export documentation, brands would also have to consider diverging rules on data protection, labeling and intellectual property besides checking contracts to ensure that the same terms apply once the UK leaves. Small and medium-sized brands can dampen price-increases by reaching a zero-tariff deal.

To avoid unnecessary transportation of goods, fashion retailers across price points are increasing their share of European warehouse space and directing goods shipped from Asia to Europe. International brands are familiarizing themselves with customs procedure as they are likely have a presence outside Europe in future.

The final straw

In January, the UK government plans to end tax-free shopping that allows tourists from outside EU to claim back 20 per cent of the cost of luxury purchases. This may encourage tourists to choose Paris and Milan over London for their international shopping. Brands may also face a two-delay in getting goods over the border.

Other complications that brands may face include the rules of origin as goods manufactured across the borders of Europe and its Mediterranean neighbors like Morocco, Turkey and Tunisia will no longer be duty-free after entering the UK. To deal with this, brands will have to prepare themselves to face the worst. However, with many companies currently being at a risk of shutting down, Brexit may prove to the final nail in the coffin for European fashion.

One of the most polluting industries, denim has been closely watched for its adverse environmental impacts. This has led the industry to accelerate sustainability innovations and inspire the fashion industry towards a greener and cleaner future.

Over the years, denim industry has launched numerous innovations to reduce its reliance on virgin cotton, harmful chemicals and dyes, excessive water use, says a WWD report. Turkish denim mill Isko has fully traceable and holistically responsible denim products under its ‘Responsible Innovation’ approach. Its latest innovation is a fully responsible fabric initiative called R Two which emphasizes on denim fabrics made from recycled and reused materials. Like Isko, Lenzing has developed Tencel and Refibra fabrics, which are great alternatives to cotton. Similarly, Swedish pulp maker Re:newcell has developed Circulose fabric to minimize its environmental impact.

News ways to make denim

Along with sustainable fabrics, the denim industry needs to find cleaner ways to make jeans, believes Nicole Murray, Founder, N-ovative. The industry can reduce excess water usage in processes by scrutinizing fiber creation process. Innovations in chemicals and finishing can also help reduce environmental impact.

The denim industry has also been an innovator of many technologies. Technologies like Calik’s Washpro extends its denim’s life and then there are Jeanologia’s laser and eco-finishing technologies and a program called ‘Environmental Impact Number’ that helps laundries and garment finishers measure denim data. Denim pioneer Levi Strauss & Co’s industrial garment finishing methods also help the denim mill to reduce water usage at its laundries by as much as 93 per cent.

Much scope for improvement

Ebru Ozkucuk Guler, Senior Corporate Social Responsibility and Sustainability Executive, Isko believes, despite innovations, there is still a lot of scope for improvement across all stages, especially for brands and retailers. Guler advises all players to contribute to sustainable change for creating the most responsible and innovative product from farm to fabric.

At its launch in July 2019, The Jeans Redesign initiative had only 16 companies as members. Today, the figure has tripled to 53 players across the value chain, including heritage brands like Gap, fabric mills Advance Denim, and manufacturers including Saitex, signaling what Francois Souchet, Head, Make Fashion Circular, called “broader conversations on circular design”. The initiative aims to encourage denim players improve garment durability, material health, recyclability and traceability by adhering to strict wastewater guidelines from chemical management standard-setting body Zero Discharge Hazardous Chemicals.

The Make Fashion Circular initiative also demands third party verification from denim companies on data. These companies have to report on compliance to required standards on the Make Fashion Circular website. The initiative is yielding concrete results — with redesigned denim from Mud Jeans, Fairblue and Outland Denim being introduced in the market.

Innovations in design and durability

To reduce carbon emissions across the industry, denim experts are urging brands to design better denims, and consumers to wear them longer. Paul Dillinger, Vice President and Head-Global Product innovation, Levi Strauss & Co believes it is difficult for the industry to engineer these values into other products and sectors of the industry. To achieve this, the industry needs to strengthen its focus on issues like climate change and pollution.

Foreign Minister AK Abdul Momen said Dhaka will seek duty free access of Bangladeshi readymade garments (RMG) products to the US market for the next three years.

Through this move, Bangladesh will ensure recovery of the RMG sector from the financial fallout caused by the pandemic, added Momen. The minister further said he will also raise the Rohingya issue seeking stronger US support in commencing repatriation of the displaced Myanmar people from Bangladesh.

Dhaka will also urge the US to invest in infrastructure development in Bangladesh under its Indo-Pacific Strategy (IPS).

Momen will also raise the visa issue of potential Bangladeshi students as the US embassy in Dhaka yet to start issuing new student visas for Bangladeshi nationals due to COVID pandemic.

According to Export Promotion Bureau (EPB), Bangladesh’s RMG exports to tis non-traditional markets maintained negative growth during the first quarter (Q1) of the current fiscal year (FY).

According to industry people, Australia, Brazil, Chile, China, India, Japan, Korea, Mexico, Russia, South Africa and Turkey are the 11 prospective markets beyond the three traditional export destinations, namely, the USA, European Union and Canada.

Exports of both knit and woven items to the non-traditional destinations declined by 8.33 per cent to $ 1.24 billion in Q1 as compared to $1.36 billion in the corresponding period of the last fiscal

Exports to Brazil, Chile, China, India, Japan and Mexico declined by 26.88 per cent, 18.37 per cent, 34.35 per cent, 43.50 per cent, 10.93 per cent and 25.72 per cent respectively in the July-September period.

Exports to Australia, Korea, Russia, South Africa and Turkey, however, increased by 8.28 per cent, 9.22 per cent, 41.69 per cent, 4.19 per cent and 47.74 per cent respectively during the period. The RMG shipments to the US witnessed a rise by 5.98 per cent to $ 1.58 billion during the Q1.

The Cotton Association of India (CAI) has increased cotton crop estimate for 2019-20 to 360 bales of 170 kg each from its previous estimate of 354.50 lakh bales of 170 kg each. As per CAI estimates total cotton supply till end of cotton season i.e. up to September 30, 2020 was around 407.50 lakh bales of 170 kg each. This includes opening stock of 32 lakh bales of 170 kg each at the beginning of the cotton season on October 1, 2019, crop for the season estimated at 360 lakh bales of 170 kg each and imports estimated of 15.50 lakh bales of 170 kg each.

Imports are estimated to be lower than previous year’s estimates by 16.50 lakh bales. Domestic consumption for the entire crop year i.e. upto September 30, 2020 has been estimated at 250 lakh bales.

CAI has retained its export estimate for the season at the same level as estimated by it previously i.e. at 50 lakh bales of 170 kg each The carryover stock estimated at the end of the season is 107.50 lakh bales of 170 kg each.

The Zimbabwe government recently released its vision for the country’s cotton industry that aims to accelerate growth in the sector besides enhancing sustainability. In context of the recently launched Agriculture and Food Systems Transformation Strategy, the vision emphasizes on climate proofing the cotton presidential input scheme to insulate the sector from the devastating effects of climate change.

Anxious Masuka, Minster for Land, Agriculture, Water and Rural Resettlement says, the industry should invent new ways to shield cotton crops from the vagaries of weather. The dominance of Cottco should be reduced and there should be an enhanced capacitation of farmers through irrigation development, tractor and implement and equipment provision through lease, rentals and outright purchase by farmers. Merchants should provide robust extension support systems and decentralize inputs collection and buying points for easy accessibility.

Involvement of farmers in cotton value addition and beneficiation should be increased so that they can get a share of by product, says Masuka. According to him, cotton production remains a key source of livelihood for many families and growing the sector will help the country achieve upper middle income status by 2030.

Launched in August last year, the Fashion Pact has announced seven quantifiable, time-bound targets that include initiatives to reduce emissions, plastic packaging and the impact of raw materials within the fashion industry. The pact has also placed fresh emphasis on the importance of protecting biodiversity. Signatories have committed to source 25 per cent of their materials from lower-impact sources and eliminate plastic that are defined as problematic or unnecessary in packaging by 2025.

These new targets have been announced at a time when there is an accelerating urgency in the fashion industry. As per a report by the Global Fashion Agenda and McKinsey & Company, the sector is under mounting pressure from consumers and regulators to become more sustainable, in recognition of an increasingly tight time frame to meet international climate goals.

The Fashion Pact has attracted an unusually large cross-section of companies, including luxury brands like Chanel, who rarely participate in such industry initiatives. It is gaining broad participation from French brands due to its government’s encouragement and a growing realization that no one company can tackle these challenges alone, says Bruno Pavlovsky, Fashion President, Chanel.