The International Apparel Federation (IAF) is expected to decrease apparel sales 50 per cent by 2020  as clothing retailers are trying to get back their feet on e-commerce or other strategies. The brands are already reopening stores in many countries. On the other hand, 65 per cent of consumers are cutting their apparel spending.

Retailers and brands are going forward with their strategies and manufacturers also getting new orders. But apparel manufacturers are the most sufferers because they are facing a significant crunch in liquidity.

To save theirs worker, the Pakistan government issued a concessional loan to partly cover 3-month salaries provided no layoffs moratorium on payment of principal. To prevent bankruptcies Pakistan took the resumption of work under strict SOP’s (standard operating procedure) with partial capacity utilization and extra overheads but without the help of brands’ receivables of payments, it will get tough.

The Re-Set of the supply chain will occur at the end of the pandemic. Fast fashion will go to slow fashion, change in order rhythm, e-commerce will go fast but it will take more time to replace shops, reconsideration of the sourcing strategy and the relationship between buyer and supplier will be re-balanced. Manufacturers around the world are taking a new initiative to get back on track again.

Likewise, RMG companies in Bangladesh reopened their factories and are receiving new orders. The garment sector in Bangladesh follows SOPs to maintain worker health security. In factories daily temperature control, proper sanitization and social distancing are provided.

The Garment Manufacturers Association in Cambodia (GMAC), the Cambodia Footwear Association (CFA) and the European Chamber of Commerce in Cambodia (EuroCham) recently requested the European Commission (EC) to postpone its withdrawal of the Everything But Arms (EBA) scheme for 12 months.

The letter said the Covid-19 pandemic has halted production and slowed global demand to a crawl, delivering a devastating blow to Cambodia apparel, footwear and travel goods manufacturers and workers.

It said some 250 Cambodian apparel, footwear and travel goods factories have had to suspend operations and more than 130,000 workers in the sector, most of whom are women, have lost their jobs and this number is likely to rise sharply.

In the first quarter of the year, the letter said, many buyers cancelled orders after they were completed or while in process. It is estimated that the Cambodian apparel, footwear and travel goods sales in the second quarter of the year will likely fall by 50 to 60 per cent on a yearly basis.

GMAC chairman Van Sou Ieng said that in this context the EC’s scheduled August 12 implementation of the decision to withdraw the tariff preference for 20 per cent of apparel imports, 30 per cent of footwear imports, and all travel goods imports from Cambodia would be a massive blow to the Kingdom.

The Bangladesh Garment Manufacturing and Exporters Association (BGMEA) has extended the deadline for blacklisting British clothing retailer Edinburgh Woollen Mill (EWM) to June 05 instead of the earlier May 29.

On May 21, the BGMEA threatened to halt production and any further orders with EWM over nonpayment of dues and demands for unreasonable discounts, despite concluded contracts.

In a letter sent to EWM owner Philip Day, the BGMEA president said the association’s step came after receiving dozens of complaints from suppliers that EWM was avoiding contacts with the suppliers that it owes money to for previous orders.

EWM Group, owned by the British billionaire Philip Day, has quite an impressive array of brands under its fold – Peacock, Jaeger, Austin Reed, Jacque Vert, Country Casuals, Windsmoor, Baumler of Germany, and Bonmarche & Ponden Home.

The Swedish retail giant, H&M, has supported the fight against racism by donating around $ 500,000 to various organisations that are fighting against racism including NAACP, ACLU and Color of Change.

The recent killing of George Floyd in Minnesota has sparked protests all around the world including Paris and London. The current protests have resulted in many arrests which may require money to seek bail.

Donating to such organisations has helped solidify H&M’s position as a global retailer and shows that they care about people and civil rights.

In its Instagram post which had ‘Let’s change’ as the words on a white background, the caption read ‘We believe in equal rights for everyone. We stand with and support the Black community – today and every day’ with the hashtag #blacklivesmatter.

Retailers across the globe are reopening stores but continued rise in COVID-19 cases is dampening the spirits of consumers who now prefer to shop only for essentials through online sales channels.

Brazil upgrades malls even as digital sales surge

In Brazil, 10 per cent of malls reopened in April, reported Bloomsberg. The country’s largest mall operator BR Malls reopened four out of its 29 Brazilian stores by May 22.  They also imported 104 cameras with infrared sensors to measure the body temperature of shoppers while Natura & Co tested drive-through and curbside pick-up in 30 shopping malls within Brazil. 

The retailer also added beauty consultations via WhatsApp with all its brands which led to a 30 per cent surge in digital sales between mid-March and the end of April, revealed Brazilian e-commerce association ABComm. 

Italy offering retail bonds to boost sales

One of the hardest hit by the Coronavirus, Italy began to reopen stores on May 18. However, as the country could reopen only one third of its stores, it is now offering inflation-linked retail bonds to investors as a way to jumpstart its suffering economy. However, e-commerce activities in the country increased by 81 per cent from February to April-end, reveals McKinsey. 

Australia benefits from new apps

The May report of Australian Bureau of Statistics reveals that retail sales in the Australia fell by almost 17.9 per cent in April after 8.5 per cent spike in March.  However, retailers benefitted using installment payment services. Fashion retailer the Cotton On Group was able to increase sales with its new app, iOS.

Sweden enhances e-commerce activities 

Instead of shutting their stores, retailers in Sweden simply emphasized on maintaining social distancing in stores and improving e-commerce activities. This led to a 39 per cent year-on-year decline in apparel sales in March in the country. 

Global brands in some of the biggest malls in the country have temporarily closed  stores based on recommendations from other countries. These malls are seeing lack of visitors as more shoppers are moving online.

Retail sales in South Korea increase by 3.9 per cent

South Korea’s retail market was hit especially hard by a lack of international visitors due to the outbreak in China. However, now there are signs of bounce-back as in April 2020, retail sales amongst the country’s 26 largest retailers grew by 3.9 per cent year-on-year, notes, the country’s Ministry of Trade, Industry and Energy. Korea is also witnessing a switch in its shopping patterns from offline to online with online sales in the country increasing by almost 80 per cent.

Discrepancies in rules harming German retailers

A survey of more than 600 non-food retailers, conducted in mid-May by Handelsverband Deutschland, a German retail trade association, found that about a third of the retailers in the country are doing only 50 per cent of the sales that they were doing last year. This is mainly due to the different rules set by each of the 16 German states for their consumers. 

High COVID-19 cases leads to dramatic fall in UK retail

As a result of over 270,000 confirmed cases and over 38,000 deaths, retail sales in the UK have fallen dramatically. The Office of National Statistics reported that the total number of goods sold in the country dropped over 18 per cent in April. On the other hand, e-commerce sales increased by over 30 per cent. Big retailers like Tesco and Sainsbury led this e-commerce growth. Their sales increased by double-digit percents last month. 

A survey titled “Sedex Insights Report: Covid-19 Impacts on Businesses’ reveals revenues of Bangladeshi export oriented apparel and footwear manufacturers declined 77 per cent due to the COVID-19 pandemic impact. The survey conducted on 3,300 buyers and suppliers across 118 countries showed the garment and footwear sectors have been worst affected by the pandemic. Of the total surveyed, 469 suppliers from garment and footwear industries are from China, India, Bangladesh, and Turkey. According to the findings, 68 per cent member countries reported a significant decline in their revenue while only 38 to 55 per cent on average reported its customers are being supportive during the pandemic.

Only 10 per cent respondents have seen an increase in or steady revenue, the survey added. Almost, 43 per cent respondents viewed disruption to supply chains and inability to get input of raw materials as the biggest challenged they faced. Reasons for this included delay in raw material delivery, suppliers stopping production, and higher prices of raw materials or transport. On the other hand, 20 per cent respondents have had orders cancelled by customers and 4 per cent experienced delayed payment terms, it showed.

The combination of squeezed production times and poor purchasing practices puts significant additional pressure on suppliers and workers, increasing the likelihood of poor working conditions, it added.

The Chinese government proposes to increase the new annual tax-free shopping limit to RMB1t00,000 ($14,000) per person in Hainan, China’s southernmost province. This will help the country to ensure its citizens shop only from its prestigious local brands. The new limit is more than three times the current RMB 30,000 ($4,200), and forms part of a much broader 60-point plan for the construction of a free trade port on the island.

Some of the other aspects of the free port plan relevant to duty-free retailing include its intention to grow tourist numbers by making Hainan an international aviation hub; liberalizing air rights including fifth and seven freedoms; and the construction of a cruise tourism pilot zone.

Hainan’s offshore duty-free policy was launched in April 2011. The allowances are available to domestic and foreign visitors including residents of Hainan province who are at least 16 years old and who board flights, trains, or ships to leave the island province.

Government statistics show that Hainan generated duty-free sales of almost $8 billion since 2011. Duty-free products that can be bought cover all the key luxury categories including jewelry, watches, perfume, cosmetics, sunglasses, fashion and accessories, as well as sports goods and confectionery.

The main offshore duty free enterprises in Hainan are China Duty Free Group’s extensive Haitang Bay Shopping Complex in Sanya, and Haikou Meilan International Airport’s duty free stores. Earlier this year, two smaller duty-free shops were added to the mix: Haikou Riyue Plaza and another in Qionghai Bo’ao. 

As the LVMH’s deal with Tiffany & Co seems uncertain, board members of LVMH Moët Hennessy LouisVuitton have urged the two companies to reconsider the deal. Members are concerned about the impact of Coronavirus pandemic and the growing social unrest over the death of George Floyd at the hands of Minneapolis police.

The outpouring of anger over racial injustice in America has prompted widespread demonstrations in the country scuttling attempts to get the economy moving again. In addition, LVMH board members have voiced concerns about Tiffany’s ability to cover all its debt covenants at the end of the transaction, which was expected to be concluded mid-year.

As no firm decision could be made at the meeting, attendees urged the board to reconsider the deal. Combining the financial firepower of the world’s largest luxury group with the iconic American house, the deal was heralded as a master stroke by Tiffany, which could use the might of LVMH to both power its jewelry business and also gain a much larger presence in the US.  

Accord on Fire and Building Safety in Bangladesh has handed over all its operations to the RMG Sustainability Council (RSC).  However, Accord signatories will continue to fulfill their obligations under the existing Transition Accord agreement through the work of the RSC.

RSC is a newly established not-for-profit company in Bangladesh created and governed by global apparel companies, trade unions, and manufacturers. The RSC was officially registered in Bangladesh on May 20, 2020 to be a permanent safety monitoring and compliance body in the RMG sector in Bangladesh.

The council will continue with factory inspections, remediation monitoring, safety training, and a safety & health complaints mechanism at the RMG factories supplying to Accord signatory companies. These programs will be implemented in accordance with the protocols and procedures developed by the Accord, which have also been inherited by the RSC.

The RSC will appoint a Chief Safety Officer (CSO) to lead the inspections work. The CSO’s performance of technical duties will be free of interference from the RSC governing body. The independence of the existing safety & health complaints mechanism that is available to workers in factories supplying to Accord signatory companies shall also be safeguarded under the RSC.

Bobby Arora, Director, Status Quo

“We wait for customers to come into our stores. At this moment it is important for every offline retailer to reach out to their customers and tell them about the new products they have started selling. They need to tempt and bring their customers to buy their product and when they buy they will obviously come in and buy more products. Sometimes even though we do not want to buy online but the continuous rotation of ads tempt us to buy the product but this doesn’t happen offline. In today’s situation retailers will have to adopt this approach of showing customers the products they need as it could be they are delaying the purchase of these products.” 

Masks have become more of a necessity than a fashion accessory in COVID-19 era. “It has become very important to wear masks before stepping out of homes, people are stocking around six to eight types of masks to match their outfits,” observed Bobby Arora, Director, Status Quo at #3 webinar organized by DFU Publications-DFU LIVE on May 30 on the topic: ‘New Categories Dikhao, Sales Badhao’ (Emerging New Categories for Apparel Retailers, Post-Covid).  Arora said, “Today, no one can step out of their homes without wearing a mask though they are not very comfortable. However, as long as current restrictions prevail, everyone will have to wear them.” 

Currently, there is a huge shortage of surgical masks in India. “It’s important to secure these masks for our health workers and people involved in treating COVID-19 patients. These masks are not reusable and need to be disposed off after each use. On the other hand, cloth masks are washable hence reusable,” Arora explained.  

Better communication to facilitate sales

According to Arora, as masks have high demand, it is important for retailers to keep customers updated on their stocks and sales. “Retailers need to inform their customers about the category of masks they are selling,” he said.  Noting there are very few customers for masks in the market, Arora said, “There is a tendency amongst consumers to delay mask purchase. E-commerce companies keep complete track of consumers’ choice of masks and their preferred price points. However, offline companies fail to achieve this. They wait for customers to come to their stores whereas they need to reach out and enlighten consumers about their new products and how they can be bought online.” 

Arora pointed out though some consumers do not prefer to buy products online, they are tempted by the continuous advertisement of a product on social media channels. “However, this is not the case with offline retailers who need to emphasize the importance to their customers,” he added. Though masks may not bring in significant revenues for retailers, they are a value-driven and inexpensive product to stock. “Masks enable retailers to reach out to their customers in their times of need. In turn, this will increase customer loyalty towards them not just for masks but also other products,” Arora summed up.