A new wave of COVID-19 lockdowns and patchy national vaccine rollouts are puncturing recovery hopes of apparel retailers. As per a Reuters report, McKinsey forecasts a 15 per cent sales drop in 2021 while Euromonitor expects recovery to be around 11 per cent. According to these analysts, retailers are still holding last year’s unsold inventories like Primark which has around stock worth £150 million from 2020 spring/summer and £200 million pounds from autumn/winter.

McKinsey estimates the value of unsold stock at around €140-160 billion. Hence, this year retailers are keeping volumes small and lead times tight, says Ron Frasch, Former President, Saks Fifth Avenue. Hong Kong-based sourcing agent Li & Fung, which manages more than 10,000 factories in 50 countries for retailers including global players, says though some retailers had requested late payment terms but declined to provide specifics. 

Fifty factories surveyed by the Bangladesh Garment Manufacturers and Exporters  Association reported receiving 30 per cent fewer orders than usual this season, as pre-Christmas lockdowns in Europe followed by another clampdown in January hit their businesses hard.

Some retailers are also trying to sell off as much of their excess stock as possible before placing new orders, said, Raffy Kassadiian, CEO, Parker Lane Group .