How COVID-19 has Affected the Fashion Industry

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The coronavirus pandemic has been affecting the industries around the world, with the travel and hospitality being negatively impacted the most. But one industry that has seen a bit of mixed emotions has been the fashion industry.

The pandemic is ongoing and with majority of the world working from home and remotely, daily office wear went from suits and ties to sweatpants and tees. Now I don’t know about you, but for me I kind of hated it at first. I enjoyed dressing up for work, choosing a lapel pin to match with the shirt, and a bracelet for the day. Now, working from home, I barely put on a watch, let alone some sort of formal attire. But that is just me, let's dive into how this frustrating pandemic has affected the industry.

According to McKinsey, they forecast that the global luxury goods market will contract by 35%-39% this year, as shoppers have slowed their spending. The idea of luxury has moved from the aesthetics of fashion and cars to health and vitality. Surveys were done in the US and in Shanghai on luxury buyers. Now for those of you who don't know what luxury buyer is, simply put, it is a person who spends $2,000 on a single fashion item in the past 12 months. Now as a result of this survey, it was found that luxury buyers were boasting about their newly purchased high-end fitness equipment instead, and that this was now becoming a status symbol ¹.

But as stores began to open worldwide, people were not flocking to the brick-and-mortar outlets because things have changed. We are now accustomed to entering a store, having your temperature checked and hands sanitized, but that does not really mix with the idea of luxury shopping now does it? Let's do the math:
Luxury boutique store + having your temperature checked + wearing a mask ≠ a luxury experience ¹.

All of those luxury fashion items, which are set to rebound after the pandemic, known as "quiet luxury"; is already seeing a resurgence, specifically the high-end brands such as Hermes, Prada and Bottega Veneta. After the '08-'09 economic crisis, luxury brands were able to charge significantly more for certain items. For example, the Hermes Kelly bag retailed for upwards of $4,800 in 2000, but 13 years later, that same bag was priced at $7,600. Basically, what I am trying to say, is that if you want some of that luxury, now is a time to buy it, because the expectation is to see a positive growth of 1%-4% in the next year alone ¹

Although the future growth seems to be positive, the current impact that COVID has had on the fashion industry is truly seen in the factories in Bangladesh. Bangladesh is the world’s second-largest apparel exporter of western fast fashion brands. I will get into what fast fashion is later on, but what this pandemic has meant for this industry, according to Bloomberg, is a shutdown of approximately 1089 garment factories and a loss of approximately $1.5 billion. Now the reason that loss is so substantial is because of the way payments to these factories are done. Brands generally would pay the factories weeks or months after delivery has been made, the factories however pay upfront for the materials used. Brands have ended up cancelling orders when the pandemic hit, even stopping payments, and the factories have had to end up destroying these garments or holding on to them ^{2 3}.

Did you know that the fashion industry accounts for 10% of the world’s carbon emissions, as well as drying up water sources and polluting rivers and streams ^{2 3}? This means that the industry severely needs a sustainable material that must be added to the supply chain. In Indonesia, experts have seen the demand for Tencel fibers, which are cellulosic fibres derived from renewable wood sources. This is an absolute gamechanger for the industry, as it offers long-lasting comfort to soft-feel fabrics; it is biodegradable; and will last longer as the fibres are stronger. And if this sounds too good to be true, well it is not, the pricing is not either. Tencel fibres can blended with other fibres to bring down prices and fit well within the supply chain ⁴.

When the pandemic began in March/April, fashion brands panicked, and tried to clean out their inventory, offering discounts of up to 70%. But as stores began to close, and lockdown was being extended, e-commerce stores saw an increase in sales, specifically the fast fashion brands. H&M online sales increased by 36% between March and May; the ASOS Group’s international sales were up by 17%; Zalando, Europe's largest e-tailor estimates a record €300 million earnings ⁵.

Now what exactly is fast fashion. Fast fashion is clothing designs, typically similar to high-end brands, that move quickly from the catwalk to stores. For example, Zara would take Balenciaga high-top sock sneakers and create something similar, and retail it for a tenth of the cost. Now, what the industry saw during lockdown was that the focus on fashion was on casual and loungewear, which makes sense. But fashion insiders do not think this will last long, as fashion is like a pendulum, swinging from one extreme to the other. In 1918, the Spanish Flu ravaged the world, and like now, casual and comfortable fashion was sought after. However, when the pandemic ended in 1920, it welcomed in the era of the roaring 20s. Now I can tell you, I am extremely keen to hit up a few roaring 20s looks this decade ⁶.

Although the fashion industry took a hit, it does not mean they have not taken advantage of it. Numerous accessories have been created, such as custom masks, designed mask cases, gloves, push-stick keychains and even wearable air purifier necklaces. Ultimately, I believe that wearing masks and similar precautions are going to be in place for years to come, and as everything, we must adapt and evolve to it. From matching belts and shoes, to matching masks and gloves, one can hope the pendulum swings to the other end in no time.

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