After the coronavirus epidemic forced Chinese fashion designers, buyers, and other industry insiders to skip Milan Fashion Week in late February, the Camera Nazionale della Moda Italiana, or National Chamber of Italian Fashion, launched a solidarity campaign: "China, we are with you." The slogan turned out to be prophetic. At the end of fashion week, Italy was doing faced with a coronavirus epidemic and the generally busy streets of Milan were strangely empty. Instagram selfies in masks, fashion magazines asked their employees to work from home, and Giorgio Armani organized his 2020/2021 women's fall / winter fashion show in an empty theater.
The coronavirus epidemic is likely to be a nightmare for the Italian fashion industry by more than $ 100 billion, says Carlo Capasa, the head of the Italian National Chamber of Fashion. Fashion companies in the country expected a good start for 2020, but are now struggling to cope with supply chain problems and low demand, especially in China, the heart of the market. Coronavirus epidemic. "Of course, we think the first six months of 2020 are going to be bad," said Capasa.
What is happening to the Italian fashion industry is probably a glimpse of the impact of the coronavirus on the global economy more broadly. Businesses in a wide range of industries depend on China as a manufacturing giant and market to more than a billion consumers. But while life in some parts of the country is almost stalled in the face of the epidemic, this addiction is increasingly looking like weakness.
Stay up to date with the growing threat to global health by subscribing to our daily coronavirus newsletter
Like many other industries, the fashion world has long viewed China as a source of cheap manufacturing – the country is by far the world's largest producer of textiles, and it produces many other items that go into clothing, from buttons to zippers to the thread. . "The vast majority of certain products are only made in China," said Gary A. Wassner, CEO of Hildun Corporation and President of Interluxe. "We have become very addicted, and we have allowed it to happen because it was profitable, but it is not the only thing to consider."
This addiction now turns out to be disastrous. While workers in China are kept at home due to fear of spreading the coronavirus, this results in delays in the manufacturing supply chain. These delays are particularly problematic in the fashion sector because the clothes are sold over the seasons, according to experts. Companies that receive raw materials such as textiles late may need to mark down products or bill manufacturers for delays. Wassner adds that companies that only sell "private labels" or a signature brand can be particularly vulnerable as it will be more difficult for them to switch suppliers. The trendy, fast-paced fashion business will also be in jeopardy, says Margaret Bishop, an expert in supply chains of clothing and textiles. "The timeline from concept to delivery in fast mode has been very significantly compressed, so there is not much extra time so that if there is a delay, you have a built-in margin", she says.
Related stories
Supply chain issues affecting fashion companies also affect other industries that depend on Chinese manufacturing, such as automotive and technology companies. Pierre Haren, CEO of fintech start-up Causality Link, says consumers may soon see less variety on store shelves as companies focus their available production on products they already know are best- sellers, and anticipates that there could be supply shortages from the start in mid-March.
The fashion industry and other sectors also face great challenges on the other side of the production chain: consumer demand. Pauline Brown, former president of North America at LVMH, says the luxury market is already starting to see a "fairly severe" effect from the virus, especially as Chinese buyers stop traveling to make major purchases in cities like New York and Paris. Brown says that when consumers focus on their health, they are less likely to buy luxury goods.
"The Chinese have been the biggest driver of luxury and fashion in the past 10 years," says Brown. "They represent about a third of all luxury purchases, but they account for more than 70% of the annual growth in luxury consumption. There has therefore been a disproportionate dependence for several years on this consumer. "
Fashion companies that were fairly healthy before the coronavirus outbreak will likely recover from all disruptions, says Brown. But she thinks companies that were already struggling will find it harder to bounce back – and that will likely be the case for companies in other sectors as well. "Consumers are quite ruthless," she says. "As they say, you know when the tide goes out, you can see who's naked, and the tide will definitely go out."
Get the brief. Sign up to receive the best stories you need to know right now.
Thank you!
For your safety, we have sent a confirmation email to the address you entered. Click on the link to confirm your subscription and start receiving our newsletters. If you do not receive confirmation within 10 minutes, please check your spam folder.
