Clothing supply chains are “unravelling fast” as the coronavirus crisis impacts both retailers and manufacturers worldwide, according to GlobalData.
While initial concerns about the impact of coronavirus on the fashion-retailing sector related to concerns about getting products out of Mainland China, the pandemic is now impacting the global supply chain, says Leonie Barrie, apparel analyst at GlobalData.
“Quarantined workers, travel restrictions and disruptions to the supply of raw materials such as yarns, fabrics, trims, packaging and labels – much of which come from China – are hurting manufacturers around the globe,” she says.
“The knock-on is being seen in factory closures and job losses for workers who are already amongst the most vulnerable due to low wages and poor labour laws and protections, with countries such as Vietnam, Cambodia, Bangladesh and Myanmar particularly hard-hit.
“The situation is unprecedented, and may well worsen before it starts to improve.”
Barrie says liquidity and cash flow are major problems in the clothing supply chain right now.
“Yet, there is the prospect of even more severe disruption and millions more job losses if factories don’t have the funds to survive until the end of the crisis.”
At the same time, retailers in North America and Europe are axing, slashing or postponing orders, as well as deferring payments, as country lockdowns reduce shopper footfall and stores are closed to try to slow the spread of the virus.
UK fast-fashion retailer Primark and department store Marks & Spencer have both made substantial cancellations or cuts of orders of product as they struggle with unsold inventory in stores and warehouses.
“We’re in uncharted territory right now,” says Barrie. “So there is no established set of best practices for brands to follow. So, while navigating their own challenges, they must continue to uphold responsible purchasing practices across their supply chains.”
Some apparel retailers, including H&M Group and Zara-owner Inditex, are refocusing their supply networks and sourcing expertise to produce much-needed medical face masks and other personal protective equipment (PPE) for hospitals and health care workers.
“While many clothing brands and retailers are focusing on their own survival in these difficult times, they must also heed the financial strain on the factories and workers who produce their clothes,” says Barrie.
“Collaboration, cooperation and strategic partnerships have been rallying calls across the industry in recent years, and they’re needed now more than ever before.”