How Covid-19 is Impacting Fashion Manufacturing

By Hannah Schmidt-Rees

I’d like to use PERSPEX as a place to escape into the world of fashion, but there is something incredibly impactful happening to the fashion industry. The fashion industry is really not having a good time right now. 

Now, I am admitting that what is happening in the fashion industry can’t be compared to the severe impact that COVID-19 is having on those directly affected. But there is something really despicable happening at the moment, especially for fashion manufacturing.

First things first; no stores = no sales, or at least, a major decline in sales.. With the introduction of social distancing lockdowns, brands are really experiencing a drop in sales for their bricks and mortar stores. With some brands that do have an online store, sales are skyrocketing. Take David Jones for example. Their physical sales fell 19% in March, but their online sale rose by 108% percent. I even heard that they needed to shut down their online store for a few days to slow the demand. A wild concept (it’s interesting that people are spending so much on clothing during home isolation, where they’re not going anywhere?), but that only covers their current stock.

But the real impact is on fashion production. We often think about business owners and retail workers being impacted as physical stores, but when store close, orders for new stock are becoming huge liabilities for brands, manufacturers and garment workers. For every brand (primarily for fast-fashion/high street brands), their latest collections are produced by manufacturing warehouses in countries like Bangladesh and India. Normally, when orders are placed, manufacturers order the materials for production and pay upfront. However, it’s common for brands to pay for the finished goods weeks and months after delivery, rather than upfront (which is an issue in itself but not the focus here). During the pandemic however, many brands are choosing to either cancel orders, delay payments many more months than ‘usual’ or ask suppliers for a discounted price, even after the production is completed and the manufacturers are out-of-pocket after paying for the materials for production. It’s completely unfair. I’m not denying that fashion brands are facing hardship in all aspects of their business, but the aspect of fashion manufacturing is having the biggest impact.

Factories are left with no choice but to store/destroy stock or to lay off workers. Bloomberg reports that during the pandemic, 1089 garment factories in Bangladesh have had orders cancelled, worth roughly $1.5 billion. Now in countries like India and Bangladesh, many garment workers live in poverty, relying on the low income that they do receive to get by. These workers barely get by as it is, as big brands hoard all the profit they can and leave those most crucial to their business by the wayside.

These workers simply cannot afford to have any changes to their income. 

By brands choosing to produce their garments in countries like Bangladesh and India, they are providing the livelihoods of those citizens and supporting their economy. As much as we all don’t like fast fashion, it does help people to provide for themselves and their family. These manufacturers are more than just places to get garments made for low prices. They are the workplaces for actual people, who need an income to survive. Do their workers need to be paid more? Absolutely. But that is a major issue for another day. (Wow, so many issues with the fast fashion industry, who knew?)

With these brands, who profit off the major markup of their garments (as an example; a fast fashion brand buying a garment from a manufacturer for $2, then selling it in store for $20; making $18 in profit but only giving the manufacturer $1 profit), I’m sure they can afford to continue to pay for their manufacturing orders. It may be the workers entire livelihood, but it’s a small drop in the ocean for these big brands. According to Oxfam, from the retail price of a garment, only 4 percent of the profit goes back to the workers. So as an example, for a $20 t-shirt, workers get 80 cents for the sale of that one shirt. There’s no way that a brand needs to completely halt their orders and put the future of their garment workers at risk. They can afford to pay them. They’re just using COVID-19 as an excuse to cut corners.

Brands are one of the main reason that these garment workers are employed, meaning that they need to take some responsibility for what’s currently happening. They are to blame for this and they need to put plans in place to ensure that their workers are not put at risk.

Cotton On was going to cancel $18 million worth of orders. Kmart was going to demand 30% discount on all orders. Kmart was also going to cancel paying for orders (seasonal) if they were not delivered on time (which is highly improbable). Brands like Millers, Katies and Rivers were going to delay payments by eight months. Discussions between brands and manufacturers are currently happening to find a ‘mutually satisfying’ outcome, but it’s not fair for brands to make these bold and hurtful decisions.

Let me just say, not all brands are going this. Brands like Adidas, H&M, Nike and Uniqlo have publicly committed to pay full for completed and in production orders.

But regardless, the fashion industry is really being decimated by this pandemic. From bricks-and-mortar, to fashion weeks, to marketing campaigns, every aspect of the industry is being impacted by COVID-19, as well as many other creative industries. Brands like Neiman Marcus, J.C. Penny and J Crew are filing for voluntary administration or bankruptcy, with many other local brands having no chance for recovery. Millions of people are either unemployed or furloughed (myself included). Excess stock is languishing in stores and warehouses, and current orders will probably will never see the light of day on store shelves.

Money will be lost. Livelihoods will be lost. Lives will be lost.

It’s difficult to predict what’s going to happen in the future, and what’s the fashion industry will look like in a few months/years. All I can write about is what’s happening now.

But there is something good coming out of this. LVMH donated $2.2 million to The Red Cross China, as well as retooling their perfume manufacturers towards making hand sanitiser and face-masks. Kering has donated to four major hospitals in Italy, as well as Prada and Moncler. Ralph Lauren has donated $10 million, Valentino has donated 10 million euros to the cause. There are many brands who are doing what they can to help and that’s really amazing, I just hope that all brands can act the same way. I also hope that this pandemic can disrupt the non-stop and unsustainable nature of the fast fashion industry, but we’ll see how we go. It’s hard to change something that’s been years into the making. So many people rely on it now.

It really is a weird and uncertain time for all of us. Buying clothing is the last thing on all of our minds, but the fashion industry is really having a difficult time. Time will tell. Everyone; stay safe, protect yourself, protect those around you, and stay home.