Mike Mikkelborg, former New Look and Gant supply chain director and CEO of data business Pilot Digital, discusses the impact the coronavirus is having on the fashion industry, from manufacturers to supply chain to retailers.
The coronavirus pandemic is having a serious and threatening effect on businesses across the world, and the fashion industry, which is already feeling the pinch from decreased consumer confidence and spending, is no exception.
Consumers across the UK face the possibility of temporary unpaid leave or, even worse, lay-offs, which will have a strong impact on all businesses, on or offline. While online businesses have fewer obstacles compared with retailers that have physical stores – low footfall, and business rates and rent, for example – we do expect an impact on sales across all sides of the industry.
Retailers: unusual spending patterns
I am working with an agency partner to assess online spending habits and whether we can expect a surge in sales before a large drop. There will of course be a shift in purchasing as people wish to protect their income, but on the other hand, we anticipate that people may spend a little more than usual online as they cut back on socialising and other aspects of their life in which they would usually spend.
Interestingly, data has revealed that sales of loungewear have increased because people are working from home, and communications have been re-jigged towards this new reality. Marketing efforts have been focused on presenting looks such as loungewear, sweats and hoodies, to cater to consumers’ new situations.
We anticipate that people may spend a little more than usual online as they cut back on socialising
Retailers with both a physical and online presence could, as a balancing measure, shift communication spend to online and work closely with pure-play online wholesale partners who are less affected.
There has also been a push for consumers to help local businesses in any way possible. Many are purchasing gift cards to use against future offline purchasing, and these can also be shared with friends and colleagues. As a result, some retailers are shifting their marketing focus to gift card sales.
Buying: data is essential
The lack of consumer purchasing will have a profound effect on buying – it has never been more important to make more precise buying decisions based on what is actually in demand. The decrease in purchasing will feed through to coming seasons.
Retailers should equip designers, buyers and planners with data insights, which are critical to gauging what and how much consumers are buying, for quick reactions and decision making based on real-life data as it happens.
Manufacturers: protecting our partners
Retailers also need to be sensitive to the situations their supply partners may find themselves in – a change in demand will reduce income and staffing requirements.
In every business I have ever been in, we have seen our manufacturers not as a different company but as a part of our ecosystem and I think that is crucial in situations such as this. Companies should be in regular contact with the manufacturing companies to see how they can work smartly and together to avoid possible layoffs. It’s been incredible in the past to see how a retailer and its manufacturer can work together to problem solve and come up with ideas on how to protect jobs.
In the face of adversity, retailers need to take radical responsibility and think beyond the buyer/seller mentality
The situation as it stands is reminiscent of the SARS outbreak in December 2002, which had the potential to derail thousands of businesses within the industry. I myself had just opened a small factory in China, and had 200 workers and my grandmother’s house on the line (she kindly acted as a guarantor for me). One worker with a temperature would have meant total shut-down and quarantine for all workers, which would have been the end of the business. Fortunately, no one was ill and we could continue, but many others were not so lucky.
At the same time, clients were cancelling orders or holding back payments and I will never forget the support from my closest Chinese management team who dug in to their savings so we could pay workers and ride out the storm. When I later sold the business, they all got a piece of the success. It’s times like these when humanity and camaraderie is especially important.
In the face of adversity, retailers need to take radical responsibility and think beyond the buyer/seller mentality, and realise that we are interconnected and rely on each other. Retailers should be supporting their partners as far as possible.
Logistics: looking for alternatives
As another crucial cog in the machine, logistics firms too will feel the effects of any reduced sales – their workload can and will dramatically decrease should consumers stop shopping in the face of this public crisis.
Logistics partners should put contingency plans in place to first and foremost make sure staff are safe and, as far as possible, keep business open to protect jobs and the income their staff depend on.
Logistics partners should put contingency plans in place to first and foremost make sure staff are safe
Plans could include staff rotation. I’ve spoken to companies who are rotating staff to ensure they have suitable time off to try to preserve health while also being with their families.
Another option could be for brands to work on more secure pick-up locations, so logistic firms will not have to travel to as many places, and can simply drop off at one location.
In this together
In tough times such as the one we are going through now, it is absolutely crucial to put people’s safety first. However, as an industry, we must avoid feeling defeatist in the face of adversity, and instead reinvent and alter our ways of working to bring consumers alternatives.
We cannot let innovation and creativity – two huge parts of the industry – be replaced by fear, panic and knee-jerk reactions. The fashion world has an amazing sense of camaraderie and togetherness, across – and in spite of – any borders, and we must continue to work together.