The 'Inventory Crisis' in Fast Fashion: COVID-19
In a matter of weeks, the coronavirus pandemic changed many things in the world from our lifestyle to industries’ working habits.
The pandemic has taught unforgettable lessons to the business world. This particularly applies to the fast fashion sector, since excess amounts of clothing items and fashion accessories have been left in stores and warehouses.
What problems have arisen in the fashion industry from this crisis?
The pandemic has completely changed consumers' lives, through the establishment of a quarantine regime across the world, which have kept stores closed. From suppliers to retailers in fast fashion, all have been hit hard by the COVID-19 pandemic.
"As you’re sat at home and you’re not going out to events, to dinners, restaurants, into work, the need for clothes – or really the opportunity to buy – just isn’t there," BFC chief executive Caroline Rush said in an interview on Euronews Now.
Those goods that had already been produced and ready to go in-store sales before the quarantine measures resulted in a large number of unwanted clothes in inventories. Once the goods have passed their ‘prime time’ to sell, the goods are typically marked down.
Two of the largest fast fashion retailers, H&M and Inditex (Zara’s parent company), closed the majority of their stores due to the pandemic. Cotton prices fell to a 15 year low.
What might be a good lesson for the industry is to become more eco-friendly down the line. There is a great opportunity to try and reset the entire supply chain.
Evolution of the impact of COVID-19 in the Global Fashion Industry
Here is a brief timeline of developments in the global fashion industry prior to and during the pandemic:
31 January 2020 Levi’s shut half of the stores in China amid the epidemic; this was the beginning of the “inventory crisis”.
5 February 2020 Nike closed half of its stores in China amid the epidemic.
7 February 2020 an apparel giant (VF Corp) closed 60% of its stores all over China to mitigate the spread of the virus.
13 February 2020 PHV closed the majority of its Calvin Klein and Tommy Hilfiger stores across China.
20 February 2020 Adidas’ sales in China dropped by 85% and decided to close a significant number of its stores there.
18 March 2020 inventory crisis in Inditex the owner of Zara and Bershka has reported 287,000,000 Euros inventory charge as the sales dropped dramatically after the COVID-19 outbreak.
30 March 2020, World Trade Organization announced an extreme decline in global trade and consumption.
31 March 2020, H&M announced that they will pay and deliver goods that had already been cancelled but manufactured by suppliers.
1 April 2020, European textile and apparel sector faced 50% decline in sales
7 April 2020, PHV (Calvin Klein and Tommy Hilfiger) offset fallout from the store closures all over North America and Europe through reduced inventory commitments.
9 April 2020, 31% of the orders cancelled according to the International Textile Manufacturers Federation.
15 May 2020, US retail sales dropped twice compared to March.
21 May 2020, British Fashion Council called fashion companies to “slow down” and rethink the way they used to produce after COVID-19 pandemic.
All these updates show how the pandemic affected the industry and alarmed the fast fashion practices.
Even as stores start to re-open, with mask wearing and long queues, the likelihood is that a lot of shoppers are less likely to flock to stores.
According to The Seam’s survey, ‘45% people said that during this pandemic, they learned that they need less stuff in order to be happy’.
How “inventory crisis” effects the environment?
About two months ago we discussed in one of our blog posts about the new law in France (France's fight against clothing waste), why it was put into place and its scope. The reason why this law came into discussion and was officially approved is because many fast fashion companies are destroying their unsold items which remain in their inventory. Those unsold items go either into the landfills or they are burned. This situation basically leads to the pollution in landfills as well as the atmosphere.
The same will most likely happen to those items that remained in the inventories after the COVID-19 crisis. The fashion industry has already been responsible for 10% of global annual carbon dioxide (CO2) emissions.
With the coronavirus outbreak, BFC's Caroline Rush made the further statements about the situation:
“My optimism is, as we go through this, that we really think about the inventory challenge that we’re facing for this season, and use that as a unique opportunity to really think down the line: what will happen to that stock, where will it go…”
Our “Why the fashion industry needs to change after this crisis is over” post can explain further about the issues caused by the coronavirus outbreak.
Cancelled events have an impact on textile waste
Many events were cancelled because of the COVID-19 outbreak, but how could this contribute to textile waste? Well, a significant amount of the merchandise made for those events have gone to waste, from tote bags to t-shirts.
How does Kleiderly help to reduce fashion waste?
As Caroline Rush said, recycling and re-inventing will be the solution for the industry and our planet, and this is simply what Kleiderly does. At Kleiderly is convert textile waste into a very innovative multi-purpose material.
We are partnering with fashion brands and charity organizations to collect their waste clothing. After this global crisis, it would be a good opportunity for fashion brands as well as event hosts to efficiently manage the overflowing waste in their inventory.
To discover more about Kleiderly and the posts like this check out our website and blog.
Sources:
https://www.euronews.com/2020/04/22/could-the-coronavirus-crisis-spell-the-end-of-fast-fashion
https://www.ft.com/content/62dc687e-d15f-46e7-96df-ed7d00f8ca55