Tuesday, 24 March 2020 13:10

ChicGeek Comment COVID 19 Cancel Everything

fashion covid 19 cancel orders manufacturing

This is a disaster. This will probably be the biggest recession the world has ever seen and fashion and retail is going to get hit hard. What the global spread of coronavirus (COVID 19) shows us is how interdependent our economies have become and what a fragile house of cards it all was in the first place. Those cards are disappearing quickly and the entire thing is coming crashing down.

Fashion brands and companies are in freefall and the current mindset is to cancel everything. Fashion had a problem with unsold inventory well before this. As the industry got bigger and the need for huge quantities to make a profit increased, unsold merchandise and how to get rid of it was a headache for the majority of brands, high-street or ‘luxury’.

It has been reported that garment factories in Bangladesh have now had orders worth more than US$2 billion cancelled by brands and retailers because of the global coronavirus crisis. Orders for nearly 650 million garments, worth a total of US$2.04 billion have been cancelled, impacting on 738 factories and about 1.42 million workers, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Just as the Chinese factories start production again, Europe and US are mostly in lockdown with many shops closed and retailers cancelling orders.

Primark is using a force majeure clause in its contracts to cancel its orders, the Times newspaper said. “We are deeply saddened that this will clearly have an effect throughout our entire supply chain,” Primark Chief Executive Officer Paul Marchant told the newspaper.

While much of the SS20 season would have been made despite the reported disturbances in the supply chain from China at the beginning of the year, it’s not too late to cancel high summer stock or the waves of drops, brands, who don’t want to hold much stock, have become used to. Primark has no online sales, so all that stock will be stuck in stores and warehouses.

“We have large quantities of existing stock in our stores, our depots and in transit, that is paid for and if we do not take this action now we will be taking delivery of stock that we simply can’t sell. This is unprecedented action for unprecedented and frankly unimaginable times,” said Marchant.

Marks & Spencer has recently cancelled £100m in clothing orders.

This is the retail equivalent of cutting off limbs to save the vital organs. Brands don’t know how long this is going to last and what shape they and consumers will be in at the end of it. They need to save cashflow. Fashion feels particularly unimportant right now and will be awash with huge discounts to clear stock in the near future, and that’s in an already saturated market. Brands cancelling orders will impact manufacturing countries hard, but this isn’t a frivolous decision, this is a battle for survival. 

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