Coronavirus à la mode: Businesses continue to suffer
May 8, 2020
2 min read
What's going on here?
As the UK’s coronavirus lockdown continues for the 6th week, businesses around the country are suffering including fashion retailers, both big and small.
What does this mean?
It’s not just the mandatory lockdowns and health and safety precautions which have impacted these retailers of “non-essential goods”. Spending habits have also changed as consumers watch their outgoings more closely and as Next’s CEO, Simon Wolfson, puts it: “no one wants to buy clothes to sit at home in”.
Next is one of the fashion retailers which could sustain heavy losses as the coronavirus closes their high street shops and warehouses, effectively stopping online deliveries. Next has predicted it could lose up to £1bn (25%) in annual sales. However, this prediction is not symptomatic of the entire industry: fitness and fast-fashion brands like Boohoo have seen sales of tops, loungewear, and gym wear increase as we stay, work and exercise at home.
What's the big picture effect?
It is not a good sign for the retail sector, with fierce competition already between high street and online brands. Nor does it bode well for the real estate industry, as thousands of retailers struggle to pay their rent for high street and shopping mall tenancies.
Bricks-and-mortar businesses who relied on in-person visits are in danger of going bust, especially those who have not upgraded their supply chains and online shopping and delivery operations. Price wars were leading to a race to the bottom for many retailers trying to attract footfall; this and the coronavirus have meant some well-known brands have already gone into administration including Debenhams, Laura Ashley, Oasis, and Warehouse.
To avoid being stuck with stock and save on storage costs, businesses are now either forced to cancel or delay shipments, by arranging to transport their deliveries by boat instead of by plane. Green activists have lobbied for the retail industry to move towards “slow shipping” for a while. As consumers are forced to go “cold turkey” from online shopping, and with World Earth Day last week, could this mean fast-fashion might get a makeover?
Report written by Hannah-Mei Grisley
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