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The global impact of COVID-19 on the fashion industry

As the COVID-19 global crisis unfolded, I watched in horror as many of the major fashion brands and retailers, without warning, cancelled orders and delayed payments to their suppliers and factories. This was because of the slowdown in consumption of their clothing, due to the closure of their retail stores. In many cases, this meant that the factories could not pay their workers for work that they had already carried out.

Over 1 million garment workers in Bangladesh have lost their jobs or been temporarily suspended from work, due to these order cancellations and the failure of buyers to pay for cancelled orders. Many of these workers have been sent home without the legally-mandated pay or severance. These workers have no savings to survive the hard times ahead and their government has such a low tax revenue, it has a very limited ability to provide meaningful support to the workers and the industry. 

Contractual obligation

These major fashion brands and retailers have a contractual obligation to pay for these orders. Consumers and the union movement banded together to name and shame the companies globally and demand that the big brands and companies “Pay up”. Some of them relented and said that they would at least pay for the clothing that had already been finished.

For example, H&M has committed itself to stand by its manufacturers: “We will stand by our garment manufacturing suppliers by taking delivery of the already produced garments as well as goods in production. We will of course pay for these goods and we will do it under agreed payment terms.

This is in accordance with our responsible purchasing practices and not only the case in Bangladesh, but in all production countries”. Since H&M issued this statement, many other major fashion groups have also decided to maintain their current production orders. Hopefully more companies will follow…

Globalised value chains

COVID-19 exposed the weakness in the socio-economic system and the globalised value chain that so many retailers rely on. Although most of us are aware that a large amount of goods we consume are shipped from abroad, empty shelves in our supermarkets brought about a sharp realisation of the fragile nature of these long and complex globalised value chains.

The current fashion production system out sources garment production to countries like Bangladesh, Cambodia and Ethiopia, who usually import fabric from China to cut and sew garments on a 90-120 day lead time.

The fashion industry mostly operates on a ‘push’ value chain, these are driven by long-term projections of customer demand and take 9-12 months to push a product in to the market. However, after this time frame, market dynamics have often changed and the product is no longer as appealing to the market as expected. The product then gets marked down or pushed aside as deadstock.

It is a really wasteful model, that relies on big companies taking bets on future fashion tastes and trends. It is risky and wasteful, with global chains being long and complicated and at risk from natural disaster, social unrest or epidemic in any one of the many countries that the chain spans.

Implosion and explosion

The COVID-19 pandemic accelerated the inevitable and exposed a system that was already imploding. In recent times, increasing numbers of enlightened consumers have been looking for a better way to buy ethically. There has been an explosion in the awareness of consumers, with an increasing number of people calling for the fashion industry to improve their practices.

This current issue with the fashion industry during the COVID-19 outbreak has helped to cement ethical and environmental concerns, such as global warming, at the forefront of consumers and brands minds alike. This awareness coupled with the massive behavioral shift and inevitable slowing down of consumption, allows us a unique opportunity to design a new plan for the way that the industry could work in the future.

Change for the good

What could this change look like? Short, localised value chains would be less likely to be disrupted by natural disasters, epidemics and political upheavals. These shorter supply chains will reduce the environmental footprint of fashion, which is something that is becoming a very important factor in conscious consumption, with the growing awareness of the urgency surrounding global warming.

Direct to consumer brands have experienced exponential popularity recently, they recognise and respond to the consumers want to customise and create their own unique products. Direct to consumer brands also allow the producer and consumer to interact together in a meaningful exchange. Something that we have all realised the importance and value of since spending time in lockdown.

Consumer power

As consumers we are working hard by using our consumer power to push the system, challenging what we buy, how much we buy and the prices we pay is so valuable to achieve a shift in mindset within the industry. But we would also benefit from a more joined up, long-term thinking from the industry itself.

We need to work out new systems which generate longer term business for brands that will be sustainable in every sphere; the fabrics used, the wages paid, and the distance from manufacturer to customer.

I’m not sure this will happen organically, it would have a much better chance of success if sustainability was incentivised for businesses. It would be good to see an increased number of international brands undertaking their manufacturing in the countries in which they actually sell, but this will only happen where it is financially viable.

This is where we need the right government support to lead us through these times and help us develop a more sustainable way of working, or we risk falling back to where we currently are, with garment workers paying the price, sometimes with their lives.


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