Doing Business

How do fashion brands respond to COVID-19?

Linh Pham

May 4, 2020

The majority of sectors are affected by the Coronavirus pandemic and the fashion industry is no exception. Consumer behavior in shopping clothes has changed, many international fashion shows have been canceled, clothes shops have been closed due to the national isolation. It is time for owners of fashion shops to come up with solutions to boost sales during the pandemic. This article offers insights into the fashion industry and gives examples of Vietnamese fashion brands in the way they cope with the situation. 

COVID-19 drags the fashion industry in the world

Loss in the revenue among luxury brands

According to a new report by Altagama, most nimble brands could experience a decline of $10.8 billion in luxury sales this year. Then accordingly, the whole industry could lose up to $32.4 – $43.2 billion in 2020. A lot of international fashion shows have been called off such as Milan fashion week and Paris fashion week. A famous beauty brand like Shishedo also canceled its event which was scheduled for February 25 in Paris. In addition to high-end brands, popular brands are also suffered from a reduction in sales and revenue. It is because Chinese consumers have driven 70% of global growth in luxury garments since 2012. Now, China restricts the number of Chinese residents to go outside, then their shopping purchase certainly declines. 

Negative impact on garment factories

Usually, brands pay money to sewers weeks or months after delivering, instead of paying upon orders. Then, in response to the pandemic, many fashion brands and retailers have canceled and stopped paying their orders, even when clothes or products are made. As a result, garment factories have no choice but to keep and store these inventories and dismiss their workers. 

According to Bloomberg, approximately 1,090 textile factories in Bangladesh have had orders canceled from European countries, which is worth roughly $1,5 billion. Some workers have received an allowance that is less than a monthly salary and many other sewers do have nothing at all. The less income made these workers be afraid of how they can handle costs for food, rent, and other necessities. In Yangon (Myanmar) 10% of garment factories have been closed due to the pandemic. 

Besides, the fashion industry also consists of craft, artisan things made by hands in the informal environment. It is estimated that there are an estimated 2 billion informal workers around the world that lack basic labor, social, and health protections

Guide to implement the business continuity plan for fashion brands

This part is suggested by McKinsey in the article “Perspectives for North America’s fashion industry in a time of crisis”

Protect your employees and your customers  

During the pandemic, the employees’ health is the most important thing. It is essential for fashion stores to prepare hygiene items such as hand sanitizers and face masks for staffs, set new working norms, for example, working from home. Moreover, protecting your clients is another top priority. Fashion brands should introduce new processes and policies for customers, namely wearing masks in stores, use dry hand sanitizer before going into the shop, and suggest online shopping.

Have a careful cash management

When the national economy is in the crisis, cash management may help owners have a sufficient budget to run and operate fashion stores. You can set up a “cash control tower”, with representation from both the procurement and sales team to check how much the cash flow reduces. 

Review your current inventories and assess the supply chain

KPI in sales is disrupted because of the pandemic, then you had better quick review your in-year buy based on factors including categories, depth, confidence in style and “fashionability” (basics or evergreen items versus on-trend clothes). Some products that have been storing for such a long time, can be on the list of flash sales during the holiday. You can also determine which products can be delayed for the summer or fall of 2021. 

Guide to the business continuity plan for fashion brands

Focus on digital channels

If your country requests national isolation, then digital channels are your buoys to sell clothes during the pandemic. The first thing you can do to amplify digital is to restructure and improve your website. Creating a look-like fashionable website will increase customers’ spending time on your web, then surfing around and is likely to increase the buying desire. Furthermore, digital marketing is significant as it not only engages customers, drives customers to your website but it also entices them to visit your stores in the geographic market when stores are reopened. 

Interact with customers

Interacting with customers on social media will help them acknowledge that your brands still survive and are ready to serve customers. Additionally, it is also a time for your brands to strengthen your brand image. For example, you can share a story about how your stores keep hygiene during the pandemic, how your warehouse workers stay healthy or how a tube of lipstick can bring joy in the period of chaos. 

Comeback: mid-term plan for fashion brands in 2020

When the social distancing is over, besides must-do things, fashion brands need to prepare a medium-term plan to come back and grow after the delay. Here are things you should bear in mind. (This part is referred from McKinsey’s analysis)

Reopen stores and trigger purchasing power

In the spirit of reopening stores, head managers should ensure to safeguard the health and trust of employees and customers. You can decide which stores you will reopen, for instance, certain stores are reopened to serve a more value-oriented customer segment. Furthermore, methods to trigger purchasing power is necessary. First, because of the closure extent, employees may leave your company, then hiring news staff maybe happens. Second, digital marketing should be boosted to invite loyal customers to revisit your stores. The second method can be done by implementing a sale campaign, offering gifts or discounts. Third, compliance with local hygiene requirements. Despite being allowed to reopen stores, the number of infected patients is still being treated, then regulations need to be met such as cleaning practice or store density. According to McKinsey, “consumer behavior and preferences may have changed during the crisis, so forward-thinking retailers will reopen with a new operating model centered around customer engagement and styling.

Adjust merchandising plan for fall 2020 and spring 2021

Weeks of shutting down have certainly affected the sales and the revenue of fashion brands. After reopening, stores ought to reassess sales data and exchange insights to vendors and suppliers, then adjust a merchandising plan for fall 2020 and spring 2021. Maybe, planning to introduce new fall collections is needed to show how you are ready to provide new items, new stylish clothes after the pandemic. 

Example: How does Vietnamese local brand respond during and after national isolation?

MOMOCO

Before the official request of national isolation from the government, MOMOCO had temporarily closed its store chain in Hanoi since 20 March. Although physical stores were shut down, online stores on Facebook, Instagram, and Shopee are still active. Besides, the brand emphasized that a new collection of affordable prices would be published in the upcoming days. This is such a good strategy that helps the brand keep engaging clients to visit their fan page or website on days of social distancing.

MOMOCO temporarily closed stores to ensure the health of staff and customers.

Since 22 March to 31 March, MOMOO offered “Deal of the week 15% off of all items”. This sale campaign only applied for items that were sold online. 

On the first of April, many items were off up to 50% – 60%, they were sold at the same price (149,000 VND – 249,000 VND – 349,000 VND). Besides, during this time, MOMOCO also posted related content that focused on specific items to trigger purchasing such as “essential shirts”, “Hazel Cardigan”, and bottom dresses. 

On April 10, the new collection named “Everyday is a holiday” was officially launched. The name of the collection was fit with the context of the current social distancing in Vietnam. In the new collection, MOMOCO would like to bring feminine items with lovely and gentle colors combined with striped and gingham patterns. Additionally, for each order from the new collection, MOMOCO would take 20,000 VND to donate the government in the fight against COVID-19. What meaningful action!

Then on April 22, the government allowed shops to reopen, MOMOCO made an official announcement on its Facebook’s page with an assurance of all employees wearing face masks and preparing hand sanitizers in stores. 

Even though you are not working in the fashion industry, the business continuity plan is essential to all businesses so, what is the business continuity plan? Let’s read this article to understand how to make the plan.

In conclusion, when the Coronavirus spreads to many countries, the global fashion industry are affected. Shops are closed, orders are canceled, garment factories are shut down, then workers face the threat of unemployment without allowance. This is a chain of negative consequences that we can see. In response to the situation, fashion brands should prepare in advance the business continuity plan and implement solutions quickly to keep engaging customers and attract them to revisit your stores. The peak of the pandemic will soon be over then everything will return like its normal pace. Therefore, being ready and be flexible are what managers need now. 

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