Nobody buys fancy clothes to sit at home, but this is exactly what people are doing in the middle of the pandemic.
And it ties the fashion industry in knots.
The economic standstill imposed as part of the efforts to stem the spread of the corona virus has changed shopping behavior, has transformed the retail landscape and could change the fashion industry forever.
“The COVID 19 crisis is manifesting itself through a series of shocks in the supply chain and in demand,” Steve Lamar, president and CEO of the American Apparel & Footwear Association in Washington, told Washington Newsday. “We had interruptions in production and transportation. Many people have lost their jobs and can no longer afford to spend money. As long as the pandemic is not visible in the rearview mirror, we will continue to experience these shocks – and if people don’t get out and spend as they did, it will be difficult to stay intact.
McKinsey & Co, a New York-based management consulting firm, estimates that global sales in the apparel and footwear sector will shrink by 27%-30% this year, but are expected to grow between 2% and 4% in 2021. Luxury goods, including watches, jewelry and beauty products, could fall by 35%-39% this year compared to 2019 and grow between 2% and 4% next year.
But not all of them will be there to make an improvement.
“We expect a large number of fashion companies to go bankrupt in the next 12 to 18 months,” McKinsey & Co. said in a report. “The interdependence of the industry makes it more difficult for companies to plan ahead.
It’s not just the products that are affected by the downturn – it’s the places where they are sold. Before the pandemic there was a flood of retail space, and the decline will continue in the coming years, according to analysts.
However, the apparel industry appears to be recovering and may have been strengthened by the emergence of a hybrid distribution channel as online and stationary purchases merge. Lamar said many retailers are preparing for the corona virus pandemic by selling online and offering in-store pickup, accelerating changes that were already underway before the pandemic broke out.
Once the item has been fitted into a computer-generated avatar to see what it looks like, in-store pickup gives shoppers the opportunity to touch clothing and return it to the store if they are dissatisfied.
“With video conferencing, people want the professional look when they work from home,” Lamar said. “But we don’t just have to look at the fashion above the keyboard, we also have to make sure that people are outside and buy coats and hiking boots.
Clinical trials of vaccines are encouraging, although none have yet been approved for distribution. Nevertheless, the outlines of a recovery in the apparel industry may be emerging.
The US economy expanded at a record pace in the third quarter, growing 7.4% quarter-on-quarter and at an annual rate of 33.1%. Overall, the economy recouped about two-thirds of its losses caused by the COVID 19 pandemic.
The U.S. unemployment rate peaked at 14.7% in April – the highest since statistics were first compiled in 1948 – and fell to a still-high 7.9% in September. The unemployment rate was 3.5% in February, the US Department of Labor reported.
However, many stores remain closed and people remain suspicious, especially as a second wave of infection is looming nationwide and new closures may be ordered.
During the first closure, consumers cut back on their spending on experiences while spending more dollars on services and material products, the New York investment bank Goldman Sachs said in a research report.
Travel and leisure spending plummeted due to the pandemic, putting pressure on the airline and hotel industry, but spending on housing, including furnishings and upgrades, and understandably health care, increased. Consumers also increased spending on products for working from home and for school from home, such as personal computers. Spending on small appliances, toys, pets and household items also increased.
These higher expenditures left less money for upscale clothing and shoes. Spending in this sector fell 24% in the second quarter, Goldman Sachs said. It is unclear whether discretionary spending on office or nightwear will continue to be