“Coronavirus will not end globalization, but it will change it”, wrote Beata Javorcik in an FT article. “That’s what viruses force us to do”, concluded the chief economist at the European Bank for Reconstruction and Development. In the post-pandemic world, fashion is an industry on high alert. With experts believing that no company will get through the pandemic alone, it has become a situation that continues to instill uncertainty and disorientation, which makes now the perfect time to reassess and reset.
Although the fashion industry is still at the beginning of its struggle, a recent report, The State of Fashion 2020 Coronavirus Update believes that the crisis will “shake out the weak, embolden the strong and accelerate the decline of companies that were already struggling before the pandemic”. The good news is that it is not all doom and gloom; there are a few strategies and disruptive innovations that can be applied to help companies give their fashion supply chain a boost.
- Manufacture Closer To Home
When it comes to manufacturing, the tables are turning. Coronavirus has caused chaos for big retailers and their supply chains. The outcome has been that European based fashion businesses are no longer relying on cheaper manufacturers abroad; instead, they are choosing to reduce reliance on places like China by turning to countries like Albania for their manufacturing needs. There has also been a growth of home-based manufacturers being approached by companies to fulfill orders.
Although the halting of manufacturing in China followed by Italy, has allowed local manufacturers to thrive even in these dire circumstances, there is a downfall to manufacturing closer to home. According to The State of Fashion 2020 Coronavirus Update the big disadvantage of choosing to manufacture closer to home is that “workers in low-cost sourcing and fashion manufacturing hubs such as Bangladesh, India, Cambodia, Honduras and Ethiopia, extended periods of unemployment will mean hunger and disease”.
2. Invest In Digital Channels
The outbreak has somewhat resulted in online retail facing challenges like consumers pulling back on discretionary spending; however, customers are still spending despite the lockdown. Digital has become a priority as more companies see the value in scaling up and strengthening their digital capabilities.
“Digital channels are a fundamental data source for understanding what’s going on and planning appropriate activities”, explained Giovanni Faccioli in a kpi6 x Deloitte webinar last month. The Leader Fashion & Luxury at Deloitte continued, “For example, Brands Audience analysis allows us to understand what kind of communication to adopt towards our customers in this bad-time period.”
Although continued consumer demand could create logistical challenges, it is a situation that has been predicted to be a short-term boost that will lessen with time. Even if that’s the case, businesses that invest in their digital channels through strategy will most likely be able to stabilize their brand online.
3. Introduce New Tools and Strategies
As the fashion industry’s foundations continue to be shaken to its very core, there are tools available that could help you strategize your supply chain better. By embracing innovation like predictive tools and digital consumer intelligence technologies, fashion businesses will be better equipped to understand what is happening so they can figure out how to plan an intervention.
“Don’t let innovation stop, because this could be the window of opportunity,” cautioned retail futurist Doug Stephens in March 2020. “Use this time to reinvent how you do what you do, bring consumers new alternatives, new value, and in the process, even reinvent your own brand.” Simply put, investing in new tools could mean that you can future proof your supply chain, which makes it easier to continue once the dust has settled.
4. Adapt to the New Market
With many industries still overcoming the shock of how vulnerable their supply chains have become, experts believe that to overcome the current climate businesses will need to adapt to the new market.
On this topic, The State of Fashion 2020 Coronavirus Update predicts that companies that do not adapt to the new market environment might not successfully emerge from the reshuffle. “The crisis will shake out the weak, embolden the strong and accelerate the decline of companies that were already struggling before the pandemic, leading to massive waves of consolidation, M&A activity and insolvencies”, states the report.
As the majority of supply chains are proving not to be entirely immune from the crisis, the good news is that new habits are already forming, which is, in turn, forcing many fashion businesses to “adapt or die”.
5. Overcome Through Collaboration
José Neves, CEO Farfetch said in a Forbes article, “We can’t help the health situation directly or calm people’s concerns on a personal level. But as a platform, we can help small businesses stay alive.” It is a comment that supports the message that fashion businesses do not need to project strength alone, when much more can be achieved by working together.
Operating under these extreme conditions means that many companies have been forced to strategize, even though it is unclear what the long term effects will be on their supply chain. Therefore collaborations between various businesses, could, in the long run, benefit every cog that helps the fashion wheel turn.
6. Rethinking Your Supply Chain
Are you ready to rethink your whole supply chain? If you are not, you should be because the word on the street is that the virus has exposed supply chain failings. On this, Richard Wilding, professor of supply chain strategy at Cranfield School of Management, told cips.org, “Once more, the lack of risk management, resilience and agility in supply chains has been exposed.”
Temporarily constrained, fashion businesses are not only rethinking their supply chain; they are also building resilience across supply networks despite how the derailment is affecting business productivity.
7. Adopting the Discount Mindset
As long lead times weigh heavily on fashion’s supply chain, for some businesses, the time has come to adopt a discount mindset. Although not a popular solution, it is one that The State of Fashion 2020 Coronavirus Update believes could help companies clear unsold seasonal stock that still sits in their overfilled warehouses.
With experts predicting a significant drop in consumer spending, inventory build-up is expected. Therefore by discounting, you will not only clear inventory, but you will also “reach increasingly frugal and disillusioned consumers”, states the report. So as fashion brands continue to rethink their “broader business mission”, many forward-thinking businesses are turning to niche innovations that will allow them to investigate new supply chain coalitions and invest in the development of recycling technologies and transparency initiatives.
It Is Not ‘Business as Usual’
Before businesses can invest in recovery strategies, they need first to accept the fact that it is no longer business as usual. Yes, fashion’s supply chain is fluid, chaotic and ever-changing, but we must let go of trying to reduce risks to ‘business as usual’ and instead focus on sustainability efforts that focus on optimization.
On this Peter Davis, Editor-In-Chief, L’Officiel US said in a Forbes interview, “For the big brands, I’m seeing a lot of business, as usual, pushing through, even though it’s obviously not business as usual.” It is essential to find a way of cushioning the blow so you can strengthen your supply chains. I think ‘The Transition to Good Fashion’ report by Drift rounded the situation up nicely when it stated, “Broadly speaking, non-core assets and activities should be divested and stopped to streamline current offerings and ensure efficient execution”.
Learn more about how Suuchi can future-proof your supply chain