Despite the reopening of fashion retail stores worldwide, the Asian suppliers of brands are facing a bigger dilemma: the demand from brand retailers around the world is different, and the backlog of spring inventories has caused autumn orders to be cut by as much as two-thirds.

According to Bryan, Garnier & Co., the COVID-19 pandemic will shrink the global fashion industry worth USD 2.5 trillion by up to 30% by 2020.

 

American sports giant Nike said that it has canceled about 30% of factory orders in the fall and before the end of the shopping season. H&M said that the company will sell some out-of-season spring stocks in the fall. Tommy Hilfiger and Calvin Klein’s parent company, American fashion retail group PVH, said last month that the company was very cautious about autumn purchases because its reopened North American stores had a same-store sales decline of about a quarter.

 

A survey conducted by Coresight Research on June 24 showed that nearly 60% of Americans said they would not go to the shopping mall for the time being. A survey by Morgan Stanley found that 57% of British consumers plan to stay away from clothing stores to avoid infection with the COVID-19.

 

The cancellation of orders by retailers caused a sharp reduction in the workload of factories across Asia. Since the outbreak, hundreds of thousands of garment workers have lost their jobs in Asia. According to Rubana Huq, president of Bangladesh Garment Manufacturers and Exporters Association, new orders are about 45% less than the same period last year. Bangladesh is the second largest apparel producer in the world, and the capacity utilization rate of the country’s factories is currently only half of normal.

 

As consumers are cautious about returning to stores, retailers have repeatedly delayed placing orders with suppliers. H&M CEO Helena Helmersson told Reuters: “We need to wait as much as possible in terms of procurement to make a decision at the moment when sales are closest to recovery.” H&M last month announced its first quarterly loss in decades. Recruiters of Vietnamese apparel companies are also facing difficulties. Vietnam is a major manufacturer of large sportswear brands such as Nike and Adidas. Recruitment consultant Will Tran told Reuters that he and his colleagues only signed two employment orders in April and May, and usually everyone has up to 10 orders. He said: “So 80% to 90% of the job requirements are gone.”