Clothing supply chains are unraveling fast as the fallout from the novel coronavirus (COVID-19) outbreak hits retailers and manufacturers across the world, according to research firm GlobalData.
From initial concerns over the disruption to deliveries of clothing from China, where the outbreak began, the pandemic is now causing chaos throughout the entire supply chain.
Quarantined workers, travel restrictions, and disruptions to the supply of raw materials such as yarns, fabrics, trims, packaging, and labels—much of which come from China—are hurting manufacturers around the globe.
At the same time, retailers in North America and Europe are axing, slashing, or postponing orders, as well as deferring payments, as country lockdowns reduce shopper footfall and stores are closed to try to slow the spread of the virus. Primark and Marks & Spencer, two of the UK’s largest clothing retailers, are struggling with unsold inventory and have in the last few days shaken the sector with massive order cuts and cancellations.
“The knock-on is being seen in factory closures and job losses for workers who are already amongst the most vulnerable due to low wages and poor labour laws and protections, with countries such as Vietnam, Cambodia, Bangladesh and Myanmar particularly hard-hit,” says Leonie Barrie, apparel analyst at GlobalData. “The situation is unprecedented, and may well worsen before it starts to improve. Liquidity and cash flow are major problems in the clothing supply chain right now. Yet, there is the prospect of even more severe disruption and millions more job losses if factories don’t have the funds to survive until the end of the crisis.
“We’re in uncharted territory right now, so there’s no established set of best practices for brands to follow. So, while navigating their own challenges, they must continue to uphold responsible purchasing practices across their supply chains.”
Some, such as H&M Group and Zara-owner Inditex, are rising to the challenge by refocusing their supply networks and sourcing expertise on the production of much-needed medical face masks and other personal protective equipment (PPE) for hospitals and health care workers.
Barrie adds: “While many clothing brands and retailers are focusing on their own survival in these difficult times, they must also heed the financial strain on the factories and workers who produce their clothes. Collaboration, cooperation, and strategic partnerships have been rallying calls across the industry in recent years, and they’re needed now more than ever before.”