Due to the global COVID-19 crisis a study done by the consultancy firm, Deloitte, shows that the retail industry is under pressure and that the turnover is declining for a lot of companies. Actually, numbers from Deloitte show that the turnover numbers were already, prior to COVID-19, going slightly down due to the online global big players (e.g. Amazon, ebay etc.) putting extra pressure on the smaller players and constantly stealing revenue.
COVID-19 has only intensified this lack of turnover for a lot of brands and Deloitte expect this to continue and also expect even more companies to go out of business. But there is also light at the end of the tunnel. New opportunities will arise and the fact that some businesses will go out of business opens up for new brands to be created and that the surviving existing brands can grow even bigger and find their spot in the market.
The big companies with private equity funds behind them will still stand strong and even due to the declining revenue the the companies will due to their strong funding, have deep pockets and can utilize their economies of scale both during and after the crisis. Another fact is that a lot of smaller brands cannot pay the rent for the top placements around the cities, but the bigger brands can. But again, due to the many available renting spots in malls and on top locations at streets, existing and new brands can definitely use this situation to their benefits and bargain some great prices for top locations.
Which factors have affected the lower revenue due to Covid-19?
One of the biggest reasons why the companies experience declining revenue is due to the closing down of shops and hence a much lower export than expected. A lot of the biggest export markets for Denmark is United States of America, Germany and Great Britain and all of these markets are hit very hard by COVID-19 with lock downs etc. The infrastructure to sent out goods is also affected as aviation transportation has been postponed and may still be affected in the future. These factors combined has lowered the global demand of goods.
Large orders in the fashion industry has also been affected all around the world and hence the shipments of spring, summer and high-summer collections have been either delayed or even cancelled. Fashion fairs and fashion shows has also been changed due to restrictions of the COVID-19. All these factors combined have put even further pressure on a already tight fashion industry.
How to solve the global COVID-19 challenges as a fashion brand?
It has never been more important to find solutions that enables you to solve these challenges. One way is through digitalization. An effective digital setup can make you showcase products even though not being physical together. Buyers can then view, explore and order products much faster and easier. It can also support the showcase of sample products or small collections so the buyer is still able to touch and feel the fabric, and then able to go into a digital universe such as our Virtual Showroom product and explore and order products. Processes, data and time management will also be more effective with a digital setup as you will get access to important data revealing critical insights of your business and products.
To read the full article (in Danish) posted by Deloitte, please visit this page.