The retail sector is in general a big player delivering both economic benefits and jobs: in the OECD economies alone 1 in 12 worker is employed one way or another in the retail sector and it almost account for 5% of GDP.
In the US, sales of clothing retailers dropped by 89.3% in April 2020 while the sales of grocery stores increased by 21.3% according to Census Bureau. In the EU, sales of non-food products dropped by 23.8% in April 2020 while sales of food, beverages and tobacco increased by only 1.2% according to Eurostat. There is no doubt that the physical sales has been pushed online by the Corona crisis and numbers support this. In the UK, the proportion of retail expenses spent online increased from 19.1% in April 2019 to 30.7% the year after – reaching a record high.
Orders are cancelled in the far East
In terms of the fashion production in Bangladesh alone, orders have been cancelled by western fashion brand for over $2.8 billion dollars and at least 1.2 million workers in Bangladesh are directly impacted by the order cancellations and all the factories and suppliers who have lost their contracts to foreign brands. 72.4% said they were not able to provide workers with income while being furloughed and 80.4% said they were unable to provide severance pay while orders being cancelled and hence resulted in worker dismissals. This situation alone could in a worst case scenario spark a humanitarian crisis and this is actually without considering the actual impact of COVID-19, which is currently also spreading in and around Bangladesh.
Luxury brands donate to the industry
LVMH has claimed to donate $2.2 million dollars to The Red Cross China, while Kering and its houses donated to Hubei Red Cross Foundation also in China as well as to four big hospitals in Italy. And both brands such as Moncler, Versace, Giorgio Armani, Prada, D&G and many more have also supported the fight against COVID-19.
Physical stores close down momentarily
By now, we have all experienced closed stores and malls. Starting out back in March and now again during Christmas stores and malls have momentarily been closing down throughout Europe and the US. Brands and big store owners such as H&M, Inditex, Arcadia etc. have been leading the way and also malls such as Selfridges, Harrods, Magasin and Illum (Both Copenhagen) have been closing down. The good thing though is that a lot of the sales has been transferred to the digital platforms and numbers show online sales have gone up and also set new records.
General speaking the entire fashion industry are expected to see financial losses due to the COVID-19 pandemic and the luxury sector are predicted to experience a €10 billion decline in sales this year alone.