Coronavirus: Millions of jobs at risk across fashion retail

1578
Covid-19 fashion retailers store closures pandemic
The luxury sector is expected to be the hardest hit in the next 18 months
// Global fashion sales could drop up to 30% in the next 18 months
// Luxury fashion is most at risk
// 80% of listed fashion retailers in EU & North America will be in financial distress if stores stay shut for 2 months

A new report has suggested that the global fashion industry could see a “significant number” of retailers go bust in the next 18 months, putting millions of jobs at risk.

Fashion sales are expected to drop by up to 30 per cent in 2020, with the luxury sector being the hardest hit with sales down 40 per cent, according to a new report by The Business of Fashion (BoF) and consultants McKinsey.

At least 80 per cent of listed fashion companies in Europe and North America will be in financial distress if stores remain shut for two months due to coronavirus lockdowns, McKinsey found.


READ MORE:


The report also suggested that the fashion retail sector was in stiff competition before the Covid-19 outbreak escalated into a pandemic.

More than half of the companies in McKinsey’s benchmark fashion index were described as “value destroyers” – meaning the profit made by a company did not exceed its cost of capital.

“The pandemic spells more trouble for this group, which includes department store giants, high street brands and venture-backed startups,” the report stated.

“We expect a large number of global fashion companies to go bankrupt in the next 12 to 18 months.”

The forced closure of high street stores and shopping centres has shed retail jobs and cancelled orders for new season stock after many countries implemented lockdowns to ensure the risk of Covid-19 transmission was being controlled.

Consequently, millions of garment workers in sourcing markets such as Bangladesh, India and Cambodia have been placed out of work.

H&M said on Wednesday it is working with other businesses to support garment workers in Bangladesh, where over two million have been affected by factory closures due to the coronavirus outbreak.

The pandemic has caused the cancellation of an estimated £2.4 million in orders.

Click here to sign up to Retail Gazette’s free daily email newsletter

LEAVE A REPLY

Please enter your comment!
Please enter your name here