LONDON, United Kingdom — As Sarah Leff boarded her flight from New York to Paris for fashion week last month, she could sense a crisis on the horizon.

On her way to the airport, the chief executive and co-founder of the label Jonathan Cohen received email after email from buyers who wouldn't be able to stop by the New York-based brand's showroom. Some were shortening their trips, others were skipping out on the week entirely. She touched down in Paris to more such messages.

The reason was obvious: the final days of Milan Fashion Week had been tinged by news of Covid-19 cases in northern Italy, the first major outbreak of the deadly virus in Europe. Giorgio Armani had just hosted his fashion show as a digital event behind closed doors.

“One by one, as we saw large retailers pulling all their employees, you knew the effect,” said Leff. The brand set up virtual showrooms over FaceTime for absent buyers, trying to convey the feel and touch of garments through images. It almost made the week feel normal.

The coronavirus was on the mind of employees at Oyuna even earlier, in part because the cashmere brand's Chinese agent is based in Wuhan, the original epicentre of the viral outbreak. During New York Fashion Week, there were noticeably fewer foreign visitors to Oyuna's showroom, particularly from markets like Japan where the coronavirus felt like a more immediate concern.

“Then Paris Fashion Week, it got quite intense,” said Marie-Luca Harms, Oyuna’s womenswear sales manager. Buyers were much more cautious. Some made selections, but then pulled back before the order book’s closing date, making the decision simply to re-merchandise the stock they already had, she said.

One by one, as we saw large retailers pulling all their employees, you knew the effect.

Arriving in Paris from Milan, Stefano Martinetto was surprised at how casual everyone seemed about the spread of the virus. The airport didn't even require temperature screenings.

There was a “false sense of security,” said Martinetto, the chief executive of fashion group Tomorrow London, which provides services including consulting, investment, manufacturing and marketing to emerging designer brands. But there were warning signs of the economic fallout to come, including noticeably fewer buyers from Asia and the US. When he returned to the UK, he and his team went into self-isolation. They haven't been back to their office since.

Leff, Harms and Martinetto's experiences were an early taste of what was to come. While the industry had braced for financial fallout from the near-total shutdown of the Chinese market since early in the year, few anticipated the degree to which the rapid spread of Covid-19 across Western markets would completely upend the fashion world.

Shops, factories and offices across Europe and North America have shuttered. The only certainty is that business as usual is impossible.

Companies are in survival mode, as the global economy tanks and sales plummet. For many, the last week has been a mad scramble of phone calls and emails with retail partners and suppliers. Brands are struggling to get to grips with the rapidly evolving situation, with little insight into how long the current crisis will last, or how deep the economy's downward spiral will go.

The Financial Meltdown

“It’s like living in a movie,” said Umberto De Marco, founder of Yatay, a luxury vegan sneaker brand with a focus on reducing environmental impact.

Based in Italy, Yatay had an earlier preview than most of what was to come. During Milan Fashion Week, the showroom "was a desert," De Marco said. Around half of the people expected didn't show up. In Paris it was worse, with attendance down around 90 percent.

The only certainty is that business as usual is impossible.

De Marco’s family also owns Coronet, a synthetic leather manufacturer that supplies materials for major brands, as well as for Yatay’s shoes. The two companies share a headquarters. As the situation in Italy worsened, they ordered 1,000 face masks and installed a massive hand sanitiser dispenser. Employees started to greet each other with fist bumps, and customary morning coffee meetings were stripped back to two people at a time, standing at a distance. By March 9, Yatay had moved to remote working, though the factory remains open for now.

Since Paris, the downward economic spiral has been swift and shocking, as more and more countries have placed restrictions on the movement of people and trade. As of last week, Italy, France and Spain are among the countries only allowing vital shops to remain open, a category that does not include apparel or footwear. In the US, New York and California are among the states implementing similar measures.

The Lockdown

Mara Hoffman sent her team of roughly 30 employees home on March 13, settling into a strange new reality of Slack channels, video check-ins and balancing new childcare requirements. Once remote working protocols were established, Hoffman quickly moved on to damage control.

“Business is shifting day to day. Our web sales are down, our wholesalers are panicked and cancelling orders, and manufacturers aren’t able to get to factories to ship goods,” Hoffman said. “It’s affecting our entire supply chain.”

The brand's Spring collection faced delivery delays because of disruptions in Asia last month, and more recently at its Italian mills. Last Sunday, Peru said it would shut its borders, leaving Hoffman anxious about sourcing raw materials like organic cotton and alpaca. Though as retailers shut, such concerns are becoming increasingly moot.

Our web sales are down, our wholesalers are panicked and cancelling orders.

The impact of closures has ricocheted across the industry unevenly, leaving some companies’ supply chains exposed to major disruptions, and others relatively unscathed for the time being. Government policies on how, when and if offices, stores, factories and supply hubs need to shut differ from country to country, or even city to city. Sometimes the orders are ambiguous, leaving individual businesses to decide whether they can continue to operate.

By March 16, Leff said Jonathan Cohen's Italian mills were offline. The brand's now working to help its manufacturers in New York shift to producing items for medical use. One atelier sewer has already made up 144 masks that were delivered to hospitals over the weekend.

Sneaker startup Thousand Fell’s founders Chloe Songer and Stuart Ahlum, had been planning for tougher containment measures since at least early March. Songer had previously lived in Wuhan and still has friends there. They had early insight into how bad things could get.

On March 9, the pair sent out emails to their strategic partners, starting a conversation about what the next four to eight weeks might look like and potential contingency measures should the situation escalate.

As the US began to shut down Tuesday, they spent seven hours on calls in an effort to manage the swiftly unravelling situation. The company had been planning a series of big events in April, along with its first foray into wholesale partnerships. That’s all on hold, with public gatherings outright banned in some states, and social distancing policies expected to endure for weeks if not months. Thousand Fell is pivoting to focus on engaging its existing digital community through the downturn.

The brand has opened a new warehouse in LA and moved inventory out of Manhattan to Brooklyn in an effort to hedge against the risk that stocks end up trapped in storage. Last week, Amazon temporarily shuttered a small warehouse in New York after an employee contracted Covid-19.

Slumping Sales

In Sweden, the founders of mens’ basics direct-to-consumer brand Asket had at first felt well-positioned to handle the crisis. The five-year-old company was on track to hit profitability this year. It was starting to build up inventory and hire external PR agencies in anticipation of further growth.

It's just unravelled so quickly.

The brand had built its business around transparency and traceability, which made it possible to quickly identify areas where its supply chain might be vulnerable and adapt. In the outbreak's first weeks, that mainly meant trims, zips and hang tags sourced from China.

But about two weeks ago, around when the World Health Organisation declared Covid-19 to be a pandemic and global financial markets entered a tailspin, Asket faced a problem with no obvious solution: consumers were no longer in the mood to buy clothes. Online sales began to dip. By last week, they were down 50 percent.

“It’s just unravelled so quickly,” said co-Founder August Bard Bringéus.

In Malaysia, local designer Melinda Looi received just a day’s notice that all stores needed to close last week.

“All retail fashion businesses, it’s to zero. The shops are closed. There’s no income,” said Chief Executive Dirk Luebbert. “Online is also very affected … it’s not top of mind right now for people to dress up.”

The brand is expecting the negative impact to drag on to Ramadan which starts in late April. In Malaysia, the Muslim holiday marks a shopping period busier than Christmas.

In Paris, Marine Serre has been lucky to see an uptick in online shopping over the last two weeks. Her show in late February, featuring her signature designer face masks, felt particularly apt during a season held in the shadow of the escalating coronavirus crisis. Still, the increase in e-commerce has not been enough to make up for the loss of the brand's primary sales channels.

“It’s really hard for us what is happening now,” said Serre. The brand is young, “so we are still really dependent on our retailers.”

There are signs of some support, particularly for brands with a global focus, who are beginning to see consumers return in parts of Asia. The week of March 9 was one of fashion accelerator Tomorrow's best ever, in part because of the return of Asian buyers. Oyuna saw a South Korean stockist increase its buy from around €8,000 to €20,000 ($8,400 to $21,000), an uptick offset by a Singaporean client that decreased its order by a similar amount.

The shops are closed. There's no income.

Elsewhere, Farfetch is working with boutiques in Italy that sell through its online marketplace, ramping up efforts to drive sales volume and online traffic to these businesses and fast-tracking payments. But such efforts are a drop in the ocean. For now, e-commerce is no panacea, with many brands seeing a sharp drop in online orders over the last few weeks.

“People now are just going online to check what’s happening in the world,” said Yatay’s De Marco. “Right now, luxury goods are not a priority.”

Survival Mode

As brands adjust to a new normal, they are facing stark choices in the weeks and months ahead. The abrupt economic downturn currently underway is reminiscent of the financial crisis in 2008, which wiped out many independent labels.

Even fashion's biggest retailers are suffering. Over the last week, fast fashion giant Inditex said it would write down the value of its inventory by nearly €300 million. Burberry said it expects sales in its fiscal fourth quarter to be down around 30 percent compared to a year earlier.

Faced with such a dire outlook, fashion’s small and independent brands are in a particularly precarious position, stuck between retailers and suppliers, often with little to no cash to fall back on.

“The loss of sales is going to hit us,” said Leff. “I am sitting on inventory, with factories asking for full payment, and stores not accepting it because they’re closed. I don’t know if I can sell it direct-to-consumer, or if I’ll be more in the red.”

As the dust settles on last week's rapid shift to shutdown, brands are taking stock and hunkering down for a difficult period. Strategies vary depending on how companies are positioned financially, but everyone is drawing from a similar, limited playbook.

Right now, luxury goods are not a priority.

“There’s two ways to approach this: you can shut down and wait for the storm to pass, or be very proactive,” Martinetto said.

Tomorrow is doubling down on efforts to use video and other digital tools to engage buyers. It's working overtime to shift clients’ inventory intended for brick-and-mortar stores online. But it’s also doing due diligence on every project and postponing plans for large capital expenditures.

The company is trying to hedge its plans and advice to clients for extraordinary times. It's suggesting designers develop new collections with trans-seasonal products and an eye to leveraging deadstock fabric and re-offering Spring/Summer 2020 items that don't sell.

“We’re not cutting any orders, and we’re launching production of Autumn/Winter because we believe by the time it hits the market, things will have normalised,” Martinetto said. “We are a solid business with a solid balance sheet, and we have the responsibility to protect smaller businesses relying on us.”

Melinda Looi has had landlords waive rent and department stores become more lenient about minimum consignments and other requirements. One of the brand’s Chinese suppliers sent over a shipment of face masks in a sign of solidarity.

But for many, this is about heading into survival mode.

Mara Hoffman spent hours on the phone with her executive team over the last week, hashing out the brand’s strategy around collections and production for the months ahead. She launched an unplanned sale, offering 25 percent off selected items in an effort to keep cash coming in. It’s a measure a growing number of brands are turning to, hoping to buoy online sales as physical retail grinds to halt.

“We have all this new product, and I know I have to generate more income right now,” Hoffman said. “I’m not going to give up without a fight. I have salaries I need to pay.”

Even this decision throws up new challenges. Brands desperately need to keep sales going to survive and keep paying their employees' salaries, but many are also struggling to square how to market and talk to consumers about fashion in the face of the broader human tragedy. Hoffman is personally overseeing all communications coming out of her company to ensure they strike the balance, without "feeling opportunistic."

In Sweden, Asket is looking at a cash crunch as spring orders begin to come in.

“We need to pay factories for these deliveries while growth is going in the other direction,” said Bringéus. “That’s where the imminent crisis appears and that’s probably the same for all high-growth startups.”

I know I have to generate more income right now...I have salaries I need to pay.

The team has been working from home for more than a week now, ratcheting up steps to manage the crisis. On Monday the company put in place initial spending stops. In a virtual all hands meeting on Friday, Bringéus announced more stringent measures.

The company is slashing spending and a third of permanent staff has been put on reduced hours, with their salaries supported by a government aid package for businesses hit by the current crisis. Five part-time employees have had their employment temporarily paused. The current plan is designed to keep the company afloat assuming sales miss targets by 50 percent this year.

Oyuna, too, has made some difficult decisions. Last week the company laid off two employees and asked the whole team to accept a reduced salary.

Emergency measures to support small businesses are offering a lifeline to many, as governments globally offer assistance like loans, reduced taxes and salary subsidies. But many worry these won't be enough. Last week, Italy's Camera Nazionale della Moda Italiana asked the government for more help to aid Italy's ailing fashion sector.

Despite the challenges, in conversations over the last week, executives and creatives were upbeat about the opportunities the current crisis presents to step back and rethink ways of doing business.

“We’re going to use this opportunity as a blank canvas to really have a new beginning, to rethink everything we do,” said Oyuna Tserendorj, creative director at Oyuna. “I think good things will come out of this.”

We’re tracking the latest on the coronavirus outbreak and its impact on the global fashion business. Visit our live blog for everything you need to know.

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