THE CHEAT SHEET

Will the Pandemic Reset Fashion’s Seasonal Schedule?

A sign announces Bergdorf Goodman's temporary closure | Source: Victor J. Blue/Getty Images

• Spring collections are already on sale online at many retailers.
• Many stores are cancelling orders through the next six months, leaving designers in a lurch.
• The pandemic could be an opportunity to change the already problematic fashion season schedule, which sees coats arriving in stores in the summer and features frequent discounts.

The coronavirus pandemic couldn’t have come at a worse time for fashion retailers, which just started selling Spring collections before they were forced to closed their shops and, in many cases, slow or shut down e-commerce. As a result, most retailers are offering the kind of discounts shoppers usually see in May and June right now (25 percent off at Moda Operandi, up to 40 percent off at Neiman Marcus) in the hopes that it will entice anxious customers to shop. But the discounts have troublesome long-term implications, as they did after the 2008 financial crisis.

It is still unclear how the seasonal calendar will be affected as retailers cancel spring Pre-Fall orders, which typically start shipping in May. Designers are weighing what to do with their fall and resort collections. This week, several key questions will be top of mind: should brands skip a season? If stores open again mid-summer, will anything be full-price? Is this an opportunity to finally align the retail schedule with the weather? Or will shoppers grow even more accustomed to discounting?

Bottom line: This crisis point could be an opportunity for fashion to rethink its four-season structure. But right now, it looks like a repeat of the discount culture seen after 2008.

Logistics Strain and More Layoffs Expected as Coronavirus Continues to Destabilise Fashion 

A deserted mall in a county north of San Francisco, California | Source: Justin Sullivan/Getty Images

• The US is now the country with the most cases of Covid-19, and the coming weeks will likely come with further disruptions to public life and businesses as the virus spreads.
• Unemployment has already spiked, with retailers such as Nordstrom and H&M announcing widespread planned or expected layoffs, and will continue to grow as the quarantine continues.
• Online retail businesses will also struggle as more distribution centres across the US are forced to shut down.

E-commerce sales may not be the lifeline brick-and-mortar retailers hoped. Yoox Net-a-Porter, UK’s Next, The RealReal and Victoria’s Secret are among the businesses that have already shut down distribution centres or drastically reduced staff and told customers to expect shipping delays. As more US states implement draconian measures to reduce the spread of the coronavirus this week, retailers will face further barriers to getting their online orders out, especially if more shipment workers contract Covid-19.

Retail layoffs are likely to increase, as brands and retailers settle in for long quarantines and try to entice shoppers with discounts on brand new spring inventory. Nordstrom’s announcement last week of store associate layoffs and corporate furloughs is a harbinger of more to come. More than three million people filed for unemployment in the US during the week ending March 21.

Bottom line: Retail hasn't seen the worst of the coronavirus crash yet.

H&M Updates the Market

Source: Shutterstock

• On Friday, the fast-fashion giant will release the results for its first quarter, which ran from December 1 through to February 29.
• The numbers will give more insight into how the early days of the Covid-19 pandemic hit the company, with China largely shut down for much of the reporting period.
• The company has already flagged a dramatic sales slump in the region in the latter part of the quarter, providing a grim indicator of how wider shutdowns across western markets may affect the company's bottom line going forward.

Fast-fashion giant H&M group will publish its first-quarter results Friday amid a global economic meltdown. The numbers will reflect the company’s performance between December 1 and February 29, when much of the Chinese market was shut down. It’s already disclosed that sales in the country plummeted 24 percent during the period, though globally sales were up 5 percent in local currencies.

Things have worsened significantly in March. Last Monday, March 23, the company said more than 3,000 of its roughly 5,000 stores are now closed, and where shops are open demand is subdued. It’s proposed cancelling its dividend and announced that it is looking at temporary furious and outright layoffs that could affect tens of thousands of employees globally.

The Bottom Line: The dent caused by China's shut down in the first quarter is just a taste of the pain ahead both for H&M Group and the wider fashion industry.

SUNDAY READING

Professional Exclusives You May Have Missed: 

• To launch Or not to launch? For new direct-to-consumer brands, that is the big question.
• Why some retailers have been hit harder by the Covid-19 crash than others.
• A post-pandemic guide to WeChat.
• Brands like Macy's and Ulta are pausing their affiliate marketing programs to save money, leaving influencers scrambling.
• Why the pandemic presents a conundrum for the booming wellness industry, which is pivoting to "immunity."
• Fashion magazines are grappling with how to be relevant during the coronavirus.
• Netflix's "Next in Fashion" and Amazon's "Making the Cut" are more focused on the business of selling clothes than "Project Runway" ever was. But can their winners become stars?
• How fast-growing of rental and resale platforms may be uniquely and disproportionately impacted by the pandemic.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com. 

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