Indian Fashion Industry On The Verge Of Collapse

The Indian fashionindustry has been hit hugely amid the global COVID-19 pandemic. With people held in their homes and zero mall traffic, retailers are struggling to clear out their old stock and restructuring their supply chain. Customers too are reeling under the increased economic burden, and many have lost their jobs that have led to a tremendous decrease in disposable income.

The COVID-19 induced lockdown has not helped the industry’s prospects either. Since people are locked in their homes, the retail industry has witnessed a huge reduction in footfall. In the wake of the lockdown, online portals too were instructed to comply with the instructions and were ceased from serving any orders.

However, as the unlock has begun in a phased manner, apparel retailers are reporting 25% footfall from the pre-COVID times, and garment producers are stating that there are no more orders from retailers around the country. Garment manufacturing units are shut down with reportedly, hundreds of thousands of jobs lost in the process.

What Has Driven Down the Demand?

Garment manufacturers stated that they have received almost zero orders from retailers. This was the condition in May, and June of 2020 and the situation is not poised to improve in July as well. There has been a 70% decline in the fashion retail sector between June 1-15, and brands are saying that their spring-summer collections will run until October with no prospects of fresh orders being placed.

The COVID-19 pandemic has not only affected the fashion industry but has affected the entire economy as a whole. The automobile sector, the apparel industry, the travel industry, and the hospitality sector have been hit the hardest. Many manufacturing units are closed with thousands of employees losing their jobs and their daily lively hood. 

A video posted on Twitter showed hundreds of protestors in front of a garment manufacturing unit that produces goods for H&M and other large retailers. The protestors stated that H&M has cancelled new orders and is refusing to pay for orders that have already been completed. 

An H&M spokesperson said that this reduced demand from consumers and retailers will ultimately hurt the industry as a whole. With numerous apparel brands extending their fashion lines run-time until October, or November of 2020, the scope of jobs for people working in the manufacturing sector is reduced enormously.

The demand for apparel has taken such an enormous hit that leading garment producers such as Arvind textiles, that manufactures and markets products for Flying Machine, Jack n Jones, etc. stated that retailers will only be liquidating stock for two months moving forward. New orders will only flow in once there is a hard cash cycle put in place and the consumer demand picks up speed, both of which seem highly unlikely in the coming months.

Since the relaxation in lockdown, retailers were expecting close to 50% of the footfall compared to pre-COVID levels, but it seems that the figure was way too optimistic. The footfall has been stuck at around 25% that is not at all helpful for the industry. All in all, the apparel retail industry is witnessing its greatest predicament in recent years.

In these uncertain times, the only hope for garment manufacturers is in the export domain. Tamilnadu’s garment hub, Tiruppur has already started working on export orders amidst the uncertainty surrounding the demand in the domestic market.

Major retailers are stating that they are only doing 30% business when compared to the same period from the previous year. Going by these sales, retailers are confident that their current stocks would last till October and no new order to garment manufacturers need to be placed. Manufacturers too reported that no fresh orders have been placed by the retailers. 

Since USA and Europe are opening up from the lockdown, Lalabhai from Arvind Retail stated that garment exports are expected to reach 60%-70% of the pre-COVID levels by the end of the second quarter and the domain is expected to witness a stronger recovery than the domestic market.  

Even the winterwear category is expected to witness a reduction in demand due to the increased cash crunch, and hordes of unsold inventory just sitting with the retailers. All of these factors have wreaked havoc on the fashion industry with no immediate prospects of the industry witnessing any sort of improvement.

Conclusion

Due to the COVID-19 pandemic, there has been a paradigm shift for the entire economic chain. The reduced demand from consumers has led to retailers postponing new order and this postponement has led to manufacturing units witnessing a drop in production. Countless jobs will be lost, and the industry will surely witness a huge loss blow to its revenue prospects. The situation is not expected to be resolved anytime soon and only exporting the products seems to be a viable option at this point.