Continued volatility and uncertainty set to characterise 2021
just-style’s annual look at key issues likely to impact the apparel industry and its global supply chain in the year ahead begins with a roundup of potential challenges and opportunities in 2021. The fallout from the coronavirus pandemic means there will be continued volatility, uncertainty, complexity and ambiguity, with fewer retail brands, stores and malls. The winners will be those companies that communicate purpose, deliver new value, and adapt to this new normal.
We also share four major changes manufacturers must make to ensure they don't just survive but come out of Covid-19 stronger.
Embracing end-to-end transparency is one recurring theme for the industry – and was emphasised last week by the US introducing a sweeping ban on the import of cotton products from China's Xinjiang Uyghur Autonomous Region (XUAR). The move looks set to accelerate the industry sourcing shift away from China – and could prompt a surge in the adoption of alternative fibres.
The UK government has also announced tougher restrictions for companies to prevent goods linked to China's Xinjiang region from entering the supply chain.
After Britain finally left the European Union (EU) at the start of the year it sounded like nothing was going to change. Yet post-Brexit apparel trade still clouded by uncertainty – and almost every aspect of importing and exporting clothes in the UK could now get a lot worse.
The actions of 6 January 2021, when hundreds of President Trump's supporters stormed the Capitol building, will also take years to overcome.
And concerns continue to mount over the prospect of additional punitive tariffs on US imports of apparel and footwear from Vietnam – with companies including Nike, Adidas America, Gap Inc, Levi Strauss and Under Armour the latest to oppose any such move.
Turmoil in Hong Kong may also be one reason why VF Corporation, owner of brands including The North Face, Timberland and Vans, is shifting its Product Supply Hub – which serves as the base of its global supply chain in Asia – to Singapore.
As holiday sales results start to come in, performance has been a mixed bag. Online retailer Asos has posted a 23% jump in total group revenue as renewed Covid restrictions drive consumers to shop online.
Stocking lockdown categories such as loungewear, which have brought reduced returns rates as they are less fit-dependent, has also helped Fast Retailing, owner of the Uniqlo casual clothing brand, to a higher-than-expected rise in first-quarter earnings.
And despite widespread criticism for poor conditions in its supply chain, the Boohoo Group has raised its full year revenue guidance after posting a 40% sales hike for the four months to the end of December.
The UK-based fast-fashion retailer is continuing to investigate some suppliers following a probe related to working conditions and low pay.
But for Primark, which does not sell online and relies heavily on city-centre store locations, the latest lockdown has lost it an estimated GBP540m (US$737m) in sales for the 16 weeks to 2 January.
US apparel and footwear brands and retailers have also seen assorted results as they try to navigate the impact of the Covid-19 pandemic.
Meanwhile, in other news, Marks & Spencer has bought the Jaeger fashion brand out of administration; Pakistan’s Artistic Milliners has acquired a denim factory in California; Bonmarché has been sold to Purepay Retail; and Debenhams is to close six stores as sale talks continue.