One of the worst hit industries will be fashion, a Moody's report says. As stores are forced to close, the spring collection can not be sold and will be out of fashion by the time stores can open again. Moreover, some chains will not have generated enough cash in order to buy the autumnal collections.
Whole chain in danger
Normally, March and April are among the most important months for fashion retailers. The current corona crisis endangers fashion chains' income in ever more countries, and e-commerce is unable to compensate for all the revenue lost to store closings. Creomoda, the branch organisation of Belgian fashion producers, sounds the alarm: the future is uncertain and consumer confidence is dropping.
The supply chain is suffering as well: Chinese companies have been shut down for months and although production there is slowly restarting, now Western markets are completely dead. Big fashion launches have been called off, European factories of brands like Hermès and Chanel have been shut down and more and more borders are being closed. If there still is a significant demand for fashion items, it is terribly hampered by logistical problems.
Discounts already starting
By the time consumers start shopping again, the current spring collections will be oldfashioned, meaning retailers will have a huge stock they cannot sell any more. Large companies like Inditex have to create nine-figure provisions in order to stay afloat. Others, like Belgian ZEB, have already started a "spring cleaning" discount in its webshop. Strong measures are necessary, Burberry echoes: the British company fears monthly turnover may drop by as 80 %.
"We see a complete season being disappear", zegt Creamoda says. Many stores either cancel their orders, or will not have enough funds to pay their suppliers. A number of chains have already started renegotiating their rents or have demanded the right to delay payments to their suppliers.