Tailoring Apparel Supply Chains for the Future

Apparel brands and retailers can use the COVID-19 crisis to take stock of existing business models and create more stable and sustainable supply chains for the future, finds GlobalData.

Fashion retailers in key consumer markets across Europe and North America fight for survival as stores close, sales slump, and inventories mount. For many, the response has also been to abandon or scale back orders, and delay—or even cancel—payments to vendors.

"Global clothing supply chains have unraveled in just a few short weeks, as has the trust and goodwill between many buyers and manufacturers," says Leonie Barrie, apparel analyst at GlobalData. "Rebuilding these relationships is key if the sector is to recover, and now is the time to start thinking about how the apparel industry can reset for the future.

"When the dust eventually settles, brands and retailers will depend on their suppliers to ramp up production," she adds. "But if large numbers of factories have gone bankrupt, where will they source their goods? Onboarding new factories is a long and complicated process.

"Retailers that have treated suppliers badly may also find their support lacking when they eventually come to restock," Barrie notes. "Consumers, too, may shun brands whose focus on self-preservation is at odds with their promises of social responsibility."

Investors are also pressuring companies to maintain payments to suppliers, and legislation that compels firms to consider the welfare of supply chain workers could be used to sue those that have not behaved responsibly.

"Actions speak louder than words and while collaboration, cooperation and strategic partnerships have been rallying calls in recent years, they’re needed now more than ever before," she says.

"The apparel industry must start planning a way out of this crisis that can bring about positive and lasting change," Barrie says. "Stronger and more stable relationships with supplier companies and countries, as well as cross-industry initiatives to fix flaws in the system, are urgently needed now if we’re going to weather storms in the future."