How the COVID-19 pandemic is affecting vulnerable players in the fashion industry
The pandemic leaves small businesses, employees and garment workers without protection and support
As brick and mortar stores have closed their doors and online fashion retailers around the world have adjusted their orders, millions of small businesses, donation based retailers, garment workers and employees have been placed in vulnerable and uncertain positions.
Small and Local Businesses
Nearly all businesses, including global fashion retailers, are taking a financial hit as a result of the coronavirus. However, the transition to online-only orders has been relatively seamless for most large companies that already conduct a significant portion of their business online.
Transitions for stores like Zara and H&M may include scaling back orders, furloughing workers and ramping up advertisements to drive customers to shop online.
The transition is not as simple, or even possible, for small and local businesses. Research by JPMorgan Chase Institute shows that 50 percent of U.S. small businesses only have enough of a cash buffer for 15 days or less, and only 40 percent have enough for three weeks or more. While online shopping may be able to keep small businesses on “life support,” it does not appear to make up for the loss of in-person sales, according to D.C. Policy Center. That's especially true when store owners are still paying D.C.’s high-rent fees, even if their physical stores are shuttered down.
Some local businesses are not able to transition their business online and are instead coming up with other ways to stay afloat. Willow, a clothing shop with two locations in D.C., has transitioned to selling giftcards that can be used once the storefronts reopen.
“If you are able to continue supporting small businesses like ours, please consider buying a Willow eGift Card,” the company said on its Instagram.
Despite potentially business-threatening financial challenges, some small and local businesses are stepping up to support organizations during this pandemic. Tuckernuck, a Georgetown fashion store that sells preppy and classic styles, has managed to shift their business online. Tuckernuck is donating profits from their facemask collection to Mount Sinai Hospitals in New York City and the No Kid Hungry organization.
Hourly Employees of Major Fashion Retailers
Waves of closures have also left employees across the fashion industry in vulnerable positions. Many large fashion retailers are beginning to halt pay for many of their employees while preserving some of their benefits after President Donald Trump signed a $2 trillion stimulus into law.
Major fashion retailers have furloughed hundreds of thousands of employees, according to data compiled by Bloomberg. This data specifically applies to large retailers, such as Urban Outfitters and Macy’s, and it does not reflect data for employees of thousands of smaller fashion businesses. Everlane, an online fashion company known for their commitment to selling clothes with transparent pricing and sourcing, recently cut hundreds of workers. While some Everlane workers are said to have been furloughed, many others appear to have been let go with two weeks of severance.
Those who remain employed may face other pressing challenges. As of March 28, fast-fashion giant ASOS has 4,000 people working in its warehouse in Barnsley, England, with an average of 500 people working in the warehouse in the same shift.
After startling feedback from ASOS employees in a survey by U.K. trade union GMB Union, General Secretary Tim Roache said, “Conditions at ASOS are scarcely believable – workers we’ve spoken to describe it as a ‘cradle of disease.’”
“Here you’ve got people packed on to public transport, a lack of social distancing, thousands of workers going into one warehouse then back to their families,” Roache said.
In the above two scenarios, fashion employees may be left on either side of a coin with equally vulnerable faces: unemployed and unsure of how to pay bills or buy food, or employed and at risk of contracting COVID-19.
Garment workers are a less talked about, yet extremely vulnerable group within the fashion industry. While the plight of garment workers is not an uncommon theme in the fashion industry, many of these workers are now left with little to no safety net for survival, according to Remake.
According to McKinsey’s updated State of Fashion 2020 Report, “for workers in low-cost sourcing and fashion manufacturing hubs such as Bangladesh, India, Cambodia, Honduras and Ethiopia, extended periods of unemployment will mean hunger and disease.”
There are about 4.1 million people working in apparel factories in Bangladesh alone, according to Fortune. The magazine also reported more than 1 million garment workers in Bangladesh have already lost their jobs, a number which has likely increased since the article came out in late March. Most of these workers have been sent home without severance pay as buyers refuse to contribute support for these workers.
In response to this, Remake started a petition directed toward some of the largest fashion companies in the world, including Primark, ASOS, and URBN, which is comprised of Urban Outfitters, Free People and Anthropologie, asking them to pay garment workers for in-production and canceled orders.
Retailers generally place orders at least three months ahead of delivery and pay for the finished goods when they are delivered. When the COVID-19 outbreak happened, many manufacturers had already paid for the fabric and other materials and employed the labor to fulfill orders made by large retailers. However, when these retailers cancelled or delayed these orders, they justified not paying the manufacturers because the finished products had not yet been delivered. Out of fear of losing future business, factory owners are unlikely to fight back, Fortune says. With these power dynamics at play, manufacturers are unable to pay garment employees. Without direct support from buyers and garment workers’ countries, which may not possess the infrastructure to offer unemployment benefits, many workers are left without income or healthcare.
As with every industry in the world, COVID-19 has impacted the fashion industry in unforeseen ways. Small and local businesses, hourly employees and garment workers are left particularly vulnerable. Some fashion businesses may be unable to financially survive months of closure, and some individuals may be uncertain of how to feed their families without long-term income.
As consumers, the best ways to support these groups are by buying from local and small businesses online and staying up-to-date with companies such as Remake, Fashion Revolution and Clean Clothes Campaign, which share ways to support employees and workers around the globe.
Although the future of the fashion industry and those working in it remains uncertain, according to a recent McKinsey report, “The coronavirus … presents the fashion industry with a chance to reset and reshape the industry’s value chain completely — and an opportunity to reassess the values by which it measures actions.”
Maybe, the post-COVID-19 fashion industry will be one in which the local businesses, hourly employees and garment workers are more valued and have an improved infrastructure for support.