‘Made in China’ has dropped 16% – The impact of coronavirus on fashion

Fears surrounding coronavirus continue to sweep the globe as the outbreak shows no signs of slowing. From the disruption of the fashion week circuit to delays in production, retailers across all sectors brace themselves for the inevitable impact.

The topic on every retailer’s mind. We dive into how events over the past few months have transpired alongside data-backed findings from the EDITED Retail Decision Platform.

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Timeline

• Dec 31, 2019 – The first cases are detected in Wuhan and patients are quarantined. China alerts the World Health Organization (WHO) and coronavirus is identified a week later. 
• Jan 11, 2020 – The first death is reported followed by cases confirmed in Japan and Thailand over the next week. After the second death on Jan 17th, the US initiates the screening of passengers from Wuhan at major airports. 
• Jan 22nd – By this stage, the virus has infected over 500 people with cases detected in the US, Australia and South Korea. WHO officials meet in Geneva to discuss the need for declaring coronavirus as an international health emergency, but decide to wait for further developments. 
• Jan 23rd – Beijing cancels Lunar New Year celebrations and domestic travel bans are implemented throughout China.

• Jan 27th – The Chinese government extend the Lunar New Year holiday to Feb 9th. 
• Jan 28th – LVMH, which are less reliant on Chinese manufacturing, release full-year financial results, stating they ‘expect the situation to be partly resolved by the end of March.’ 
• Jan 30th – Surgical face masks sell out online at Boots in the UK. 
• Jan 31st – WHO declares coronavirus a global emergency as the death toll exceeds 200, with 23 countries affected. The first cases are confirmed in the UK and by now, Russia, Singapore and Mongolia have all closed their borders to China.

• Feb 6th – The Capri Group, which own Jimmy Choo and Versace, announce the anticipation of a $100 million reduction due to the coronavirus. Burberry closes a third of its Chinese stores and states the impact will be more damaging to its Asian business than the civil unrest in Hong Kong, which resulted in halved sales during the last fiscal quarter. 
• Feb 7th – New York Fashion Week kicks off. By this stage, brands such as Nike, adidas, Levi’s, Apple, Ikea, H&M and Uniqlo have also temporarily closed Chinese locations. 
• Feb 9th – Extended CNY holiday ends. The death toll passes 800 in China, overtaking SARS. 
• Feb 11th – Six Chinese designers announce they are pulling out of Paris Fashion Week due to the virus. Masha Ma, Shiatzy Chen, Uma Wang, Jarel Zhang, Calvin Luo and Maison Mai will be absent from the circuit.

• Feb 12th – Mobile World Congress, the world’s largest mobile technology showcase, is canceled in Barcelona. 
• Feb 13th – Ralph Lauren expects a $55 million to $70 million hit to its fourth-quarter sales in Asia. 
• Feb 14th – London Fashion Week kicks off with extra precautions in place, as well as a focus on virtual coverage to include the estimated 1,000 Chinese buyers, journalists and stylists unable to attend due to the outbreak. 
• Feb 18th – Milan Fashion Week begins and Dolce & Gabbana announces its partnership with Humanitas University to support coronavirus research.

• Feb 19th – Gucci live stream its Fall 2020 show using Weibo to keep Chinese buyers engaged. 
• Feb 20th – Adidas report business activity in Greater China has been around 85% lower than the prior year since CNY with more details to come in March with the release of its full-year results. 
• Feb 21st – Premiere Vision Trade Show in Paris experiences a 16% decline in visitors due to the outbreak. However, it announces the launch of a new Chinese event to kick-start in November. Reports emerge that coronavirus could cause a €40 billion decline in luxury sales in 2020. 
• Feb 23rd – Giorgio Armani holds its Fall 2020 show behind closed doors. Turkey, Pakistan and Armenia close their borders with Iran.

• Feb 24th – Paris Fashion Week kicks off. 
• Feb 27th – LVMH cancel a cocktail reception to celebrate its 2020 Prize for Young Fashion Designers.
• Across fashion weeks – Attendees have worn and designers have showcased face masks.
• Early March – Ralph Lauren didn’t take part in NYFW and was due to present in April, Gucci and Prada’s Cruise shows in San Fransisco and Japan respectively, as well as Chanel’s Métiers d’Art show in Beijing in May are amongst future events canceled.

Regions affected

The coronavirus has in some way affected every point of the fashion industry’s critical path. Widespread now across 53 countries, businesses reliant on China will be impacted the hardest with expected delays across the supply chain. In Hong Kong, retailers such as Uniqlo have added disclaimers on their homepage, stating that delays for product launches in-store and online may be expected due to setbacks in manufacturing caused by the outbreak. 

Overall, new products available online in China have seen a significant drop compared to last year with a 74% decline in arrivals. However, despite the distinct lack of newness, product sell outs only fell by 19% on last year with consumer appetite still high as those on lockdown are potentially shopping out of boredom or frustration.

‘Made in China’ down 16%

For many US and UK retailers, it is still too early to measure the full effect of coronavirus on their business. Overall arrivals have remained consistent, however a 16% decline has been noted on online styles described as ‘made in China.’ 

Before coronavirus, the US trade war with China nudged retailers to explore alternative countries for sourcing and manufacturing. Amid the outbreak, the conversation around manufacturing closer to home has sparked and the aftermath will see retailers spread their business to mitigate future risk.

How did CNY collections perform? 

In anticipation of what has traditionally been one of the biggest shopping events in the retail calendar, Chinese New Year collections were up by 45% compared to last year as brands everywhere tried to capitalize on the spring festival. With an already difficult zodiac character to market (the rat), the looming risk of the coronavirus appeared to impact online product shifts. Towards the end of February, CNY capsule collection items still available are currently reduced at an average of 38% – higher than for the same period last year, which saw remaining Year of the Pig products marked down at an average of 33%. 

Status of future events

• Feb 01 – Mar 14: Six Nations Rugby – 2 games postponed 
• Mar 2020: Stormzy’s #HITH Asian Tour – postponed 
• Mar 15 – Nov 29: F1 Grand Prix Season: China – postponed; Australia/Bahrain/Vietnam – risk of cancellation 
• Mar 16 – Mar 21: Seoul Fashion Week – canceled 
• Mar 25 – 26: Beijing and Shanghai Fashion Week – postponed 
• May 12 – 23: Cannes Film Festival – risk of cancellation 
• Jul 24 – Aug 9: Tokyo 2020 Summer Olympic Games – risk of cancellation if outbreak not contained by late May 
• Sep 2 – 12: Venice Film Festival – risk of cancellation 

Reactions – Who’s talking about it 

Designers who were unable to present at fashion week took to social media and a slew of selfies featuring celebrities and influencers wearing surgical or ventilation masks also cropped up. In accordance with the runway season, the face masks have become something of a fashion accessory in addition to a means of protection. 

Gwyneth Paltrow and Leandra Medine both shared content on protection as they arrived in Paris. Taking a different approach, Prabal Gurung used his platform to call to attention the racism generating as a response to the outbreak, urging his followers to show up for one another and fight hate. 

Despite the uncertainty of the current retail landscape, data can help your business decode wider industry trends so you’re not relying on guesswork. For more data-backed analysis, sign up to our weekly Insider Briefing delivered straight to your inbox.

*Chart data available up until 27 Feb 2020