No one could have predicted the scale and scope of disruption caused by COVID-19. In just the first few months of the pandemic, the entire retail landscape was irrevocably changed. As consumers increasingly began to work and shop from home, the eCommerce sector experienced positively explosive growth.
Unfortunately, fashion brands were not beneficiaries of this growth.
Although online clothing sales increased significantly, overall revenue nevertheless plummeted. According to the McKinsey Global Fashion Index, the fashion industry experienced a 20% decline in revenue from 2019-2020 and a record-setting 69% of companies generated negative profit. Another 7% of fashion companies left the industry entirely.
It was not simply small and mid-sized businesses that struggled. Larger retailers were arguably hit even harder, losing trillions in revenue, closing stores, cutting jobs, and even filing for bankruptcy. What's more, many retailers did not even attempt to change their sales strategy — instead of transitioning to a direct-to-consumer sales model, 47% of retailers left their eCommerce strategy untouched, if indeed they ever had one.
The Fashion Industry Example
The situation was dire enough that some refer to 2020 as the year that fashion almost died. There was no singular contributor to this near-collapse. Instead, it was the result of multiple interconnected factors, all stemming in one way or another from the pandemic
- Per a research brief published in Science Direct, apparel shopping frequency between June 2020 and April 2021 decreased by roughly 57%, while 56% of people reported decreased apparel spending.
- Relative to the above, a third of US consumers reported a decrease in household income during COVID-19, while 40% indicated their intent to spend more carefully due to a global recession.
- In the face of declining demand, inventory bloat — a common problem for many clothing retailers — became near-unsustainable.
- A manufacturing freeze created by garment factory closures caused widespread material shortages and delays.
- Struggling fashion retailers began to either cancel or delay their production orders, with some even asking for discounts of up to 70% from manufacturers.
The news wasn't all bad, though. Even as the wider industry collapsed under the weight of recession, the growth of online sales continued to pick up pace, accelerating through the new year. By the end of 2021, clothing was reportedly the top segment to shop for online.
It is also important to note that not every apparel chain was brought low by COVID-19. There were also a great many that weathered the storm successfully. Some, such as luxury swimwear brand Cole Buxton, even managed to thrive.
These brands defied the downward trend of their own industry. As you might expect, they all share certain traits in common, allowing them to make it through the worst of the pandemic relatively unscathed. These characteristics can be easily translated into strategies to help your brand survive future economic hardship, no matter how crippling it may be.
Get a Handle on Your Cash Flow
A business cannot survive economic hardship if its finances are already a catastrophe.
The usual best practices all apply here. Ensure your business doesn't have any outstanding debt, keep your P&L statements organized, and make sure your tax information is completely up to date. Your accounting department should already have all of this managed, but it never hurts to double (or triple) check.
You'll need to do more than the bare minimum of keeping your books in order, however. You need to find ways to streamline and optimize your operations before you slam face-first into a recession. If you're scrambling to optimize when your business is already bleeding money, it's already too late.
The first, most obvious word of advice here is to secure multiple revenue streams for your business. Ensure you're not overly reliant on a single product or sales channel. That way if you do end up having to pivot — such as by closing down physical outlets — you won't kneecap yourself by doing so.
We also strongly advise exploring strategies you might use to reduce overhead across your franchises and suppliers. Find new efficiencies rather than cutting corners, such as by exploring how technology can help streamline manufacturing and business processes. You'll want to engage stakeholders from every department and at every level of your organization in order to get the most accurate picture of the current state of things and thus have a concrete idea of what can be changed.
Examine Your Supply Chain
Perhaps one of the most painful lessons of the pandemic involved the supply chain. We got to see firsthand how our seemingly-robust supplier and vendor networks buckled under their own weight. And supply chain instability is something many sectors are still grappling with to this day.
Even prior to the pandemic, the fashion industry grappled with supply chain issues, regularly coming under fire for wastefulness and inefficiency. It's incredibly likely that these pre-existing problems further exacerbated the disruption experienced by the sector during the pandemic. Just as it's likely that inefficiencies and bottlenecks can easily topple a business during a recession.
With that in mind, there are several questions you must ask yourself:
- Are there any suppliers that could be counted as single points of failure? What would be involved in finding secondary options?
- How much visibility do I have into my business's overall supply chain?
- What measures are in place to safeguard against supply chain instability due to shutdowns, conflict, etc?
The right people in the right positions with the right skills can be the difference between a highly successful business and a failed one. At least, that's how the old adage goes. When one's brand begins to operate on a national or even global scale, it becomes less a matter of failure and more a matter of lost revenue.
We've all seen it at least once in our careers. A once successful brand is now a boated husk of its former self, incapable of effectively pivoting to keep up with smarter, more agile competitors. You could even argue that this was the exact fate of many fashion giants during COVID-19.
If you want to avoid that, the first step is to rethink your hiring practices and ensure you're investing in the right people. The second step is to re-examine your business structure. At the minimum, you'll want to ensure the following roles are filled and can interact and share data freely with one another as needed.
- Frontend development
- Backend development
- UX/UI design
Beyond that, you'll want to follow the basic best practices of any successful eCommerce venture, including SEO, high-quality product listing, and a website that's easy to navigate and understand. If you have the budget and the internal skill set for it, you might also consider innovating and experimenting with new technology such as virtual try-on or adaptive lifestyle imagery.
Know Your Brand
In today's hypercompetitive landscape, even a large brand can get lost in the noise if it's not memorable enough. And during a recession, when business is already going to be slowing down, that's not a good thing. You want your brand to provide customers with a memorable, enjoyable experience, one that keeps them coming back whenever they need to buy new clothes.
To do that, you'll first need to define who you are. What makes your brand unique, why does your brand exist, and why do customers shop with you? You may also want to revisit your audience profiles if you've not done so already, as changes in consumer spending habits could mean you're serving a different demographic than you're used to.
The most important thing here is to define the following:
- General personality
- The emotions you want to convey
- Core value drivers
- General tone of voice
- Common language
- Terminology to avoid
Be Prepared to Pivot
If you're still isolated to one or two sales channels, you're falling behind. Omnichannel commerce is no longer the future, it's now the standard. Your customers expect an exceptional, consistent experience across their entire sales journey.
If your brand doesn't provide them with that, then they'll simply find a competitor that does — and make no mistake, you do have competitors that have already embraced omnichannel.
Beyond that, as we already mentioned earlier, flexibility is key. A growth mindset on its own is no longer enough. You need to focus on innovation — on constantly looking for new sales opportunities, revenue streams, and emerging trends.
For instance, during COVID-19, many apparel companies began selling their own custom-branded masks. The best advice we can give you here is to keep an ear to the ground as far as market trends and customer habits are concerned. With any luck, you'll get advance warning of a coming market shift, and be prepared well ahead of time.
Is Your Brand Capable of Weathering a Recession?
Intelligent spending and hiring. Branding. A robust supply chain. Multiple revenue streams shored up by an omni channel approach. An eye for innovation and adaptation.
These are the characteristics of the most successful apparel brands of the pandemic. Businesses that survived not only a recession, but a level of market disruption the industry has never before seen. Follow their example, and you might well find yourself in the same place.
But just remember one thing — there's no such thing as a one-size-fits-all strategy for surviving a recession. The tactics laid out in this blog post should be adjusted to your own unique needs and challenges. Should you need help with any of that, feel free to contact Parkfield Commerce.
For years, we've worked to help some of the world's most ambitious and successful businesses pivot to D2C ecommerce, scaling both their revenue and their brand to new heights. With tailored strategies, experts that put your team in the driver's seat, and a focus on exceptional customer experiences, we have everything you need to future-proof your brand and safeguard your revenue against even the worst recession.