The COVID-19 pandemic adversely affected numerous industries, and garment manufacturers were among the hardest hit. Here are some of the reasons why the global health threat impacted the apparel sector so severely.
The pandemic reduced exports
Asia accounts for a significant portion of the global apparel industry, and garment factories located there heavily depend on exports to Western nations. However, the COVID-19 pandemic drastically cut export activity.
A report from the International Labour Organization showed that 10 major textile-producing Asian countries account for three-quarters of all textile workers worldwide. However, as the pandemic emerged and worsened, some of those nations experienced decreased exports of up to 80%.
As a result, many garment workers had their wages cut or received paychecks late. In some cases, those changes meant they lacked enough money to buy food.
Pandemic restrictions caused factory and store closures
As government leaders imposed COVID-19 restrictions worldwide, the new rules typically had tremendous effects on factory productivity levels.
For example, even when regulations classified garment manufacturers as essential businesses, they usually limited the number of people who could work at any given time and stipulated other social-distancing measures.
These changes meant many workers lost their jobs or got told to come to work less often. Even with significant progress made in fighting the pandemic, some clothing stores remain closed. That reality hurts garment manufacturers’ profits.
For example, Irish fast-fashion brand Primark — which operates Penneys retail outlets in Ireland — has remained closed for months even though restrictions in the country still permit in-person retail sales. Although many companies pivoted to sell online, Penneys is an outlier that has never had an e-commerce arm, and executives don’t plan to change that.
Supply chain issues posed additional challenges
The impact of COVID-19 caused substantial supply chain issues for numerous sectors. You may have noticed some of them firsthand when you tried to buy something you previously bought without difficulty and discovered the item was unavailable.
By early March 2020, a garment factory in Myanmar had to temporarily close for an undefined period after it ran out of raw supplies and could not import them from China. Statistics show that companies lose 4.1% of their profits due to inventory shortages. That’s one reason why many of them use artificial intelligence and other advanced technologies to avoid the issue. However, COVID-19 was arguably an event few people expected.
Another complicating factor for the global apparel industry was that the pandemic caused consumer buying shifts.
For example, with many people staying home as much as possible and large events canceled, it became unnecessary to buy clothes for parties, weddings, or other special occasions. Jeans brand Levi’s had a second-quarter revenue drop of 62% in 2020, although brands specializing in athleisure wear often saw increased sales.
These changes meant sudden declines for former apparel staples while other garments became more popular. Things will likely shift again as more people get vaccinated and spend time in public, but it could take a while to see the effects.
Garment workers experienced covid-19 outbreaks
Like most other factories, garment manufacturers’ facilities are typically large spaces where people work closely together. Although such setups work well for boosting productivity, they’re not ideal for controlling the spread of a deadly virus.
One particularly unfortunate impact of COVID-19 is that people working in these places often had an elevated risk of contracting the virus. In August 2020, news outlets covered an outbreak in a Guatemalan factory where more than 200 employees tested positive. An initial sample showed that 26 out of 32 workers had the infection.
That result caused authorities to declare a state of emergency and close the factory indefinitely. One worker at the plant died from COVID-19. Major American brands, including Gap and American Eagle Outfitters, rely on the factory for products.
A representative from the company asserted that it was among the first to adopt COVID-19 safety measures. However, this example is a somber reminder of how rapidly the virus can spread under optimal conditions.
Retailers are still placing smaller orders
Coverage published in February 2021 indicated it might be a while before the global apparel industry recovers from coronavirus shocks. One reason is that the orders fulfilled by garment factories are smaller than before the pandemic.
Some apparel brand decision-makers opted to sell off last year’s clothes rather than place big orders for the spring season. Others decided not only to buy less but also to do business with fewer supply chain partners.
Factory owners said their facilities were already operating at a reduced capacity and are not getting the order volumes they did before the pandemic. Many worried they may close for good if things don’t change.
However, retailers likely want to wait and see how reduced COVID-19 restrictions affect people’s desire to shop for clothes before purchasing more, and such trends won’t be immediately apparent.
The impact of COVID-19 persists
These five obstacles are some of the most pressing for garment manufacturers to overcome, and there are almost certainly more on the horizon. Getting through these challenging times will require creativity and, perhaps, changed business models.
About author: Emily Newton is a manufacturing journalist and the Editor-in-Chief of Revolutionized