Spending the dead hours scrolling on the computer screen looking at models of shorts has become almost a routine for Patricia. And like her so many others. Looking at fashion websites is not just a matter of trend, it is a personal promise that in the long term “maybe it can be used”. A kind of light at the end of the tunnel in fashion for a situation that still does not have clear schedules. In the end he ends up buying, a jumpsuit to go out and a dress. “It just arrived,” he says, “with a note of thanks for buying on the store’s website and a lollipop.” But he knows that it may take weeks for him to premiere it – at least on the street. Very surely it will buy again, they have already conquered it with that little detail.
With shops closed and keeping only with internet purchases, many Patricias must be in Spain right now making online purchases to support the fashion sector; or at least its figures prior to the coronavirus health crisis. The reality is that they do not arrive. According to an EY report on the effects that COVID-19 has on the industry, almost 40% of the sector’s sales have already fallen by the wayside.
An effect that is much greater in small businesses than, without counting on the means of large chains, lack online sales or developed distribution systems. Other natives, formed by that small but great ecosystem of fashion entrepreneurs in Spain, play with that birth advantage. Others have tied the blanket over their heads and got to work in the middle of the pandemic. But they are all victims of the situation.
What will happen to this sector once the confinement order ends and the world returns to a certain normality? The textile business, representing 2.8% of national GDP and 13% of the reasons for foreign tourism, he will have a really bad year for EY. According to their data, this crisis will reduce the size of the industry by 25%. All assuming that there is no return to the obligation to close in on a new outbreak at the end of the year and that Patricia, like so many other buyers, have to look at the winter collection through their computers.
Dominated by the greats in a sector in decline
The bad news for textiles did not take long to follow one side or the other of the continent. Store closings, ERTES in small, medium and large companies, collection cancellations and the “we’ll see what happens” have set the tone in recent weeks.
While, here in Spain, the greats like Inditex avoid the ERTE to their employees – not without controversy -, others in the world of entrepreneurship have already announced it practically from the first moment. Pompeii, in statements to Hipertextual, explained that he had had to open a file to 100% of his staff: five years of work thrown away in just one month for a very simple reason: consumption stops and there is nothing to do.
In the United States, things are not very different. While the boom in second-hand platforms increases, Vestiaire Collective achieved a round of $ 64.2 million as they advanced at Techcrunch, several stores have already declared bankruptcy. Among them the well-known Neiman Marcus, who, after a long time dragging the debts of an increasingly less voyant sector, has ended up giving in to the worst crisis that could come to a clothing trade.
The coronavirus crisis that is already beginning to be defined in the textile sector as “the retail apocalypse” is a trend that has been dragging on for 10 years, followed by the decline of department stores. According to data from the research firm Forrester, “not even online commerce will be able to compensate for store losses, large or small”; since the profit margins are much lower than in the physical environment. A statement that the owners of the large commercial parks in Spain have also adopted as their own. With 500,000 companies in the sector and 1.8 million employees requesting ICO grants to withstand the drop in sales, permission to open every day between now and 2021 and promotions without VAT to encourage spending that is not entirely clear that it will end up arriving. If the IMF’s worst forecasts for Spain are met, we will see an 8% collapse in the economy and an increase in unemployment to 20.8%. All fueled by a drop in tourism, our main source of income, and an increase in family savings in the face of uncertainty.
Textile retail is also facing a challenge at home. In 2019, the Moody’s report for the textile sector provided a series of not positive conclusions. “Textiles are a vulnerable market in a declining macroeconomic environment,” they explained; shopping for clothes is no longer a priority for customers who now have to divide their salary among a long list of services: travel, leisure, subscriptions to content platforms …
Relatively new concepts such as fast fashion, in which Inditex or Mango are the leaders in Spain – and a good part of the world – with invoices that exceed 1,000 million euros, conflict with even newer ones such as sustainability. A subject that these major retailers have suspended since 2001 with the Multifiber Agreement through which China kept most of the textile production and trade in Spain.
And now what in a sector that does not give up everything for lost
The outlook is not the best we could have, nor for the powerful – albeit declining – textile industry, including the world of entrepreneurship and small businesses. But all is not lost especially for the little ones with more room for maneuver and a possible balance in a future in which the big ones are less big and the little ones less small.
And there is no single strategy in this to continue. Hypertextual has contacted several entrepreneurs in the sector who prefer not to make statements but who do confirm that they are low spirited. “It is not a good time to buy clothes, because we do not need it; the one that has the most and the least has clothes to stay at home. The market figures that we are seeing are that they have fallen almost 80% globally, and that Obviously it affects us “, he does dare to explain Federico Sainz de Sepiia to this medium, which does accuse the drop in income, but he already looks at what will happen in the coming months.
Some like Lookiero keep their online advertising to incentivize the purchase, in the case of Sepiia has decided not to encourage consumption but they do continue to serve orders although they cannot manufacture new merchandise; less than before, but newspapers do explain. “At first we thought we were going to interrupt sales because we don’t have an essential product, but talking to the Nacex courier and they told you that it didn’t make sense, because if we work they can work. It’s a chain,” he explains. They are not the only ones who have stopped selling as much as they had thought And even large digital companies are lending a hand to entrepreneurs in the sector. Zalando, dedicated to textile sales, announced this week an initiative to support fashion brands and retailers during the crisis by allowing them to access their customer base.
They are aware of the fall in the sector for the coming months and also that the industry is very likely to change in a few months: “It will not be a global debacle, only that consumers will buy less than before,” but the low-cost logics that have reigned until now will continue.
There will hardly be a relocation of the industry of fashion because, as they explain from the sector, that would mean changing the business model of many well-established companies. But this could also be an opportunity for that entrepreneur looking for his niche. “The question of sustainability can be a differentiating effect in this new stage that is opening; how from the proximity we can make products that meet our needs and are purchased by customers “, does not explain the collaborating professor at CEF Josep Miracle. A position maintained by professor José Luis Ramírez, but from a less positive perspective:” I am pessimistic and we are not going to advance or learn, some will and they will have an opportunity, but unless we know how to sell much better, we cannot recover the factories because that would mean a price increase, “he explains.
But while some decide whether to return to China or not, for analysts the battle is even closer. While it is true that fashion entrepreneurship has focused on the digital world, the reality is that this situation “private capital has come a little with the water around his neck to this, the reality is that people have saved him, “says Miracle,” many have also realized the need to give a quick response without thinking a lot and improve on the go with a product that can be managed on the go. “
With a consumer who has realized that he can buy 100% online, Ramírez points out that the task of the entrepreneur in this new stage aims to create those places specialized in customer experience. “Something that so far it’s been like preaching in the desert“It aims” because it is easy to move by inertia. “In this way, the future of the ratil – the most entrepreneurial – would go through creating that experience online and in person in a parallel way in the same way that Hawkers or Singularu already did when born first in the digital world to pass that user experience to personal treatment. Or the popular shopping websites for sports shoes that have made the experience, despite being conquered by large international brands, a unique event for a very niche market specific.