While the ultimate impact of COVID-19 won’t be known for years, apparel has already begun to assess the damage, as businesses across the value chain chart a course through the pandemic. From a rocky start filled with cancelled orders and fractured relationships, the industry is now looking ahead to the initiatives, technologies and culture shifts that could finally transform it.
In this episode of Sourcing Journal Radio, Steve Hoffman, partner at McKinsey, discusses the results of an industry-wide survey the consulting firm conducted in collaboration with Sourcing Journal. The findings, which were published in the company’s report “Time for Change: How to use the crisis to make fashion sourcing more agile and sustainable,” details the damage that’s already been done to liquidity and partnerships as well as how fashion firms plan to battle back—and the likelihood that they’ll successfully achieve their goals.
While the survey found that the pandemic may be the catalyst for the industry to finally put initiatives like speed and flexibility in place, Hoffman says, the landscape is likely to be bifurcated, with those he dubbed “immediate and bold” as the winners.
“The new normal is really what’s going be a key factor here, because if in the new normal certain things play out such as a reduced assortment… that will help accelerate speed and flexibility because the complexity of doing that will be a lot easier,” he said. “There’s a couple of factors that we would wait to see if they could be enablers, but by and large, you’re going to see the retailers or apparel wholesalers who are currently more advantaged, probably more advantaged coming into the crisis, that will be able to sort of double or triple down on those speed and flexibility aspirations. And I would say the vast majority the industry will sort of be left a little bit behind, and maybe doing a handful or a more limited kind of speed and flexibility push, but I think will be far outpaced by the folks that are more advantaged.”
For the time being though, Hoffman said the winners will be those that quickly pull back and focus on managing cash in the short term before aggressively jumping on new opportunities once the dust settles.
Listen to the episode to learn more about how retailers can overcome the “distracting” financial concerns that might make them hesitate rather than move forward, the root causes holding back much-needed initiatives like on-demand manufacturing, and why funding sustainability will continue to be a challenge.