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With Virus Stealing $15.7B from UK Retail, British Brands ‘Simply Try to Survive’

A single red double-decker bus carrying key workers sails unimpeded down an otherwise deserted Oxford Street in London. Across the capital and in Manchester and Edinburgh, storied shopping streets are eerily empty, and the sound of birdsong can be heard for the first time.

From closed apparel factories in Turkey and Portugal to boarded-up boutiques around the U.K., the coronavirus pandemic has felled the British fashion industry, bringing retail sales to a grinding halt. Brands—like humans—that went into this crisis reasonably healthy will have more chance of coming out of it alive, but when the British high street is finally reopened, the landscape will look very different than how it did mere weeks ago.

According to estimates from GlobalData, the impact of the virus will wipe £12.6 billion ($15.7 billion) from total U.K. retail this year. Burberry confirmed last week that sales were down 50 per cent over the past month and a half, while brands including Debenhams and Cath Kidston have been forced to close all their outlets and call in administrators. Both are now on the verge of collapse.

“So far the coronavirus has been devastating for the industry,” said London-based luxury commentator Mario Ortelli. “This is the only positive I can find, but slowly but surely Asia appears to be coming back, and recovering a bit. Now Europe and America are the center of the storm—which means they can look to Asia to see what might happen, and then simply try to survive for that long.”

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In the U.K., warehouses are still open but many apparel factories are not; ports are, for the moment, operating, and goods are being slowly processed into the country. This means that brands with stock, or an international supply chain in countries that allow manufacturing, are theoretically able to trade online. However, many of them—Next included—are struggling with sales and have closed down even e-commerce after finding they couldn’t protect workers from illness.

“Certain brands are trying to get people to buy online, but consumer spending is seriously down, and I don’t think anyone is in the mood to shop,” according to Jodi Muter-Hamilton, the founder of Black Neon Digital, a British communications firm. “In terms of factories, staff have mostly been furloughed and those that are still open are having to try to supply PPE [personal protective equipment] to hospitals.”

However, the problem at this stage isn’t producing, it is storing. Major firms including Primark, Peacocks, Arcadia and Next have now stopping accepting deliveries to their warehouses because goods aren’t being shifted, and there is simply no more room to hold shipments. The U.K. is known for having far less storage space than most equivalent European countries, and reports suggest that warehouses were almost entirely full at the start of the month. Inquiries for emergency clothing storage were also up by one-quarter ahead of the Easter holidays, and containers of new stock are currently heading for British ports, but there is nowhere to put them.

Newly arrived goods are unlikely to be sold in the next two months, and brands are being forced to accept that the fashion industry will most likely lose the next season— what they do with these lost collections is down to each individual company.

“The effects have been felt most acutely for us in brick and mortar,” said Olivia Von Halle, founder of the eponymous London-based brand. “We’ve had to close our London store and many of our wholesale partners have too closed their doors. Anticipating the cancellation of a large part of our autumn/ winter wholesale orders off the back of this, we made the decision to get out ahead of the problem and cancel the collection entirely.

“A small amount of fabric had already been produced and we are working with our factory to roll this over onto our next production run so absolutely nothing goes to waste,” she continued. “The overwhelming response from our wholesale partners was that this action relieved a lot of pressure and is enabling them to better support other brands who are not in such a fortunate position.”

From closed apparel factories in Turkey to boarded-up U.K. boutiques, the coronavirus pandemic has felled Britain's fashion industry.
A woman wears a scarf around her face to protect against coronavirus contagion as she walks past Debenhams in Clapham Junction south London which is already permanently closed, Monday, April 6, 2020. Debenhams will file for administration after the coronavirus lockdown forced it to shut its shops across the United Kingdom. Gill Allen/Shutterstock

At the end of March, the British Fashion Council (BFC) Foundation’s newly formed Covid Crisis Fund earmarked £1 million ($1.24 million) to support “British businesses that need additional subsidies, beyond government stimulus available, to address their most urgent challenges,” chief executive Caroline Rush said.

The British government has now stepped in to help businesses pay staff wages throughout this crisis, meaning the biggest problem brands now face is rent. This is particularly hard for those with a strong presence in London—on tony New Bond Street, for example, each square foot is costs around £2,200 a month to lease. At this stage, there are no government bailouts related to commercial rent, so retailers face the dismal prospects of ending up in debt or moving out altogether.

Stores that operate mostly offline with a strong brick-and-mortar presence will be the hardest hit by pandemic’s stifling effects. Arcadia Group, the owner of fashion chains including Topshop and Miss Selfridge, is expected to permanently close hundreds of stores as it fails to compete with the likes of Asos and Boohoo, which operate on an e-commerce basis only. For physical stores to survive, many will need more government help than they are currently getting.

“There is a lot on Downing Street’s plate at the moment, so we can’t expect too much,” Muter-Hamilton said. “But when the worst of this has passed, I do hope they stand up for the industry. Fashion isn’t seen as important in the way that the arts and film are—but it is actually one of the biggest taxpayers in the country. People might consider it to be frivolous, but it employs millions of people, and is a real source of identity and soft power within the U.K..”

Ironically, politicians have been the bogeyman of British fashion for a few years now, with the entire industry waiting on tenterhooks to see exactly how damaging Brexit would turn out to be. Before he went into hospital, Prime Minister Boris Johnson was adamant that the Brexit transition period would close at the end of this year as planned, but if the coronavirus crisis continues to worsen, it will have to be delayed, giving brands at least a brief respite from trade talks.

If one of the biggest issues Brexit created was uncertainty, then the virus has escalated this ambiguous future to entirely new heights.

“It’s incredibly hard to create a strategy for the future when no one knows what tomorrow will bring,” Von Halle said. “At the moment, our focus is on how we can think imaginatively and hold the attention of consumers in the absence of ‘newness.’ We will also have to learn how to create more with less. That, at least, can only be a good thing.”