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Embattled Italian Manufacturers Brace for COVID-19’s Continued Impact

The international community has been dealt blow after blow by the months-long spread of the coronavirus, but some regions have fared better than others when it comes to public health.

In Italy, long renowned as one of the planet’s fashion meccas, a spike in COVID-19-related deaths in late March sent ripples of fear and anxiety through the industry worldwide.

The country’s renowned production helps drive the entire sector, and the closing of factory doors has driven the entire fashion world to hold its breath.

According to Riccardo Bruni, founder and textile designer for fabric producer Lyria SpA, the results of the shutdown have been devastating. The factory is based in Montemurlo, a province about 40 minutes outside of Florence.

Orders have dropped by half, Bruni said, and special developments for apparel clients across the globe—from Europe to Korea, Japan and the U.S.—have dropped precipitously.

“Coronavirus has forced us to review all our economic and business plans for 2020,” Bruni told Sourcing Journal—and the effects of the virus will reverberate through his business long after the country returns to health.

“We expect a decrease in turnover of around 40 to 50 percent, and of course the worldwide situation will have a negative impact on our investment plans for the next two years,” he said.

In a normal climate, Lyria would be fully stocked with materials to drive future orders. But because the factory’s production has ground to a halt, along with most links in the apparel supply chain, Lyria can’t afford to take on new shipments of raw materials. Bruni worries that the company will find itself in a tough spot once operations resume.

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“Due to the cancellations of production orders during this period, we had to review the quantities of raw materials purchased at the forecast level,” he said, adding that he will pare down selection in the near term, working with a smaller range of products, yarns and fabric to try to limit supply-chain hiccups.

Though his downstream suppliers have been impacted, Bruni said he would not entertain the idea of switching things up. “We are not looking for new material suppliers because we absolutely do not want to change the image of our product in the market,” he said.

Bruni is also hoping for a way to bring back his staff—all of whom have now been furloughed. He is hoping that consumers will return to stores once restrictions are loosened, driving up demand for Lyria’s products. And he is hoping to rehire all of his employees once business as usual resumes.

“All of this will obviously and mostly depend on the dutiful help that we expect to receive from the credit system,” he said, referring to state-driven aid. That help “unfortunately seems to be slow to arrive,” he said.

Further north in Lombardy, apparel manufacturer Castor Srl found itself in the first region to go under lockdown.

Until that time, founder Angela Picozzi said her factories complied with all government guidelines for personal protective equipment, sanitation and social distancing while remaining operational through satellite operations across the region.

“Castor is a ‘big family’ and the direction is respectful of the employee’s health,” she told Sourcing Journal. “We are very strict and we follow the rules by the book because we knew this is the only way to win together.”

When a new decree forced the complete closure of production not related to food and health products, Castor began collaborating with fabric company Serica 1870 on the production of non-medical-grade face masks, to be worn by workers in factories.

Castor’s business is split into two divisions, Picozzi said. One provides services for international fashion houses like Thom Browne, Gabriela Hearst, Longchamp and Giambattista Valli, among others. The other  is a brand incubator, which produces in-house label Mantù and lines for emerging designers Françoise and Coliac, both distributed worldwide.

“Currently Italy is experienced a lockdown so it is very complicated for retailers and consumers,” Picozzi said. “Stores are closed, but some of them are still working with personal shopper digital services and e-commerce—even though this business model is still challenging in Italy.”

Castor’s clients are 85 percent international, however, and Picozzi is keen to continue to drive business outside of the country.

“We are continuously working to support our stockists by providing them with all necessary tools to digitally present our collections to their clients,” she said. Stressing the need to find new ways to offer merchandise to stores, Picozzi said Castor will have to “think outside of the box.”

“Responding rapidly and creatively will be a key resource,” she said.

Castor’s spring deliveries have been completed, she added, and the company is now working on production for the fall season. “To make a forecast at the moment is very complicated,” she said. “We know stores are going to have a very tough spring-summer season, and the ones that can survive the closure are going to need merchandise” once fall hits.

The spread of the coronavirus has highlighted some of the industry’s most glaring issues—namely, the overproduction of fast fashion, Picozzi said.

“We have to be able to change a system that was already suffering,” she said. “Everywhere you can see too much low-quality product.” At Castor, it takes a day to make a dress because, Picozzi said, “it has to be impeccable.”

While e-commerce has picked up, according to assessments by Castor’s stockists, online shopping won’t make up for the sales lost at brick-and-mortar retail, Picozzi said. Italian shoppers value the in-store experience, she added, and enjoy trying on garments before they purchase.

Picozzi is also anticipating challenges when payments from Castor’s brands and vendors are due, because of the dearth of sales.

Still, she is hopeful that the tide could turn for retail in the coming months.

“I feel confident consumer behavior will change and we are continuing to develop and evolve our long-term strategy around that,” she said. “Providing a timeless, high-quality product could be the answer.”