The European apparel market after the coronavirus pandemic

In 2020, the coronavirus pandemic disrupted the international fashion industry. But now, things are returning to normal for European fashion markets. Several European countries have started to ease lockdown restrictions. Shops are opening, and consumers are going back to the high streets. What can manufacturers expect from the European apparel market now?

In 2020, businesses worldwide went into survival mode. The Boston Consulting Group states that the fashion industry lost €525 billion or one-third of revenue in 2020. European consumers mostly stayed at home and spent less on non-essential goods. Brands and retailers had to shut down stores. Online sales increased, but this only covered part of the loss in sales.

Many manufacturers faced cancelled orders and delayed or even cancelled payments. In the first 3 months of the pandemic, suppliers to the US and European fashion markets lost €13,5 billion in cancelled orders. Also, producing countries faced coronavirus restrictions. Many factories had to send employees home, leaving them without an income.

Changes in Europe

Now, there is a positive change towards recovery in the European fashion markets. The UK was one of the first countries to open non-essential shops again in April. This resulted in a 10% increase in retail sales. Other countries, including France, Germany and the Netherlands, have also started to relax restrictions or have plans to do so. We expect the situation to improve towards the summer, as more people will be vaccinated.

A different fashion market

The future is looking better, but manufacturers should not rely on a quick return to business as usual. There is still a large amount of unsold stock in the market. There are unsold garments at fashion brands and retailers and unused fabrics at factories due to cancelled orders.

McKinsey states that there is between €140-160 billion in unsold stock worldwide. This is more than double the level before the pandemic. European fashion companies are now focusing on improving their liquidity by selling stock products. For the fashion seasons in 2021, many European brands and retailers are placing smaller orders.

Buyers are not placing big orders due to the uncertain coronavirus situation in production countries. Many of these countries are seeing an increase in infections. The Clothing Manufacturers Association of India (CMAI) says that the cancelled orders and labour shortage have resulted in a 75% reduction in production for more than half of all SME apparel manufacturers in India.

International travel restrictions have caused buyers to choose countries that have more control over the pandemic. This is a problem for manufacturers in developing countries that are now trying to re-establish their business. International travel restrictions limit their sourcing abilities and make production more difficult.

New suppliers

Due to:

• Unsold stock;
• Fear of another lockdown;
• Lack of liquidity; and
• International travel restrictions;

European buyers are looking to expand their sourcing portfolio with suppliers that offer flexibility.

This means they are open to new suppliers and new sourcing countries. Short-term business based on low order quantities, fast delivery and extended payments is what European buyers currently want.

More information

Find out more about the latest measures taken by European governments. These include Italy, Germany, France, the United Kingdom and the Netherlands.

Also, read our new research on childrenswear, knitwear and bridal wear.

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FT Journalistiek wrote this article for CBI.