I recently started looking into the impact of the Coronavirus (Covid-19) on retail. It’s been widely covered from many angles, but what hit me the most during my research was the far-reaching, epic nature of how this virus is impacting the global economy, with retail at the epicenter. The balance between supply and demand is fragile, and when both sides are hit, it can unmask deep issues in the right product - right price equation.
On the heels of the trade war with China, the virus further illuminates the many shortfalls within the design and supply chain process which for most brands and retailers is not predictive or responsive enough to offset the growing number of risks in doing business with China, whether they be political, weather-related or, in this case, another epidemic.
Disappearance of nearly 40% of the Global Fashion Industry’s Buyers
The coronavirus has caused the quarantine of more than 50 million people in China, and travel and visa restrictions to more than 70 countries at a time when the influence of the Chinese consumer had skyrocketed.
The power of Chinese consumers has exploded in the last 15 years and these shoppers now account for 38% of the global fashion industry. By comparison, during the SARS epidemic in 2003, the Chinese consumer accounted for only about 8% of the market. We can see the far-reaching impact of China by looking at a few global brands. Sportswear maker Adidas AG reported business in greater China dropped 85% in the weeks since Jan. 25. Further, Under Armour recently told investors that its revenues in the first few months of 2020 — and potentially beyond — would take a hit of $50 million to $60 million because of the outbreak.