The global apparel sector is likely to be one of the greatest victims of the novel coronavirus pandemic, with brand value likely to fall by around 20 percent.
According to the Brand Finance Global 500 report for 2020, the brand value of the world's 500 biggest companies is set to potentially lose up to an estimated $1 trillion due to the outbreak, reports Just Style.
"The Covid-19 pandemic is undoubtedly going to hit the apparel sector hard," said Brand Finance Managing Director Richard Haigh.
"As brands negotiate store and factory closures, broken supply chains and a customer base that is facing unprecedented economic uncertainty, they will have to prepare for a tough and turbulent journey ahead."
The report suggests agile brands are likely to fare much better than inflexible ones. With new consumer behaviour habits likely to be born out of the pandemic, brands will look towards greater innovation in their e-commerce businesses and potentially reassess store business models.
For the sixth consecutive year, Nike has claimed the title of the world's most valuable apparel brand, recording a seven percent increase in brand value to $34.8 billion as of January 1 this year.
Rival Adidas, however, has had a less successful year, recording a one percent drop in brand value to $16.5 billion.
However, both companies have been forced to close stores due to Covid-19 and sales are going to take a hit. Adidas is expecting to lose over $1 billion from sales in the first quarter of 2020 from greater China alone.
Levi's, meanwhile, is the fastest-growing brand in this year's ranking, increasing by 38 percent to $4.1 billion. While it has traditionally relied heavily on its men's clothing range, it now boasts womenswear as the fastest-growing segment of its business.
In contrast, luxury label Valentino – brand value $1.4 billion – and specialty clothing retailer Gap – brand value $1.6 billion – are the two fastest falling brands in the ranking. Both recorded a 39 percent drop in brand value.
With a brand value of $14.6 billion, Spanish retailer Zara slipped down the ranks to sixth position following a 21 percent drop in brand value. Fellow Inditex Group brand Bershka has suffered a similar fate – its brand value dropping 26 percent to $1.6 billion.
Sales at US clothing retailers free-fall in March
US retail sales saw their biggest monthly drop on record during March as consumers prioritised spending on essential goods such as groceries and health products, reports Just Style.
Sales at clothing stores in March more than halved from February, even though the month started out with many shops still open.
Overall retail sales during March were down 8.7 percent seasonally adjusted from February, and down 6.2 percent unadjusted year-over-year, according to the US Census Bureau. The monthly drop is the largest ever recorded, exceeding a 4.3 percent decline during the November 2008 recession.
March was a tale of two halves as food and beverage stores were up 28 percent from the same month a year ago, while clothing and clothing accessories stores were down 50.7 percent from last year. On a monthly basis, sales at food and beverage stores were up 25.6 percent from February, while those at clothing and clothing accessories stores fell by 50.5 percent.
The fall comes as the Covid-19 pandemic has forced restaurants, bars, and many stores to temporarily close across the nation with stay-at-home orders also impacting gasoline sales.
Ken Perkins, president of research firm Retail Metrics, said, "Entire malls shut down across the country in the second half of March with discretionary retail segments taking a beating. The pain is excruciating for retail, particularly for weaker players."
However, sales soared at grocery stores and were up at other retailers deemed "essential," offsetting some of the decline.
Perkins notes while essential retail categories such as food and health care generated "incredible" sales growth as consumers stocked up, "virtually everything else got crushed," with apparel sales in free-fall as stores closed and clothing purchases took a back seat to paying the rent or mortgage and buying food.
Clothing stores saw the biggest decline, with sales down 50.5 percent month-over-month seasonally adjusted and 52 percent unadjusted year-over-year, according to the National Retail Federation (NRF).
The body's figures also show sales at sporting goods stores were down 23.3 percent month-over-month seasonally adjusted and down 24.4 percent unadjusted year-over-year.
Meanwhile, with more people turning to e-commerce, online and other non-store sales were up 3.1 percent month-over-month seasonally adjusted and up 12.1 percent unadjusted year-over-year.
"Covid-19 has hit the retail industry unevenly," said NRF chief economist Jack Kleinhenz.
"This is a market of haves and have-nots. The haves are the stores that remain open with lines out the doors to buy daily necessities, while the have-nots are the stores that have closed and are taking the brunt of the impact of the pandemic. These numbers should come as no surprise given the mandated shutdown of our economy to slow the spread of the virus.
"March was a month that started out with many stores still open but far more are closed now. Don't be surprised if the data going forward shows a worsening situation. Even if the economy begins to reopen in May, consumer behaviour may take a long time to adjust. The road to recovery could be long and slow."
With sales at clothing chains falling by 52 percent on a year-over-year basis, Neil Saunders, managing director of GlobalData Retail, describes the apparel sector as "extremely distressed."
"This unheard-of level of decline underlines how the consumer has quickly de-prioritised non-essential spending. It is also a factor of the relatively quick drop-off in mall traffic, where most apparel stores are located, as people felt unsafe visiting enclosed environments."