After an initial outbreak in China’s Hubei province, the coronavirus (known technically as SARS-CoV-2) is now a worldwide issue.
At the time of writing, there have been at least 115,000 confirmed cases across 114 countries outside of China. Italy saw its coronavirus death toll rise to 463, as the Lombardy region – known for textiles and manufacturing, and home to brands like Prada, Versace, and Armani – is hit the hardest. Business of Fashion caculates that 60% of Italian textile production and clothing factories are located in this region. What we are witnessing in Italy’s fashion industry could be a preview of the virus’ greater impact on the global economy.
After Seoul Fashion Week was cancelled altogether, South Korea predicts that they have “passed the peak” of the outbreak, according to the country’s health minister. Coronavirus has claimed 54 deaths in South Korea.
Containment is the first step in responding to any outbreak. While the World Heath Organization has yet to label the coronavirus a “pandemic,” the very description of the word — a term used when a disease takes hold in multiple regions and spreads rampantly within communities — suggests the grim reality of the current situation.
As some symptoms are very mild, the virus poses a particular threat in crowded spaces. As The Atlantic points out in an article titled “You’re Likely to Get the Coronavirus,” strains of it “are believed to have evolved in humans to maximize their own spread — which means sickening, but not killing people.”
While we’ve already seen how this health crisis has impacted global juggernauts like Apple and Starbucks, there’s also a strong indication that the fashion industry will continue to be effected by coronavirus.
In some cases, corporate headquarters are also closing, like in the case of Nike, as the brand shut down its European HQ for deep cleaning after one employee was confirmed to have coronavirus. Home office or “self-quarantine” policies are becoming common for many workers in the fashion industry and elsewhere.
The coronavirus has caused the quarantine of more than 50 million people in China, alongside travel and visa restrictions to more than 70 countries. Investment bank Jefferies estimates that Chinese buyers accounted for 40 percent of the 281 billion euros ($305 billion) spent on luxury goods globally last year. Chinese consumers are the fastest-growing luxury shopper demographic in the world, driving 80 percent of the past year’s sales growth in the luxury sector alone.
Roughly a third of Burberry stores in mainland China have been shut down. Capri, the owner of Michael Kors, Versace, and Jimmy Choo, said it was reducing its sales outlook for the quarter by $100 million after closing 150 of its 225 mainland China stores. Tapestry, which owns Coach, Kate Spade, and Stuart Weitzman, said it was expecting sales to drop as much as $250 million. Ralph Lauren temporarily shuttered 2/3 of its stores in China, stating that its fourth-quarter guidance will be negatively impacted by $55 million to $70 million in sales as well as $35 million to $45 million in operating income in Asia.
The outbreak has prompted adidas, which attributes roughly one-third of its sales to Asia, to close a “significant” number of stores in China. Since Lunar New Year on January 25, the brand had seen business activity drop roughly 85% when compared to the same period a year earlier.
In letters to their investors, PUMA indicated that the virus negatively impacted their business since the beginning of February. This was especially true in China where more than half of both own and operated and partner stores were/still are temporarily closed due to restrictions of the local authorities. As a result, PUMA anticipates a negative forecast for the first three months of the year.
Nike has closed half of its stores in China, and the ones that are still opened are operating with reduced hours. CEO John Donahoe told CNBC that nearly 18% of Nike’s sales came from the greater China region in the most recent quarter.
The coronavirus has led to the postponement or cancellation of a number of fashion shows for fall 2020. In China, specifically, both Shanghai and Beijing Fashion Weeks — which were slated to run concurrently the last week of March with new offerings from brands like Burberry and Chanel — have been postponed.
While other shows in Paris and Milan still took place, they have not been the usual festive affairs. Chinese fashion brands Masha Ma, Shiatzy Chen, Uma Wang, Jarel Zhang, Calvin Luo, Maison Mai, Angel Chen, and Ricostru all cancelled planned events.
In Milan, fashion house Armani held its runway presentation behind closed doors, noting the choice was was made in order to”support national efforts in safeguarding public health,” and to protect the invited guests by stopping them from attending “crowded spaces.” Giorgio Armani later announced that his group will donate $1.43 million USD to coronavirus prevention. Departing Milan Fashion Week, attendees had their temperatures checked at the airport in Italy.
On the other side of the world, Seoul Fashion Week was cancelled after a number of designers pulled out of the event. An official statement from the Seoul Metropolitan Government noted: “We have internally decided to cancel the 2020 Fall-Winter Seoul Fashion Week and will notify the concerned parties of the decision in a few days.”
A number of high-profile trade shows were either cancelled outright, or they were severely impacted by the Asian travel ban. Postponements included Cosmoprof Worldwide Bologna, Kingpins denim show in Hong Kong, Luxe Pack Shanghai, and eyewear trade show Mido in Milan.
China is the world’s largest textile producer with exports worth more than $280 billion a year. Some analysts think shortages may soon become apparent in stores worldwide. Factory workers in China are being kept home due to fears of the coronavirus, which is causing delays in the manufacturing supply chain, which affects the fashion industry in a more acute manner, due to the seasonality of products.
“The vast majority of certain products are only done in China,” TIME was told by Gary A. Wassner, the CEO of Hildun Corporation and the chairman of Interluxe. “We became very dependent, and we allowed it to happen because it was cost-efficient.”
Trend forecaster Li Edelkoort told Dezeen, “Not many people understand what is happening to our world and economy right now. Often in companies, up to 90 per cent of all goods are made in China from oil-derived substances such as plastic and polyester. We will soon see shelves empty of shoes, phones, clothes and even toothpaste. We will have a shortage of medical supplies and will see a stop in the endless production of ugly souvenirs and useless goody bags.
We already know that the design processes for fall/winter products are not happening as they should be.”
The Chinese city of Putian has been an integral piece of the supply chain for brands like Nike, PUMA, and adidas for decades. According to Reuters, a tenth of the city’s population is employed in the footwear trade. Paralleling something of a wartime economy, ten of the city’s shoe factories have now been tasked with producing 200,000 disease preventative masks per day, in an attempt to meet the needs of Putian’s nearly 3 million residents. Working collectively with diaper factories to produce the three-layer masks, the Putian shoe manufacturers have specialized in adding nose pieces and ear loops.