Coronavirus has started impacting Indian apparel manufactures directly, as more and more brands and buyers are asking to stop production and intimating delays about payments. From North to South, apparel manufacturers are worried as they are getting negative information from their buyers. The pandemic is severely affecting Indian apparel industry – export as well as domestic, which in turn, is affecting the entire supply chain including yarn, fabric and trims suppliers. Various apparel manufacturers interacted with Apparel Resources, sharing how their buyers are panicking and how it is disrupting their businesses.
One of the leading apparel manufacturers of the North Indian apparel industry tells us on the request of anonymity, “Landmark Group has asked us to stop production. But as we already had production in process with raw material ready with us, almost Rs. 11 crore is stuck now. It will impact our entire business and will have a cascading impact on our suppliers also.” He further adds that not only international but domestic brands are also giving a similar direction. “One of local but well-known brands asked us to complete whatever orders we can by 20th March, which is not logical but as we do understand the brand’s problem and believe in long term relations, we have to follow them.” There are more than 200 vendors of the company in India and it also sources from other apparel manufacturing hubs in the country worth of somewhere Rs. 400 crore. The group, having prestigious brands like Max, Splash, Lifestyle etc. has around 500 stores in India, and over 2300 outlets worldwide.
Another apparel vendor of the company also confirms the same on the request of not disclosing the name, “Though they (Landmark) assured us to support completely as production is stopped, we are in the state of uncertainty. All of this will impact our business cycle.” He further adds that they are planning and are in touch with their suppliers for further developments.
Apparel Resources approached Landmark in this regard but its spokesperson was not available. Reply to the email is awaited from the company.
As per some industry sources, even Zara has cancelled orders in a big way. Raja M Shanmugam, President, Tirupur Exporters Association, shares, “The European buyers, particularly from Italy and Spain have already asked our members not to export the garments to them and wait for minimum one or two months till the situation resumes normalcy and the shops are reopened. Some of the buyers are even cancelling the orders.”
He further adds that the buyers are deferring the payment against the promise for already sent goods also. They are also not lifting goods. The cause of concern is that the production activities have been continuously taking place to fulfil the committed orders and deliver in time and the disruption at this crucial juncture is causing a huge impact on the financial part of the units.
It is natural also, as many retailers are closing stores. PVH, VF Corp, H&M and few others have announced that all company-operated retail stores across North America and Europe will remain closed up to next 10-12 days. All retail associates at these locations will continue to receive full pay and benefits for their scheduled shifts during the temporary closure period.
More than 1,900 people have lost their lives due to COVID-19 in Europe alone, while 6,500 deaths have been reported globally so far.
VF Corporation, one of the world’s largest apparel company having brands like Vans®, The North Face®, Timberland® and Dickies® also informs, “VF’s supply chain operations have experienced limited disruption to date as a result of the COVID-19 situation. Ongoing diversification efforts such as re-directing manufacturing and materials sourcing are underway in an attempt to mitigate potential future disruption. While it is not possible to gauge the full impact to VF’s supply chain at this time, VF continues to believe its global supply chain represents a key competitive advantage during periods of uncertainty and market volatility.”
As far as the domestic market is concerned, many Indian states have issued orders regarding the closure of malls, which is naturally going to affect the domestic market, especially the organised retail in a big way.
Not only organised retailers of Indian and overseas markets, even wholesale and unorganised sector is also facing the heat and taking such steps. Ahmedabad, the biggest denim production of India, is also witnessing slow-down of many offices of apparel wholesalers as local brands. Similar is the status of Gandhi Nagar market in Delhi which is the biggest hub of apparel production and distribution for the Indian domestic market.
Arpan Shah, associated with The Gujarat Garment Manufacturers Association (GGMA), Ahmedabad, says, “Whatever orders were booked, are supplying while new orders are not coming at all. This is going to affect the summer season in a big way. Keeping this in view, wholesalers have reduced production.” He further adds that as the overall economy is slow, it will have a negative impact on apparel buying.
While various companies are facing the heat of this crisis, they don’t want to say anything on record due to their apprehensions. “Majority of my clients have asked to put fabric supply on hold and not share even any idea about when they will resume the order,” shares a fabric manufacturer of Delhi-NCR.
“Due to Government directive in interest public health and safety, retail stores have been asked to close down in different parts of the country. This means sales during the close–down period will be nil. In markets where stores are operational, footfalls have dropped due to the fear of COVID-19. With such an impact on consumption, all retailers and brands will need to re-plan their inventory forecast. Order cancellations are a consequence of store closure for extended period,” Rakesh Biyani, Chairman, The Clothing Manufacturers Association of India (CMAI)
Looking at the aforementioned circumstances, apparel manufacturers believe that even if COVID-19 gets under control even now, their businesses will still be affected by at least 10 to 15 per cent, as the closure of stores will surely lead to inventory pile up. Having a major business with leading European retailers, Noida-based Moissanite Apparels was comparatively lucky as the organisation cleared major shipments just few days back. “We were totally ready for Spring-21 but now as all design meetings have been cancelled, I can say that there will be at least a 10 per cent negative impact on our business,” says Vivek Saxena, Founder and Director of the company. Many other apparel exporters do echo the same opinion.
“The way governments across the globe are tackling with this challenge is appreciable and we are hopeful that soon the conditions will improve,” he concludes on a positive note.