It's All about Retail
Nov. 18th-20th,Shanghai, China

Big Brands Start To Cancel New Stock Due To CoronaviruS

Retailers throughout the world are closing (temporarily) to safeguard staff and shoppers’ health as more and more countries enter into lockdown in order to slow the spread of the Coronavirus pandemic. 

Here in the UK we have seen a number of the biggest chains close over the weekend, from Primark to Harvey Nichols and Topshop to John Lewis.

Primark, the budget fashion chain owned by Associated British Foods Plc, and lauded as one of the most successful retailers in recent times has, over the last week, closed every store it operates throughout the world due to the spread of the coronavirus. This move its’ estimated will strip £650 million ($760 million) from the companies revenue every month that the shops are shut. 

41% of Primark revenue comes from UK stores where it has invested heavily in modern megastores offering a one-stop-shop for the whole family and including themed cafes and beauty salons etc. Primark has been hailed as a fashion retail success story in recent years thanks to soaring revenues and sales, what it hasn’t done is develop an online presence.

Therefore its little surprise that with bricks and mortar shops closed indefinitely and no online presence to continue trading, Primark has quickly moved onto cost-cutting mode,  including informing suppliers that it will stop placing new orders in order to manage its stock during the Covid-19 pandemic.

“A variety of workstreams have been established to mitigate the effect of the contribution lost from these sales and all expenditure is being reviewed,” the company said.

“In the first instance we have implemented a significant reduction in discretionary spend. We are making good progress in also reducing fixed costs following discussions with counterparties, in particular landlords, and welcome the recently announced government support in the countries in which our stores operate.”

It added: “As a result, we currently estimate being able to recover some 50% of total operating costs.”

New Look and N Brown group (which owns brands such as Jacamo, Simply Be and JD Williams) also announced that they would be stopping new stock intakes and reducing costs across marketing. New Look even asked staff to take voluntary leave to help the business navigate through these difficult times. 

It’s not a shock to see companies reducing their stock cover considering consumers have reduced spending on clothes, due to worries about job security combined with a lack of opportunities to wear new products due to social distancing.

Manufacturers are now expecting other companies to soon follow suit, causing large disruptions to the supply chain and likely leading to large scale job losses in the countries where fashion garments are produced, which often have significantly less societal safety net compared to where most of these products are sold.