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Apparel Retail Forever Changed: Moving Beyond COVID -19

By Robert Hetu | April 14, 2020 | 0 Comments

Apparel and footwear retailers seeking digital business transformation and innovation must embrace the aftermath of COVID-19 as an opportunity to affect major changes in operating models and business processes that are long overdue. The apparel industry was struggling before COVID-19 to restructure their operating models and are now facing an existential crisis.

For apparel and footwear retailers, the next 12 to 18 months will be about survival, with a heavy emphasis on top-line sales, cost containment and risk mitigation. When allowed to reopen, these retailers will be faced with massive amounts of inventory that are unseasonable and may be out of fashion, both in stores and warehouses and on trucks and ships. Traditional liquidation channels will also be overstocked, limiting options for quickly moving large blocks of inventory. Because of these changes, a number of retailers will enter a bankruptcy process.

Some other key business issues include:

  • Up to 50% of mall-based physical stores, and many others, will permanently close or be re-purposed for showrooms, off-price expansion or to serve as micro-fulfillment centers.
  • Most associates are likely on furlough or layoff, not returning until reopening and many will not return.
  • Business leaders will attempt to shift more sales to e-commerce, with mixed results.
  • Over time, suppliers may no longer be operating or still in recovery mode, complicating sourcing.

This will lead to future seasonal assortments for fall and holiday being incomplete, endangering recovery by extending the sales, margin and inventory issues into 2021.

My latest research leverages a 5 point scale to measure the impacts of COVID-19 on apparel and footwear retail sub-segments, and what IT leaders can do to help facilitate a recovery strategy.

Impact Severity Scale by Apparel and Footwear sector.

Gartner clients can read and download the entire research here:

Beyond COVID-19: Impact Severity and Recovery Framework for Apparel and Footwear Retail

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