Coronavirus: What if ecommerce can’t rescue fashion?

Closed shops, home workers, isolated cities. On paper, the coronavirus crisis presents a great opportunity for fashion ecommerce. Clients comfortably seated on their sofa, limited to buy offline, mass clicking on Asos, Zara, Zalando or Mango. But ecommerce isn’t exactly alienated from the situation either: with widespread stress among the population and logistical interruptions, what if the ecommerce can’t rescue fashion after all? 

In Italy, the mature market where coronavirus has had the biggest impact so far, the first reaction of consumers did cause a sales spike. However, as the restrictions increased, their online purchases progressively shifted to basic necessities such as food or medicine. In the midst of the crisis, few want to buy skirts. Perhaps the situation will change if the exceptional circumstances lengthen, but in the meantime, all fashion, online and offline, will hurt. 

Fashion sales through the Network account for a modest 7.4% of fashion sales in Spain. In France, the rate amounts to 13.4%; in Germany, at 24% and in Italy, the European country most affected by the Covid-19 pandemic, stands at 11.7%, according to Kantar data. The United Kingdom is the European market with the highest penetration of the channel and one of the first in the world, with a 28.2% share. 

The crisis is an opportunity for the online channel, but not for the sector: who buys skirts in the midst of a pandemic? 

During the crisis, a large part of the population tends to avoid crowded public spaces. In the case of China, 85% of Internet users followed this measure to prevent the coronavirus, according to a YouGov study carried out on March 3, before the pandemic reached Europe. 

The quota reached 83% in Hong Kong, 76% in Taiwan and 73% in Malaysia, while in the United States it was then at 27% and in the United Kingdom, at 14%. The study asked about respondents’ activity in the last two weeks of February. 

Asked about the possibility of avoiding stores if the crisis worsened in the United States, 74.6% answered that they would stop attending shopping centers and 52.7% said they would avoid commerce in general, according to a study by Coresight. 

74.6% of Americans would stop going to the malls if the crisis spread 

But the truth is that the impact of these preventive measures on electronic commerce has been small, at least in fashion. “In China, the government itself fostered a feeling of guilt overconsumption,” explains a directive from a Spanish fashion distribution group with a presence in the country. 

Although the government is now transmitting the opposite message, to reactivate the economy, then the speech stopped and consumption stopped. “There was a peak in e-commerce, but then it started declining,” continues the executive, who stresses that, in Europe, governments “do not have as much power” to influence the behavior of the consumer. 

In Italy, street traffic was reduced as the crisis began, causing an upturn in online sales. But, according to another manager in the sector, “when anxiety reaches other levels, spending moves to food, pharmacy …”. “Retail will suffer, and online will also end up slumping.” 

Seur or Logisfashion have already taken measures to guarantee their operations and protect their employees 

In this sense, from Seur they point out that, in Spain, the greatest peak has been experienced in food. “We have noticed an impact on Now’s business line (urgent deliveries in 1 or 2 hours), specifically e-grocery, which increased its production by 50%.” 

“The crisis may be an opportunity for people to get used to shopping online, but in fashion it will have very little impact,” agrees Jaume Hugas, e-commerce logistics expert and professor at Esade. “Alternately, for food, it will be a peak similar to what Black Friday is in fashion and requires a lot of planning,” he adds. 

Another manager from one of the largest ecommerce in Europe shares a similar opinion. “Conceptually, people are not going to go out and buy more online, but it depends on the sector.” The executive points out that his company has not seen any impact and that “if the crisis lasts a short time, it will be bad for everyone, except for the food.” On the other hand, if the crisis lengthens and the exceptional situation becomes the norm, it could have a positive impact. 

The alert status does not affect cargo ships, as stated by Puertos del Estado 

After the order of closure of shops in Catalonia (Spain) and the Community of Madrid, some Spanish retailers have been quick to stress that their website does remain active. Tendam explained on Friday that, after closing all its stores across Spain, it would increase its online service capacities, offering customers free shipping and extending the garment return times to 60 days. 

The shoe company Magrit also transferred a statement stressing that “it will keep its online store 100% operational” and that orders will be distributed weekly from its headquarters. The brand’s store in Madrid remains closed until further notice. 

Other smaller companies, such as the Laconicum cosmetic, an ecommerce, also sent communications to their clients specifying, “we continue to open and send orders.” “We are all teleworking and there are minimal, very minimal, shift services.”

However, the big fashion ecommerce groups in Europe do not anticipate an increase in business with the crisis, but quite the opposite. Within its presentation of results, on February 27, Zalando clarified that its forecasts for 2020 “exclude a potential negative impact caused by the coronavirus.” Asos has still not spoken on the matter. 

Experts agree that if the crisis is brief, there will be no impact on fashion ecommerce 

Operations 

From an operational point of view, the crisis does not present as many difficulties as for physical retail, except in confined areas, where goods cannot enter or leave. “Ecommerce should be treated as a minimum service,”

Seur’s points out that contingency plans have been prepared in all areas and that the company is prepared for more complex scenarios such as the closure of roads or the temporary closure of hubs. 

Communications with delivery agents have been intensified so that they comply with a series of hygiene measures when they deliver the shipments to the recipients. In this context, Hugas stresses that in countries like China, where automated deliveries are more widespread, the last mile has been able to be covered without a problem. 

“In China, JD.com has been brutally successful thanks to delivery via automated wheeled platforms,” says the expert. “The one who is not prepared with good technology and software is the one who will suffer the most from this crisis,” he adds. 

In logistics centers, most logistics and e-commerce operators have taken protective measures, but activity continues normally. “In a medium or large center about three hundred people work, but in shifts, so there should be no problems,” says an ecommerce manager from a Spanish group. 

Companies like Logisfashion, specialized in the fashion sector, launched on March 9, a prevention policy that increased hygiene measures, the suspension of mobility between centers and the reorganization of working hours to minimize the confluence of personnel in one place. In Seur, a contingency plan has been developed that includes intensifying hygiene measures and making the day more flexible. 

In China, the crisis came just after Chinese New Year, the country’s biggest holiday during which warehouses are already closed, as are most workplaces. Upon their return, the workers were met with strong controls and the Government limited the return to work, but today the activity is already 80%. 

In Spain, the declaration of the state of alarm, which came into force on Saturday, restricts passenger traffic but excludes cargo passengers, according to state ports in a statement on Friday. 

The biggest problem lies in international shipments, especially the ones to the United States. Last week, the US government suspended all flights from Europe, with the exception of the United Kingdom, which directly impacts European companies that send merchandise on commercial flights.