Apparel brands could lose 20 percent of value due to Covid-19

The apparel sector is one of the most heavily impacted by Covid-19, with fashion firms facing a potential 20 percent drop in brand value, new research reveals.

According to business valuation consultancy Brand Finance, the brand value of the world’s 500 biggest companies could fall by up to 1 trillion US dollars, with the apparel sector one of the worst affected.

“The Covid-19 pandemic is undoubtedly going to hit the apparel sector hard - Brand Finance has predicted that apparel brands could face up to a 20 percent drop in brand value,” Richard Haigh, managing director at Brand Finance, said in a statement. “As these brands negotiate store and factory closures, broken supply chains and a customer base that is facing unprecedented economic uncertainty, these brands will have to prepare for a tough and turbulent journey ahead.”

It comes as fashion stores across the world have been forced to close to mitigate the spread of the novel coronavirus. In the UK, all ‘non-essential’ stores have been closed since 23 March.

Apparel sector faces potential 20 percent drop in brand value

The British fashion market is worth approximately 55 billion pounds a year in sales, with 80 percent coming from physical stores and the remaining 20 percent from online.

But the pandemic hasn’t only affected physical stores. Many fashion companies, such as River Island and Moss Bro, have been forced to halt their online operations over health and safety concerns.

Over the past few days, however, a number of companies including Next, Quiz and Fenwick have relaunched their online operations after altering them to meet strict health regulations for their employees.

After reopening its online operations “in a very limited way” on Tuesday, Next reached its self-imposed daily order limit within less than two hours.

Other companies like Primark, which has no webstores, have already experienced huge impacts from the lockdown. In March, the retailer warned it would lose 650 million pounds a month in sales due to store closures.

Haigh said: “Despite the havoc that Covid-19 is undoubtedly going to wreak on the sector in the coming year, agile brands are likely to fare much better than their inflexible counterparts. With new consumer behaviour habits likely to be borne out of the pandemic, brands will look towards greater innovation in their e-commerce businesses and the potential reassessment of their store business models.”

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