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Fashion supply chains in India remain hit due to factory closures: report

After the devastating effects of the pandemic, 2022 will be a crucial year for the fashion industry as businesses attempt to recover and grow while grappling with new and existing challenges.Premium
After the devastating effects of the pandemic, 2022 will be a crucial year for the fashion industry as businesses attempt to recover and grow while grappling with new and existing challenges.

  • Around the world, a record 69% of fashion companies delivered losses in their annual filings, dragging down overall industry performance. Fashion industry’s recovery is likely to be V-shaped, as performance in the first half of 2021 points to a possible return to positive economic profit by 2022

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NEW DELHI: Like it did for many other industries, the proliferation of covid-19 variants in the first half of 2021 pushed consumer sentiment to a record low and disrupted fashion industry suppliers in India, finds a new report. While spending has rebounded in urban areas, supply chains remain hit amid ongoing factory closures, said fashion news company The Business of Fashion (BoF) and McKinsey & Company's 'The State of Fashion 2022' report.

India, the report said, also saw increased uncertainty around job security and working conditions due to factory shutdowns and impact on the supply chain. Like in India, supply chain pressures have also been identified as the main challenge for the industry globally, posing a risk to the pace of the recovery with 67% of businesses expecting to increase prices next year.

According to Retailers Association of India (RAI) chief executive, Kumar Rajagopalan, recovery has been uneven across income groups and income inequality has widened over the last 20 years.

In 2021, lockdowns were announced and lifted randomly by individual states basis. With different durations and severities of restrictions, retailers across the country experienced different economic impacts. Rai said the southern region, and most of the country’s north, too, where malls and retailers were open for business “almost all the way through" the pandemic in some states, have seen a faster retail recovery in the wake of India’s second wave.

According to RAI’s September 2021 business survey, nationwide retail sales touched 96% of comparable levels in 2019, boosted by the beginning of India’s festival season, which runs through to December, and the return of weddings, many of which were postponed due to restrictions on people gathering.

Globally, things are looking better though for 2022. The fashion industry, it said, is set to recover in 2022 and sales are likely to surpass 2019 levels by 3-8%, the report said. The biggest contributors to the recovery will be China and the US, with Europe lagging. The analysis is based on interviews with top industry executives and a survey of about 220 international fashion executives and experts.

After the devastating effects of the pandemic, 2022 will be a crucial year for the fashion industry as businesses attempt to recover and grow while grappling with new and existing challenges. According to the management consulting firm's Global Fashion Index (MGFI), the industry posted negative economic profit for the first time in 2020 for at least a decade, causing all-time high levels of industry consolidation in 2020 and 2021.

Around the world, a record 69% of fashion companies delivered losses in their annual filings, dragging down overall industry performance. However, it added that the MGFI shows that fashion’s recovery is likely to be V-shaped, as performance in the first half of 2021 points to a possible return to positive economic profit by 2022.

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