How Coronavirus is Affecting Fashion and Streetwear Brands

It’s a grim statement, but a realistic one that business owners are having to grapple with as they prepare for the worst but hope for the best.

“A lot of brands don’t have the cash reserves to sustain this,” says Bobby Hundreds. “We’ve had to have conversations about the future whether that’s having layoffs, filing for bankruptcy, and how we can come back from this if it goes on longer than expected.”

Brands and stores are dealing with a few things. For one, some of them can’t produce collections because factories in Italy, and some in China, are shut down. And even if they could, retail buyers who purchased pieces from their collections are canceling/cutting orders to eliminate expenses and to avoid holding inventory they can’t sell. And for brands who operate a store, business owners are dealing with paying expensive leases on spaces that can no longer generate sales because they are closed. Brands can rely on e-commerce—Round Two, which is known for not having e-commerce, just announced a new site consumers can shop from. But it’s yet to be seen whether people are comfortable with or able to purchase clothes during this time. In general, the fashion industry’s  financial streams are drying up.

Typically around this time, stores are receiving Spring/Summer 2020 product to sell, and brands are developing their Spring/Summer 2021 collections to show in June, but that timeline has been upended due to the virus, which hit Wuhan, China, in early January, shut down factories there, where many brands make their product, and then spread into other countries including Italy, another apparel manufacturing hub, around late January. Italy is currently shut down.

While China is starting to get back to normal, Bobby Hundreds, who's spent the last 15 years traveling back and forth to China—a sizable portion of The Hundreds product is manufactured there—says because of the Chinese New Year, which takes place in February, they are used to factories shutting down for a couple weeks during that time. But around mid-January Bobby started to receive panicked emails from manufacturers he’s worked with for years requesting masks.

“These are people who have experienced SARS, MERS, H1N1 and nothing has been as big of a concern as this virus,” says Bobby. “These are sensible, professional people I’ve worked with for 15 years who were sending messages begging for masks.” 

The Hundreds canceled its annual warehouse sale, which was supposed to take place on the weekend of March 21, closed its Los Angeles store on the weekend of March 14, hoping to signal the importance of social distancing to its Fairfax neighbors. And to help move inventory so the company doesn’t incur as much loss, The Hundreds site went on sale. Los Angeles Mayor Eric Garcetti issued a stay-at-home order last week, mandating that residents not leave their houses for non-essential tasks. But, businesses that ship goods and services directly to people and their warehouses and distribution centers are considered essential and allowed to remain open. 

“The advice I would give to my friends with brands is to just focus on how to make it through these next 10 days or months,” says Bobby. “Now is not the time to be precious about image. Take things one day at a time, make actions to keep things afloat.”

He speaks to his young, typically high school aged customers via a program called Community and says a couple weeks ago when The Hundreds released its weekly drop, most of them weren’t thinking about the virus or letting it impact their usual routine—see the crowd at the Post Malone concert in Denver—but the mood started to change more recently with some customers expressing hesitation to buy things during this uncertain time. Bobby and his co-founder Ben Shenassafar,  address this in an Instagram post asking its followers to take care of themselves first, and if they can, support small business.

Multiple brands who need to sell product to stay in business but don’t want to be insensitive are releasing statements addressing this unprecedented pandemic. Elijah Funk and Alix Ross of Online Ceramics said after careful consideration they decided to release their most recent collection and mentioned the small team they support with these projects. Noah’s founder Brendan Babenzien posted a “Not Business as Usual” message on Instagram emphasizing how small businesses could struggle. “The only ones truly shielded from this are the ultra wealthy and huge businesses that can rely on vast reserves. The rest of us could be in serious trouble,” he wrote. He went on to ask customers to support independent businesses if they can.  

Chris Gibbs, who owns Union Los Angeles, posted a similar message, that also mentioned the need for a small business bailout—according to WWD, fashion groups such as the Council of Fashion Designers of America and the British Fashion Council are seeking federal aid. He started to notice a dip in online global sales in mid-January, and once the virus spread from China to Japan in late January, he shut down his Tokyo store for a couple weeks. It has since reopened, but now, with Covid-19 spreading throughout the U.S., he’s having to consider multiple things that make up his business. 

He operates two physical locations in Los Angeles: his store and his shipping office. As of last Tuesday those were both open to a limited capacity, but with Los Angeles new stay at home order, the store is now closed. Gibbs says e-commerce typically makes up 65 percent of Union Los Angeles’ sales, but last Monday that percentage was 97 percent. They are taking precautions now by bringing photo equipment home to shoot product, and changing delivery addresses so product isn’t shipped to his office. 

“We even have a curve here. And if everybody decided not to work on the same week, that's starting the progression of the worst case scenario which is going out of business,” says Gibbs. “I would say we probably have cash reserves that would get us through two months if the worst version of this came to pass. If Martial law came in and if we had to shut down the site but I still pay staff, I can probably survive for like two months.”

Gibbs did say his bookkeeper mentioned a legal term that says if something is an Act of God, you legally don’t have to pay rent. But outside of rent, he’s starting to consider canceling some orders or cutting them down to conserve spending. And brands he carries are doing the same.  “Some have canceled outright seasons, some have canceled a certain percentage of product during the season. Some are just delayed and some are on time,” he says. His in-house line, which is made in Los Angeles, hasn’t seen any real delays as of now.

There have been no confirmed decisions about Paris Men’s Fashion Week, which takes place in late June, but designers are starting to plan ahead. Mike Cherman of Chinatown Market, which is based in Los Angeles, made the decision to shut down his office a couple weeks ago. He’s already canceled his Paris Fashion Week market in order to recoup the €10,000 they usually spend on going. Because Chinatown Market sells mostly T-shirts and printables, which can be easily manufactured in various locations, he feels like they can get through it.

"It's not like I feel like our business will be shuttered, but it will be greatly affected," says Cherman. "My sales person came over to me and said 'What do you want to do about canceled orders?' If store are hit hard, they are going to cancel orders, but they will also need product. So it's a complex situation."

Kurt Narmore, the founder of Noon Goons, who makes all of his product in Los Angeles, is currently developing spring/summer 2021 to show and sell in Paris.

“I hope to God everyone is still able to go because that's the center of commerce. I mean that's where everything happens. So there's no backup to that,” says Narmore. “If Fashion Week was canceled I think that would be catastrophic for the fashion industry as a whole. So I, as of right now, I'm still planning to go to Paris, for sure.”

Gibbs, who says 40 percent of his stock comes from going to market in Paris, but believes brands will have to adapt, whether that’s by sending detailed shots of product on models or producing editorials for buyers/stores.

New York City is also under a take shelter order, but similar to Los Angeles, warehouses and shipping distribution centers are considered essential and therefore still open. Eric Emanuel, who manufactures his pieces in New York’s Garment District says when coronavirus hit overseas, he was thankful to be producing in New York, but by March 13, his company made the decision to shut down production. As of last week his e-commerce site was still busy and he was still shipping product, but as of now he’s looking into alternatives to keep his team safe and healthy. 

“The New York Garment district as a whole has been in a rough place even prior to what we are seeing now. it’s not cheap to manufacture here, so most take their work elsewhere,” says Emanuel. “My hope for what’s happening now is that as New York State is calling for help manufacturing gowns, masks, etc., the Garment District shines. With a shutdown of most of these manufacturers currently, they need work more than ever and the temporary solution to me is to aid the state in producing what they need most, which is protection [for healthcare professionals].”

Ev Bravado, who designs Who Decides War, which is based in New York, says they haven't received canceled orders as of yet and were able to get out spring/summer 2020 deliveries before the year was over. As of now, production on his collection hasn't been affected, but they are operating remotely. 

"It is important to keep an open mind about this current climate and do what makes the most sense for your business and brand, regardless of how it may seem to others," says Bravado in an email. "We are taking this time to focus on deeper  development and what comes next as a team. We will continue business as usual, remain optimistic, and will be prepared for any adjustments to come."
 

In the meantime brands are releasing product, but trying to also find new ways to engage the customer and help. Kerby Jean-Raymond of Pyer Moss has set up a $50,000 fund for minority and women owned small creative businesses in distress and converted his New York City office into a donation center for medical supplies like gloves and masks. To promote social distancing, Warren Lotus encouraged fans to submit a  self quarantining selfie for 7 days straight to win free merch. Zach Kinninger of Basketcase gave away 30 free T-shirts to people who have lost their jobs. RSVP Gallery is holding a T-shirt design challenge. And Kith's Ronnie Fieg set up a Zoom session with Nate Brown—98 other participants who were able to join—to brainstorm ways they could give back. Everyone is being tested on how to speak to its audience during a global pandemic that we've never experienced before. 

There are challenges that always come with owning a brand, which entrepreneurs try to prepare for, but Gibbs says he’s not sure how he could have gotten ready for this unprecedented situation.

“I consider myself a relatively fiscally responsible person who's tried to do right by the store and tried to keep pretty low overhead all things considered,” says Gibbs. “I don't know if there's anything I could have done. This shit happens and you just got to eat shit. And hope you can weather the storm and hope you can come back.”