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The managing director of Harrods struck an upbeat tone ahead of the luxury department store reopening on June 15, but said the government must ensure London remains accessible to international visitors.

Harrods is among the scores of upmarket retailers, including Mulberry and Tiffany, that today open their doors for the first time since stores were ordered to shut in March for the Covid-19 lockdown.

Companies have all been working on plans to promote social distancing in stores, and most have new and heightened health and safety measures they are implementing.

Michael Ward, the managing director of Harrods, which is introducing footfall monitoring technology to limit capacity in-store, told the Evening Standard: "The considerable new measures we have introduced will enable customers to shop safely at Harrods, without any compromise on experience, product or service."

He added: "Whilst the challenges of the last few months continue to impact us all enormously, at Harrods we are looking to the future with optimism. We have a new season to share, innovative plans in the pipeline, and we are excited to serve and support our community once more."

Harrods ready to reopen its doors as soon as safe to do so

However, Ward cautioned there will be difficulties ahead for the sector: "For most retailers, the storm is far from over, despite the positive steps we are beginning to take."

There are concerns from a number of retailers and restaurant owners about less spending from tourists, with travel restrictions and quarantine rules potentially deterring some shoppers.

Ward said it is vital for many industries that international visitors are able to travel into London.

Harrods through the years (1900s-1970s) - In pictures

He said: "Retail businesses have adapted quickly and introduced vast new measures to protect people, but our economy thrives on the support of those who travel here to live, work and invest. The government must ensure that the capital remains accessible and attractive to international visitors."

Scores of upmarket retailers are reopening in London today, including Mulberry.

Insight: How has the coronavirus crisis hit luxury retailers?

The bag maker plans to have 30 stores and concessions ready to serve customers this week in the UK and Ireland, of those 19 open today. All of its sites here are expected to be trading by June 29.

A spokesman for Mulberry said: "Our stores will implement a capacity limit and adhere to social distancing and all our staff have been provided with gloves and masks, as well as hand sanitiser. No cash payments will be taken but contactless payment methods will be available. Customers can also book a personal appointment, either in-store or as a virtual consultation."

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Harrods boss: We are looking to the future with optimism

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The managing director of Harrods struck an upbeat tone ahead of the luxury department store reopening on June 15, but said the government must ensure London remains accessible to international visitors. Harrods is among the scores of upmarket retailers, including Mulberry and Tiffany, that today open their doors for the first time since stores were ordered to shut in March for the Covid-19 lockdown.

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The coronavirus crisis and subsequent lockdown has impacted every level of the fashion and retail industry - and logistics is no exception.

But as lockdown lifts, how will customers choose to shop, and how will the industry deliver this new normal?

In this special Drapers Connects in partnership with Clipper Logistics and our Guide to Growth initiative, experts and retailers discuss the future of e-fulfilment and how Covid-19 has reshaped shopping, pushing the focus online as returns become a bigger volume challenge, click and collect becomes ever more vital, and safety and sustainability concerns remain at the front of shoppers minds.

Panelists: Tony Mannix, CEO, Clipper Logistics

Gordon Knox, business transformation and logistics director, Superdry

Dino Rocos, logistics expert and non executive director, Clipper Logistics

This video was recorded on 2 June 2020 as part of Drapers Connects.

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See the rest of the Drapers Connects schedule and other on-demand videos here. More digital events and live content will be annouced soon.

To contact us about partnering on future Drapers Connects content, click here for editorial, and here for commercial opportunities.

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Video: watch Superdry discuss delivering retail's new normal

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The coronavirus crisis and subsequent lockdown has impacted every level of the fashion and retail industry - and logistics is no exception. But as lockdown lifts, how will customers choose to shop, and how will the industry deliver this new normal?

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Clothing giant Primark has gone from making £650m in sales a month to nothing as the coronavirus has forced it to close in Europe and the US, it revealed on Tuesday.

It was not the only company to admit struggling in the face of the pandemic.

John Lewis has furloughed thousands of staff and fashion retailer Cath Kidston said it had closed its stores for good.

Primark owner Associated British Foods "has been squarely in the path of this pandemic," said boss George Weston.

Without furlough support from European states, many of Primark's 68,000 staff would have been made redundant, he said.

The company has also written down the value of its clothing stock by £284m.

"From making sales of £650m each month, since the last of our stores closed on 22 March, we have sold nothing," Mr Weston said.

He added that while he would "love" to be able to reopen Primark stores, "I know that we must not do so until we have suppressed this disease".

The chain, which was founded in 1969, does not have an online store or offer click-and-collect services for its products. The firm has previously said this is because it would not be able to keep prices for its clothing as low if it offered home delivery.

Mr Weston said that when stores can reopen, "we must make our Primark stores safe for our staff and our customers, even if that means ensuring there are fewer people shopping at any one time and so accepting lower sales at least until the remaining risk is minimal".

"In time we can rebuild the profits. We can't replace the people we lose."

Mr Weston paid tribute to two workers at AB Foods who within the last three weeks have died from coronavirus.

Mario Marioli worked for 40 years at a yeast plant the firm owns in Italy, and Claudio Maini worked at Italian balsamic vinegar maker Acetum for 20 years.

AB Foods said it had paid Primark's suppliers for stock it has received and will set up a fund to ensure workers who make those clothes are paid.

This move comes at a time when competing retailers have asked suppliers for payment holidays and cuts.

Earlier this month, New Look said it would suspend payments to suppliers for existing stock "indefinitely", telling them in a letter that the stock can be collected by its owners.

AB Foods is cash-rich by comparison with many companies with a High Street presence.

It has £801m in cash and a £1.09bn loan agreed, which it has recently drawn down in case banks have trouble lending in the future.

As well as Primark, Associated British Foods owns food brands including Twinings tea, Blue Dragon sauces and Ovaltine.

For these and other businesses outside Primark, the company has kept its financial forecasts for the year the same.

However, while many clothing rivals have been able to make sales online, Primark sells only gift cards through its website.

This is a big problem for AB Foods as Primark usually contributes about two-thirds of the company's profits.

'Key priority'

"Although AB Foods derives some benefit from product and geographical diversification in other parts of the group, the impact of the loss of Primark income, even if temporary, is a major blow," said Richard Hunter, head of markets at Interactive Investor.

The shares fell 2.3% in London trading to 1,944 pence apiece, valuing the firm at about £15.4bn. The shares changed hands at 2,708 pence each in February.

Overall, it said net profit for the first half of the year fell to £217m from £389m.

"Our food businesses have continued production at all facilities, maintaining their essential output to support the food, animal feed and pharmaceutical supply chains. This has been and remains a key priority for us," said Mr Weston.

John Lewis also reported trading figures on Tuesday.

Unlike Primark it has a strong online presence, but it said a surge in online orders had not made up for its loss of trade from department store closures amid the coronavirus outbreak.

After shutting its shops on 1 April, John Lewis furloughed 14,000 of its staff, according to its annual report.

Products like clothing and other items that can offer high margins for a retailer are not selling well right now, said Maureen Hinton, global retail research director at GlobalData. Meanwhile, low-margin areas with lots of competition like technology are selling well, which is good for sales but not profit.

The lockdown will test its ability to deliver, which may put it in good stead for September, when it parts ways with delivery firm Ocado.

"It will certainly have tested their ability and it is bringing on more capability as well," she said.

Its Waitrose supermarket chain has seen a boost, albeit one the company thinks could be temporary.

It warned that in a worst-case scenario, its department stores could see sales fall 35% this year, with Waitrose seeing a fall of less than 5%.

"Items in highest demand have been cupboard essentials like rice, pasta, long life milk; home baking; frozen foods and cleaning products," the company said.

Since 26 January, Waitrose sales have risen 8% compared with a year ago, while John Lewis sales are down 7%.

Primark and John Lewis were not the only brands to reveal on Tuesday that they are struggling in the face of the crisis. Floral fashion firm Cath Kidston said that its 60 stores in the UK would not be reopening their doors after the lockdown is over.

The firm fell into administration and now its brand and online shop has been bought by a company owned by Baring Private Equity Asia. That has left its physical stores in the hands of administrators and more than 900 shop staff unemployed.

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Coronavirus: Primark sells nothing as retailers struggle

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Clothing giant Primark has gone from making £650m in sales a month to nothing as the coronavirus has forced it to close in Europe and the US, it revealed on Tuesday. It was not the only company to admit struggling in the face of the pandemic.

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Cath Kidston permanently closed all of its stores with the loss of 900 jobs, while Primark's owner said sales had fallen to zero and it had furloughed 68,000 staff on another ominous day for British retailers, who have been hit hard by the coronavirus pandemic.

Meanwhile, pubs, bars and restaurants warned MPs that they face a "bloodbath" as lockdown conditions are eased, with up to a third of the sector at risk of going out of business.

Associated British Foods (ABF), which owns budget retailer Primark, was the first to sound the alarm on Tuesday, as it revealed that sales had dropped from £650m per month to zero as a result of all its stores closing in Europe and the US.

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Sharing the full story, not just the headlines

Unlike many rivals, Primark does not sell clothes online - meaning it has been unable to mitigate lost revenues by ramping up deliveries to customers' homes.

ABF boss George Weston said the group had been "squarely in the path of this pandemic" and would have had to have laid off staff if governments had not implemented furlough schemes which cover wage costs.

Pre-tax profits slumped 42 per cent to £298m for the half-year to February as Primark was left with millions of pounds of stock it was unable to sell. The company wrote down the value of its stock by £243m.

Mr Weston said that when stores can reopen, "we must make our Primark stores safe for our staff and our customers, even if that means ensuring there are fewer people shopping at any one time and so accepting lower sales at least until the remaining risk is minimal".

"In time we can rebuild the profits. We can't replace the people we lose."

Home furnishings chain Cath Kidston confirmed on Tuesday that its 60 stores will not reopen after the coronavirus lockdown ends, with just 32 out of 940 employees to keep their jobs.

The brand will continue after a deal with the one of the retailer's shareholders, Baring Private Equity Asia (BPEA), which will buy the online business, brand and wholesale arm from administrators Alvarez & Marsal.

Melinda Paraie, chief executive officer of Cath Kidston, said: "While we are pleased that the future of Cath Kidston has been secured, this is obviously an extremely difficult day as we say goodbye to many colleagues.

No hype, just the advice and analysis you need

"Despite our very best efforts, against the backdrop of Covid-19, we were unable to secure a solvent sale of the business which would have allowed us to avoid administration and carry on trading in our current form."

Hospitality firms are facing similar problems to retailers, with the sector's trade body calling for deferral of rent payments that have built up during the pandemic to help prevent mass insolvencies.

UK Hospitality chief executive Kate Nicholls called for urgent action, including extending the employee furlough scheme for premises that may be forced to continue social distancing measures as late as Christmas, long after the rest of the country has left lockdown.

Ms Nicholls told MPs on the House of Commons Treasury Committee that large numbers of hotel and restaurant staff are already missing out on furlough payments because income from tips and service charges is not included.

Ms Nicholls said: "It is undoubtedly the case that we are not going to be able to save every business and we are not going to be able to save every job in hospitality."

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Primark sales fall from £650m a month to zero

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Cath Kidston permanently closed all of its stores with the loss of 900 jobs, while Primark's owner said sales had fallen to zero and it had furloughed 68,000 staff on another ominous day for British retailers, who have been hit hard by the coronavirus pandemic.

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De Keyser, who has previously worked at Harrods, Harvey Nichols, Selfridges and John Lewis, has written to Business Secretary Alok Sharma proposing the immediate introduction of a new insolvency process.

His proposal, coined "rental administration", aims to "ensure that landlords make their contribution to the survival of the high street".

De Keyser says the Rental Administration would allow retail leaseholders to enter into a special, limited administration where the only creditors affected would be landlords and rates authorities. Having entered into rental administration, the retail business owner would then buy back the business, but without the lease in its old form. All parties, including landlords, would then be bound into a new lease, of the same duration as the previous one.

Under its terms, the amount payable by retail business owners would be calculated on a percentage of turnover in the previous 12 months. Rates would be levied using a similar formula. All other creditors and assets would be taken into the new company intact.

De Keyser said: "The rental administration I am proposing would be simple and cost effective. It could be entered without loss of reputation or stigma being attached to individuals and businesses. It would be equable in introducing a sliding scale of property overheads to be adjusted in keeping with turnover. This would ensure landlords play their part in restoring economic prosperity in the post-corona world and also that they would benefit from the long-term survival of their tenants businesses.

"For the initial period of inevitable decline in turnover, their income would decrease proportionately. Then, once it recovers, rents and rates will rise again. The fact is that, without the scheme, turnover for many simply will not recover. Fashion outlets, department stores and thousands of other retailers will simply go out of business, devastating the High Street, casting thousands out of work and leaving the landlords with no rental income."

He added: "The government has been ingenious and generous in designing schemes to help businesses cope with the lockdown and its dire economic consequences. Introducing a rental administration would be in keeping with other measures. It would bring relief to a vital sector and ensure that the pain and rewards of recovery are equally spread. Without it, 15 June will mark the start of a high street apocalypse."

Meanwhile, fashion wholesale agencies and distributors across the UK are calling to be included in the Covid-19 business rates grant and relief schemes. London-based Jonny Drama is one of the signatories.

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Retail veteran calls for 'rental administration'

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De Keyser, who has previously worked at Harrods, Harvey Nichols, Selfridges and John Lewis, has written to Business Secretary Alok Sharma proposing the immediate introduction of a new insolvency process. His proposal, coined "rental administration", aims to "ensure that landlords make their contribution to the survival of the high street".

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In order to survive in the lockdown, UK fashion retailers will have to show they can adapt to changing consumer needs. With clothing sales likely to decline even after restrictions are lifted, how can the fashion industry best adjust to this 'new normal'?

A strong decline in sales

Next's latest trading update highlights t he severe impact that COVID-19 is having, and will continue to have, on the UK fashion sector. The retailer has warned that the retail sales decline has been faster and steeper than it anticipated, and that it will lead to significantly lower performance in both the first and second halves of the year. Next's 32% fall in full price online sales was clearly impacted by its decision to close its warehouses and halt online sales for 18 days. This, however, gave it the time to re-organise its warehousing to ensure safety and social distancing, and has allowed it to be more prepared for the surge in demand it has seen since it reopened its online site on 14 April.

As one of the biggest clothing retailers in the UK, Next's sales results act as a bellwether for the UK fashion market. Many retailers can expect sales to continue to decline heavily, even once the full lockdown has been lifted, due to the disruption from continued social distancing and the economic consequences of the crisis, as it might take time for customers to return to their normal shopping habits. While Next is in a secure financial situation, many other fashion retailers in a less stable position will also have seen a similar drop in sales, and based on an expected prolonged decline that will last for at least the rest of the year, they are likely to find it much more difficult to recover.

Retailers need to adapt

As people continue to work from home, fashion is less likely to be seen as a spending priority. Fashion retailers will need to proactively approach the upcoming months and efficiently manage inventory, as sales drop and consumers prioritise essential items. Certain categories, such as loungewear and nightwear, are likely to benefit as people seek out more comfortable clothing to wear around the house.

Independent retailers could offer customers a more bespoke online service and may be able to be more flexible at a time when large online deliveries may be disrupted. In China, we saw sales assistants setting up social media WeChat groups with VIP customers for exclusive online fashion shows, and there is scope for higher-end fashion stores and luxury brands to offer something similar in the UK via WhatsApp.

Retailers need to spread their supply chains

Once the lockdown is over, retailers are going to struggle to sell Spring/Summer stock, so there is likely to be heavy discounting to encourage people to buy. However, many retailers have cancelled future orders and this will inevitably have a huge impact on global supply chains and could push factories in developing countries to the brink of collapse. This could impact availability of Autumn/Winter 2020 fashion, although many of the large retailers have spread the risk by having factories in different parts of the world and so can shift manufacturing.

Luxury fashion brands are most likely to see their supply chains impacted as many rely on textile suppliers and garment manufacturers in Italy, which has been in complete lockdown for a prolonged period.

Brands can show they are helping society

There is a growing need for some businesses to shift manufacturing and investment into supporting wider society. We are seeing some fashion businesses responding to these demands. LVMH, the parent company of luxury brands including Louis Vuitton, has started producing hand sanitiser to deal with the shortage. Dolce & Gabbana has partnered with Humanitas University to fund a coronavirus research project, while Giorgio Armani, Prada and luxury group Kering have all donated money to hospitals and to help the fight against the virus. In the UK, womenswear brand Three Graces London donated all of its net sales between 18 March and 1 April to homeless charity Crisis to help the most vulnerable amid the COVID-19 outbreak.

Consumers care how brands act, with Mintel research showing that most consumers would think twice about buying from a designer brand that acts in a way they disagree with. Mintel Trend On Displa y highlights how, in the digital world, brands have to become aware that all of their actions are magnified.

Brands that show empathy and support consumers during these unprecedented times are likely to be viewed favourably once the COVID-19 outbreak has passed.

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COVID-19 is putting huge pressure on UK fashion

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In order to survive in the lockdown, UK fashion retailers will have to show they can adapt to changing consumer needs. With clothing sales likely to decline even after restrictions are lifted, how can the fashion industry best adjust to this 'new normal'?

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Personal Care delivery from goPuff
goPuff

As the COVID-19 pandemic is the first national crisis in the age of "startup disruptors," I have been curious to see how younger, innovative companies that often have the flexibility to be nimble and data-oriented have stepped in to monitor and adapt to the current environment and fast-changing consumer behavior.

One such disruptor on my radar that seems well-suited to consumers staying home is goPuff, a Philadelphia, PA-headquartered startup that delivers everyday essentials from cleaning supplies, home needs and over-the-counter (OTC) medication to food and drinks in just minutes for a flat $1.95 delivery fee.

According to Daniel Folkman, Vice President of Business at goPuff, it's their vertically integrated model - with its own centrally located facilities in every local market it serves - that differentiates them from others in the space and enables them to deliver everyday essentials quickly and safely. I caught up with Daniel to discuss how their model, coupled with their product offering and increase in demand, has enabled goPuff to deliver to customers in a time of need while simultaneously providing CPG partners with unique insights into changing consumer habits and trend predictions.

Dave Knox: Why are customers going to your platform in the midst of the pandemic? How is goPuff responding to this call, particularly in such a challenging environment?

Daniel Folkman: Our customers have always valued the convenience of delivery - whether that's an order for chips during the big game or baby diapers in the middle of the night. Amid COVID-19, this service has become critical for many who need access to daily essentials. In many places, we may be the only option for immediate delivery of critical items. We understand that we are fulfilling a need and have taken the necessary steps to ensure our services can be provided safely for our customers, employees, driver partners and the entire community - even expediting the launches of new facilities and increasing our standard delivery zones to serve more people during this unprecedented moment.

Knox: How do you approach the increase in demand while ensuring safety for both your customers and your driver partners?

Folkman: The reason we are able to scale and meet customer demand is because we know our field employees and driver partners are the lifeblood of goPuff. We are also hiring thousands of additional driver partners and have shifted operating hours in response to demand.

With this in mind, the health and wellness of our driver partners, employees and customers is absolutely our top priority, no question, and we have implemented several new policies procedures in line with CDC guidance to ensure continued health and wellness: We developed a financial assistance policy to support our teams, including 14-day assistance for any employee or driver partner quarantined or diagnosed with COVID-19; we have and will continue to equip facilities and driver partners with cleaning supplies and protective equipment, including gloves, masks, disinfectant wipes and sanitizer; we enable safe social distancing inside facilities; clean our facilities every four hours; and have implemented Non-Contact Delivery.

Knox: Shifting gears, goPuff just released a white paper on consumer trends during COVID-19. What makes your insights different from what other retailers are offering to brands?

Folkman: Thanks to our direct-to-consumer business model, we're able to predict order patterns and identify changing consumer habits in real time. This information enables us to provide our CPG partners with deep and action-oriented behavioral insights into how and when their products and brands are used and what actions to take to maintain relevance in an increasingly crowded marketplace. This allows brands to better understand changing preferences, know what levers to pull to create repeat purchasing habits and identify opportunities for loyalty with an audience that has been shifting away from traditional shopping habits.

Knox: We have all heard about consumers stocking up on cleaning products and staples like paper towels, but have you uncovered any more surprising trends in your research?

Folkman: The most surprising trend we uncovered was how quickly consumers shifted from preparation products to lifestyle products as we spent more time hunkered down. While we did see a spike in cleaning, disinfectant and OTC products (Purell spiked over 400% when cases first trickled in and has remained high), we also saw orders for energy drinks, school supplies and popcorn spike quickly as Americans were working, studying and entertaining themselves at home 24/7.

Following the energy drink spike, we began to see an increase in search and orders for cooking, baking and canned goods as Americans adjusted to spending more time in the kitchen and likely ordering out less than in the early days.

More recently, as many of us have been in quarantine for about a month, we're seeing big spikes in personal products - our personal care category has seen a 113% growth in the past week as consumers are likely replenishing soaps, shampoos and other items they may have purchased when the cases first started.

Knox: Now that you're seeing habits begin to normalize, what happens next? What are you telling brands to prepare for in the future?

Folkman: Hopefully the past few weeks have been unique in many regards, but there are two trends we believe will last long after the pandemic recedes. The first is fast-casual cooking at home. While there's no reason to believe people will reallocate their former commuting time to cooking elaborate three-course meals, individuals and families alike have turned to home cooking as a necessity and we expect that the novelty becomes a more frequent habit.

When it comes to ingredients, we predict that many shoppers will have lessened their aversion to frozen options. This may open the door to products and brands that previously struggled to establish a foothold in the fresh-food space. Instead of leaving the store empty handed when a certain item is unavailable, shoppers may be more willing to seek frozen alternatives in the post-pandemic time.

The second trend we expect to last is renewed personal and community connections. Both despite and because of isolation, friends, families and coworkers are turning to new methods of engaging with each other. While virtual happy hours and social distancing get togethers will fade as the pandemic subsides, we expect communities to emerge more connected than before. Brands may continue to message on these newfound connections while celebrating a revived sense of freedom.

Knox: Do you regularly share these insights with CPG brands? It seems like they would benefit most from this information.

Folkman: Absolutely. CPG companies are coming to us and asking 'what trends are you seeing across the industry right now and which of those trends do you think will stick?' Everyone is trying to get a better grasp on the situation so that they can make more informed decisions that benefit their brand long-term. This is a challenging time for everyone and our goal is to help our brands truly understand what consumers want and need now and in the future to drive better connection, satisfy customer needs and adapt in this changing environment.

Knox: Given your own knowledge of these trends, is goPuff tapping into this through product offering or marketing tactics?

Folkman: At goPuff, we want to be there for our customers as they adapt to a 'new normal.' For example, based on what we have seen and what we expect to see, we have added more cooking products, like cooking oil, broths and spices, to our offering. If customers are having virtual happy hours or get togethers, we're here to bring them the snacks and essentials they need and are communicating this to them regularly.

This is consistent with who we are as a customer-first company. We evaluate trends and data daily and constantly seek and listen to customer feedback to ensure we're providing the experience and value they want and need. We are hopeful this insight is as helpful to our partners as it is to us.

... Read More

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How Brands Can Adapt To Changing Consumer Behavior Amid COVID-19

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As the COVID-19 pandemic is the first national crisis in the age of "startup disruptors", I have been curious to see their response. I sat down with one such company to discuss how they have delivered in a time of need while providing partners with unique insights into changing habits and trends.

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C oronavirus has exposed many shortcomings in the way the fashion industry does business, but none more so than the strained and fraying relationship between retailer and supplier.

Faced with closed stores, a glut of unsold stock and new-season product already on the way, many retailers quickly cancelled orders as the crisis took hold. Several suppliers warned Drapers that they could be forced out of business, and that it could take until 2021 for capacity to recover following a raft of cancellations across the supply chain.

High street giants such as New Look cancelled all orders and pushed back payments "indefinitely" and Philip Day's Edinburgh Woollen Mill Group cancelled all pending and future orders until further notice. Much of the industry followed suit.

Experts tell Drapers the lasting impact of the virus will increase the need for strategic relationships, a demand-driven and more flexible supply chain, and to more near- and on-shore manufacturing. Consumers will also become more discerning about sustainability and retailers should not slack in upholding their corporate social responsibility values when trying to limit costs.

The supply chain has now reached an absolute limit of being treated as the fall guy in every respect

Brand Supplier

Ultimately, Covid-19 has served to accelerate much of the change that was already happening across fashion retail's supply and sourcing base.

A matter of trust

Many manufacturers and suppliers have been left with catastrophic levels of cancelled orders, as well as trust issues over future partnerships. This has exposed a legacy of stress points in supplier and retailer relationships that can no longer be ignored.

"The supply chain has now reached an absolute limit of being treated as the fall guy in every respect," says one brand supplier. "It's always the supplier that gets hit, and that is on top of what is already very competitively negotiated prices on the high street."

Suppliers argue that the model needs to move away from purely transactional relationships in favour of strategic ones, where retailers invest in their suppliers to regain trust, and suppliers invest in infrastructure to drive productivity.

One buying and merchandising expert explains: "As the retailer starts creating revenue again, if it is a truly established partnership and with longevity between the two, then the retailer should be looking to invest a large sum of money back into that manufacturing facility."

Right-sizing a business is not just your shop estate or your buy. It's the number of relationships you need and can manage effectively

High street chief executive

He notes that manufacturers will want to reserve some capacity for securing new clients, but adds "the power of the profitable retailer and the strategic partnership will bear fruit in the long run".

One high street chief executive fears that "transactional supply base relationships will become more challenging" as many businesses "rationalise how many suppliers they need": "We won't have the teams to interact with them. Right-sizing a business [after Covid-19] is not just your shop estate or the size of your buy - it's right-sizing the number of relationships you need and can manage effectively."

However, while the industry agrees that strategic partnerships are of crucial importance to the future of the supply chain, consultancy firm McKinsey & Co suggests that large retailers are not willing to directly invest in suppliers' businesses.

In April, McKinsey conducted a survey of 116 sourcing executives from retailers and brands, mostly in the US and Europe, who between them manage more than $120bn (£98bn) in sourcing value. Almost half (46%) of retail sourcing bosses said it was highly unlikely that their organisation would co-invest in suppliers to secure future capacity, compared with 17% who found it somewhat or highly likely.

The core element of a stronger partnership is an increase in productivity

Achim Berg, McKinsey

Instead, the necessary transition to strategic partnerships will include support in the form of future binding commitments, more exchange on retail data, and formal documentation of agreements, says Achim Berg, senior partner at McKinsey, who advises global clothing clients on topics including supply chain and sourcing.

"We have been telling everyone for a couple of years now that the days of transactional relationships are long gone," Berg explains. "They need to be seriously investing into partnerships. The core element of a stronger partnership is an increase in productivity where you can jointly invest into all your processes and also into the production process to make it more efficient."

Contracts will inevitably come under greater scrutiny from manufacturers.

"The issue is that there are a lot of verbal commitments [rather than written contracts between retailers and suppliers], which is incredibly risky," UK Fashion and Textile Association chairman and global manufacturing consultant Nigel Lugg tells Drapers. "Previously, all the risk was on the supplier side. It's my personal feeling that that will change. The contracts are going to be verified much more strongly."

Terms and conditions will now be challenged more routinely, one UK sourcing director suggests, adding: "The key is the payments, though. A lot of factories in Bangladesh were producing garments purely on cashflow and, the moment the production stopped, they realised they made no money at all.

"They weren't really focusing on the profitability and a lot of corrections will take place on that basis. Manufacturers will look at their own resilience."

A united front of manufacturers would present a stronger front to customers and enable them to more readily withstand unrealistic demands

Mostafiz Uddin, Denim Expert

One positive result of the pandemic could be the emergence of an internationally recognised regulatory body for clothing manufacturers and their partners.

Multiple experts suggested to Drapers that such a body could act to collate information on retailers to create a rating system of who is reliable to work with, produce best-practice guidelines and facilitate negotiations.

"There is no reason why, once the pandemic subsides, manufacturers in geographical regions should not consider the formation of a unified apparel manufacturing body," says Mostafiz Uddin, managing director of Bangladeshi manufacturer Denim Expert.

Uddin explains: "A united front of manufacturers would present a stronger front to customers and enable them to more readily withstand unrealistic demands."

The customer is always right

Across almost every sector of the industry, the coronavirus crisis has led to the acceleration of change that was much needed and often happening at a painfully slow pace.

No one quite knows what customer demand is going to look like when the world begins to return to some form of "normality". However, experts tell Drapers that one thing is for certain: the industry needs to move rapidly to a demand-driven model.

"When you look at supply chain resilience, it is traditionally very rigid with little agility," says one UK sourcing director. "The model is very flawed. The new normal will be that the brand or retailer has to orbit the consumer. They are the ones who will decide what the demand is going to be."

This will mean a much more reactive model, incorporating smaller order volumes, vertical working processes, and the benefits of dual-location and near-shore sourcing to enable retailers to better react to customer data and analytics.

We are on the cusp of major growth in digitalisation in areas such as sample development and product approval

Peter Walsh, former Primark sourcing director

It will also involve further digitalisation of the supply chain, and maintaining in the long term some of the digital practices that sourcing teams have had to adapt to when working from home and unable to travel during lockdown.

"A lot of the business processes that existed [such as buyer meetings and long-distance travel for garment approval], you have had to re-engineer quickly just to survive," says Mike Mikkelborg, former New Look and Gant supply chain director, and founder of sustainable brand Nu-In. "A large portion of those are not in place just for the crisis situation - actually those are better processes and will carry you forward."

Video conferencing tools such as Zoom and Skype are now being used much more universally. Together with the continued developments in technologies such as 3D modelling, they provides the opportunity for reduced travel and more dynamic garment production.

"We are on the cusp of major growth in digitalisation in areas such as sample development and product approval," says Peter Walsh, former global sourcing director at Primark, who now runs his own consultancy. "With 3D graphics, 3D sampling and 3D image quality becoming more commonplace, it allows a lot more of that sample development and approval to be done remotely."

Design processes can be streamlined with the use of artificial intelligence and 3D sampling, and consultation processes can be cut down via video appointments and virtual approvals, enabling better team integration.

The global merchandising manager of one high street retailer tells Drapers simple things such as videos of garments in development phases could make all the difference in speeding up the currently laborious process: "When Asos introduced its Virtual Catwalk [in June 2019], it gave a much better insight as to how the garment moves and fits on the person versus a flat photograph. How can suppliers learn from that and develop catwalks or showrooming so you can select in a virtual environment?

"Without a shadow of a doubt, technologies being used now to cope with coronavirus will be adopted in the long term. Digitalisation is certainly going to kick in, in terms of how we communicate and how we work smarter."

Closer to source

Retailers will also seek to remap their sourcing strategies as part of this transition to a reactive model and to ensure they are not overly reliant on a single market, should a second wave of the virus create future production headaches.

Coronavirus has caused "a tsunami across the global supply chain", UKFT's Lugg tells Drapers: "The industry has gone out [internationally] for cheap labour, and we're now realising that the exposure and distance of that, and to shut it down in the event of a pandemic, has catastrophic impacts."

At the outset of the crisis, western retailers were left scrambling to secure stock as factories in China shut down, not anticipating the virus would spread. However, as the epidemic turned into a pandemic, the danger to the UK public started to dawn as the UK government ordered the closure of non-essential stores. Retailers rushed to cancel orders.

The pandemic has heightened everyone's awareness and concern about having such a large reliance on international shores

Sourcing expert

This has caused retailers to evaluate their international sourcing mix and over-dependence on certain regions as they attempt to better balance risk, flexibility and cost in their future supply chains.

"The pandemic has heightened everyone's awareness and concern about having such a large reliance on international shores when something happens that you can't control and your business becomes very fragile," says one sourcing expert. "The mix between regions is undoubtedly going to change."

The most likely result is going to be an acceleration of the shift to near-shore and some on-shore sourcing, which provides benefits in terms of shorter lead times.

The global merchandising manager of one retailer tells Drapers the business would be moving "considerable amounts" of product that "was on long lead time from Asia and the rest of the world back closer to home".

He said key categories such as knitwear and shoes would move back to a predominately European sourcing base, enabling the retailer to "source close to season" and adapt to trends more reactively.

As part of its ongoing transformation programme, Marks & Spencer has also said that it will concentrate its supplier base and develop a faster, near-shore supply chain to enable the reorder of seasonal lines.

Walsh, ex-Primark sourcing director, tells Drapers the crisis may "be the impetus retailers and brands need to make sure that their risk is balanced across sourcing regions": "It may cause them to introduce a cap on the proportion of any one product sourced out of one region to really work at developing strategic sourcing in new areas and in new countries." He adds that Ethiopia, for example, is "developing strongly as a result of significant amounts of textile and apparel development" driven by big supply groups.

What this has exposed is how little manufacturing we have here

Brand supplier

This growth of near-shore sourcing puts locations such as Turkey, north Africa and eastern Europe in "a more favourable situation", says McKinsey's Berg: "Retailers have realised and experienced how difficult it is if you are too dependent on one or a few markets, and that will have a lasting effect. They will diversify their risk, but China will continue to be an important player [because of its sourcing legacy and market share].

"Suppliers in Sri Lanka, China and Bangladesh have tried to mitigate the disadvantage by creating flexible set-ups to stay in business."

This includes solving issues in sourcing certain fabrics, and holding increased stock to make more flexible offers.

When considering new sourcing locations, Mikkelborg says retailers should look at who has dealt with the current pandemic most effectively: "That's where you need to start looking [for sourcing] because those countries have not only managed the current crisis well, they will manage any future outbreaks well again and again. We know who has dealt with it well so far: China, Singapore, South Korea and Germany."

Limited capacity in UK factories means retailers are unlikely to rely on UK resources for a large proportion of production in the future, although experts tell Drapers there will be some resurgence of on-shore manufacturing.

"What this has exposed is how little manufacturing we have here," one brand supplier tells Drapers. "At least if we were manufacturing at home, we could ride out storms far better at a retail level than we do currently.

"However, the government has a role to play here as well - investment is required, and the government needs to create funding for new manufacturing businesses to establish themselves and avoid taking huge overdrafts."

The sourcing director of one UK-based brand tells Drapers the business was investigating "the adoption of micro-factories to bring production back to the UK and closer to source", and considering owning some of these factories itself to have increased flexibility.

He adds: "There will be a global correction within 18 months, and a lot of retailers will be looking at having a fragmented supply chain so it's not dependent on any one particular country."

Sustainability sells

The coronavirus pandemic has also accelerated a consumer focus on ethics and sustainability within the fashion industry's supply chain.

When deciding how to spend their - probably reduced - clothing budget after the pandemic and faced with the choice between a sustainable and non-sustainable product or company, customers are likely to opt for the former, experts tell Drapers.

Sustainability has not dropped off the agenda of the consumer, and actually is even more important now than before

Karl-Hendrik Magnus, McKinsey & Co

In another survey conducted by McKinsey in April, two-thirds of UK customers said it was now even more important to limit retail's impacts on climate change: 65% of consumers indicated that they would be sticking with brands they know, and highlighted the importance of trust and transparency during the crisis and beyond.

"While [sustainability] has dropped off the agenda of many executives, it has not dropped off the agenda of the consumer, and actually is even more important now than before," says Karl-Hendrik Magnus, a partner at McKinsey who specialises in retail supply chain and sourcing. "Executives need to be quick in reprioritising this on the agenda."

Another supply chain expert agrees that, although "sustainability and compliance may not be the biggest priority of businesses in the short term, they aren't going to be able stray from it for very long, as the consumer awareness and demand is strong and will continue to grow".

The short-term approach to social sustainability in the supply chain has varied across the market as retailers navigate the immediate stock conundrum.

After initial criticism, Primark established a fund to cover the wages of workers in the developing world who were producing now-cancelled orders. Suppliers tell Drapers that players such as Asos, Zalando and M&S have also treated them positively.

However, widespread order cancellations across the industry have left countries such as Bangladesh - and its workers - devastated. The Bangladesh Garment Manufacturers and Exporters Association says 59 garment factories had closed permanently as of 29 April, and 25,900 workers had lost their jobs as a direct result of deferred payments and cancelled orders.

Total clothing exports from Bangladesh will be down $4.9bn (£3.9bn) from March to May. The figures paint a disturbing picture of the impact on the country, and one of which consumers are becoming increasingly aware during the crisis.

In the McKinsey survey, when asked how fashion brands could help society to deal with impact of Covid-19, 40% of consumers said a contribution to helping low-paid workers in their factories in Asia was a top priority.

"If you link sustainability to corporate social responsibility [CSR], it's going to play an even bigger part in people's lives," says one supply chain expert. "With job security at risk for some many people, they will be thinking twice about what they spend their money on. Businesses are going to have to make sure they are ticking the human and emotional boxes with consumers with all of these CSR points."

Former sourcing director Mikkelborg agrees: "In all crises, there is an opportunity and I think sustainability is a big one here. It will be even more powerful going forward."

When the retail industry emerges from this crisis, damaged relationships with suppliers will be the first bridge to rebuild. From there, retailers must seek to minimise risk within their sourcing structures and not dismiss any underlying issues - such as an overreliance on one country - that the pandemic has exposed. Out of adversity comes opportunity, and the industry should take this chance to build a flexible and reactive supply chain model, suited to the modern consumer and their spending habits.

After the coronavirus pandemic, the world will not be the same again, and the fashion industry cannot afford to be either.

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Drapers Investigates: Sourcing and supply chain in a post-Covid world

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C oronavirus has exposed many shortcomings in the way the fashion industry does business, but none more so than the strained and fraying relationship between retailer and supplier. Faced with closed stores, a glut of unsold stock and new-season product already on the way, many retailers quickly cancelled orders as the crisis took hold.

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All it takes is a walk down any street in a major metropolitan area to see how many consumer-facing businesses are responding to the coronavirus crisis, which is unfolding, and worsening, by the day. With governors in at least 19 states having slapped restrictions on bars and restaurants, many are now closed.

Chains from McDonald's to Shake Shack have roped off their seating areas. Much of the retail sector, meanwhile, is a ghost town. Companies from Nike to J.Crew, Nordstrom to Sephora, have all shut down their stores. Patagonia made news last week by closing down not only its retail outlets, but all of its operations, period.

These are short-term responses to a crisis and, experts agree, they are wise and necessary ones. They will also cost a great deal of money, not just because of lost foot traffic, but also because of the outward rush of money from corporate coffers as many brands continue to make payroll for workers who are not presently working. ("All of our hourly workers will continue to receive pay in alignment with business as usual operations," Apple CEO Tim Cook promised on Friday.)

Yet even as companies improvise responses and gird themselves for severe, short-term losses, an unsettling fact remains. Even optimistic health officials believe current lockdown conditions are likely to remain with us for two months. President Trump has mentioned restrictions lasting until July or August. And officials in the U.K. have even warned that the epidemic could drag on into the spring of 2021.

Nobody knows how long this restrictive period will last, but the mere uncertainty of the pandemic's duration calls into question just how well companies are equipped to manage a long-term disruption to their business. Taking it on the chin for the next quarter is one thing, but business may well be severely disrupted into the quarter after that-or longer.

"From an operational standpoint, most organizations right now are dealing with the immediate term, with how do we get people up and running and feeling connected culturally and having access to what they need," said CBX chief engagement officer Satoru Wakeshima. "For the longer term, you have to question: How prepared are companies?"

That's hard to know exactly, since most of them are either not talking or sticking with general statements about the immediate steps they're taking such as implementing work-from-home procedures and shifting as much business as possible to online and delivery models. A Coca-Cola spokesperson told Adweek that "we are all taking it day by day as we receive updates from health officials and the government." A spokesperson for Walgreens said that "the situation remains very fluid" and that the company is "working around the clock to monitor the situation."

While that situation develops, however, analysts and economic experts say changes in the long-term business picture will be just as critical as the immediate challenges brands are facing right now. If there is good news, though, it's that much of the distant-horizon planning can be done while simultaneously addressing some of today's issues.

It's time to address technological shortfalls

Douglas Laney, data and analytics principal at Caserta and the author of Infonomics, observed that a number of organizations are presently scrambling just to equip employees to work from home-including many who've never had to work remotely before.

"One client [told me] their employees don't have laptops to take home-so what are these people going to do? They can't take their workstations home," Laney said. "So, this client is renting and buying laptops for critical home workers."

But while the IT guys are busy setting up remote-office capabilities, Laney said, it's a good idea to consider whether employees will have the tools they need to stay home and work for a long period of time. Brands, he said, need to think about anything technological "that inhibits your company from doing business-you can't sign documents or you can't get someone on a meeting because your conference facility is crashing or you can't reach each other because you don't have the bandwidth. How do you get [employees] all prepared with proper security-VPN and antiviral? That takes time. It's going to be an eye-opener for a lot of companies."

Ecommerce won't save the day, but it's crucial

Industry watchers also suggest that if a brand hadn't devoted major resources to ecommerce in the past, now is the time to do it. While many analysts have said ecommerce cannot replace all lost foot traffic (especially if consumers hit by curtailed or lost incomes have less money for shopping), it's also true that in the wake of the coronavirus, over 46% of consumers are more likely to buy clothing online, and nearly 65% are more likely to head to the internet to buy personal care products, according to recent data from Red Points.

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What Can Brands Do If the Coronavirus Crisis Drags On for Months?

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All it takes is a walk down any street in a major metropolitan area to see how many consumer-facing businesses are responding to the coronavirus crisis, which is unfolding, and worsening, by the day. With governors in at least 19 states having slapped restrictions on bars and restaurants, many are now closed.

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Boris Johnson has announced all non-essential retailers will be able to reopen in England from 15 June, a move which will include clothes shops.

Since the beginning of the coronavirus lockdown, normal shopping habits have been thrown out the window.

Drapers reported in-store sales have dropped 84 per cent compared to 2019, and - despite online grocery sales surging - for the rest of the retail landscape things look bleak.

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It is hoped the reopening of shops will give a boost to the economy and reverse the fortunes of the high street, but things will not go back to normal; shops will be expected to adhere to strict guidelines to reduce virus spread.

So what could the new rules mean when it comes to shopping?

The Independent has spoken to a number of retailers including Arcadia - which owns stores such as Topshop, Dorothy Perkins and Burton - and Next regarding the next steps, with all confirming that they are currently in the process of working on plans and further guidance for the government.

Here is everything you need to know about how coronavirus might alter the shopping landscape, from when you can expect stores to reopen to how people's spending habits have changed.

When will clothes shops reopen in England?

Mr Johnson said the reopening of shops is still contingent on "progress in the fight against coronavirus" being made.

Provisionally all non-essential retailers will be able to open from 15 June, it was confirmed on Tuesday 26 May, and some will be able to reopen even earlier on 1 June.

These earlier re-openings will include outdoor markets and car showrooms.

What about the rest of the UK?

The leaders of the four nations of the UK have been choosing different ways to ease the coronavirus restrictions, with first ministers Nicola Sturgeon, Mark Drakeford and Arlene Foster all rejecting Mr Johnson's new "stay alert" slogan.

Instead, they have opted to retain the original "stay at home" message, while lifting selected parts of the lockdown at their own pace.

In a speech last week, first minister Sturgeon suggested the re-opening of shops will not be happening in the coming weeks, as they are only in phase one of the easing measures.

What safety measures will retailers have to take?

Before non-essential retailers can begin to reopen, businesses will need to seek guidance from the government on how to go about doing so safely.

Supermarkets and pharmacies can provide a glimpse into how shopping might look post-lockdown, with spaced-out queues, physical screens at till points, controlled entrances and contactless payments.

The government has provided some guidance for people who work in or run shops, in which it states that the number of customers allowed in store will need to be limited and that shops should consider implementing one-way flow systems and queue management.

"Shopping centres should take responsibility for regulating the number of customers in the centre and the queueing process in communal areas on behalf of their retail tenants," the guidance states.

The British Retail Consortium (BRC) and shop workers' union Usdaw have also drawn up a series of recommendations in readiness for the easing of the lockdown with the suggestion of closing or limiting access to changing rooms, employing security guards to manage entrances and encouraging customers to pay by card.

The document also recommends that shops install cleaning stations to provide hand sanitiser where possible.

Helen Dickinson, the BRC's chief executive, said: "Retailers are closely following developments from government on when restrictions might be eased and are starting to plan accordingly. The safety and wellbeing of colleagues and customers remains the highest priority and these guidelines aim to support everyone in the industry.

"Since the lockdown many retailers have proved how shops can be run safely and effectively in line with the government's social-distancing advice. This guidance is the product of retail's incredible efforts to adapt to exceptional circumstances."

Speaking to The Independent, Professor Joshua Bamfield, director at the Centre for Retail Research, said that he believes fashion retailers will reopen in two phases.

"In stage one there will be rigorous social distancing, which will also mean no trying on of clothes and a problem about 'returns'. Shopping for clothes won't be as friendly and casual as it has often been in the past," he explains, adding that chains with large units like Marks & Spencer and department stores might have an advantage because of their large floor areas and the fact people can retaining social distancing while shopping.

Bamfield predicts thatt stafe two will take place towards the end of 2020, when social distancing rules will be "gradually dismantled by the government and shopping becomes more normal".

"Retailers have to manage the process of keeping shoppers and staff safe and selling merchandise and there may be a creeping liberalisation (eg allowing more people into stores at a time) as Autumn winds on," he says. "But it is going to be really difficult for everyone large and small, out-of-town megastore or small gents' outfitters. The rules as now set out will make shopping for clothes no fun at all."

How has the lockdown affected people's shopping habits?

A recent survey of nearly 3,000 people conducted by YouGov found that, unsurprisingly, groceries have become the most common online lockdown purchase among British households (40 per cent).

However, despite two months of the nation staying in, clothes and beauty products come second at 29 per cent. This figure is especially high among younger people, with nearly two in five 18 to 34-year-olds having bought fashion or beauty products while in lockdown.

A separate study by Nationwide Building Society found that nearly two-thirds (6 per cent) of people said their spending habits have changed with around a third (32 per cent) stating that the pandemic has made them more mindful of their purchases.

Craig Summers, managing director at supply chain commerce solutions firm Manhattan Associates, said that this trend for online shopping is likely to continue post-lockdown.

"Many consumers are likely to still be cautious of entering stores even after lockdown restrictions have been lifted, the surge in e-commerce orders is unlikely to disappear anytime soon," he said.

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No changing rooms and hand-cleaning stations: This is what clothes shopping could look like post-lockdown

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Boris Johnson has announced all non-essential retailers will be able to reopen in England from 15 June, a move which will include clothes shops. Since the beginning of the coronavirus lockdown, normal shopping habits have been thrown out the window.

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With many of us not feeling quite so in need of a regular fashion fix during lockdown, the knock-on effects have been huge.

Millions of Bangladeshi garment factory workers have been left out of work by the coronavirus pandemic, after major fashion brands cancelled orders en masse to the tune of $3.5bn, according to a report by The Independent.

"We do not want charity, we just want companies to pay their bills and respect their contracts," factory owner Mostafiz Uddin told The Independent.

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"We have bought the raw materials, we have produced the garments, we have invested the money and we will not be able to survive. We will literally die. It will be impossible for us to handle this. Our workers will be suffering a lot. I have no words to express what it will do to us."

Some 135,000 tonnes of new clothes have also been consigned to landfill, reports the Daily Record.

But one Edinburgh start-up sought to change all that by launching Lost Stock, to unite unwanted clothes with new owners and donating the proceeds to garment workers in need. Here's everything you need to know.

What is Lost Stock?

It's a new scheme bridging the gap between starving garment workers and wasted clothes. It delivers mystery boxes of clothing from a range of high-street brands for half the cost of the normal retail price. The clothes are shipped direct from manufacturers in Bangladesh to consumers in the UK.

How much is a box?

Each box costs £35, half the price of what the clothes would retail for normally (around £70 altogether).

What will be inside?

You'll receive a guaranteed three items; in most cases all products will be tops and t-shirts as it's harder to get the fit right on bottoms, according to Lost Stock. The clothing would originally have been destined for high street brands - however, they won't have branded labels on as the companies cancelled their orders.

Although the contents are a mystery, shoppers get to fill in a questionnaire beforehand so that items are tailored to them. Questions include gender, size and preferences when it comes to colours and prints.

Can I send it back?

According to Lost Stock, a large proportion of the cost of the box goes towards the donation to Bangladeshi factory workers. Only whole box returns will be accepted, customers must pay for shipping, and they won't receive the donation or original shipping costs back when they're refunded.

Lost Stock says: "We'd encourage you to swap and share the clothes with your friends if there are items you don't like and we're currently working on a sharing platform for this."

Where does the money go?

Each box costs £35 plus £3.99 for shipping. Lost Stock has shared a transparent pricing model to show exactly where all the money goes. This is how it's currently split:

Transaction charge: 3 per cent

Lost Stock staff costs, marketing and returns: 9 per cent

Product costs: 30 per cent

Transport and logistics: 9 per cent

NGO Partner, Sajida Foundation: 37 per cent

Postage: 12 per cent

The 37 per cent that goes to the Sajida Foundation means a worker is supported for a week with every box sold.

Whose idea was it?

Lost Stock was conceived by the team behind Mallzee, a free shopping app which has over 180 high street brands and popular retailers.

The original goal was to support 5,000 families in May and 100,000 by the end of 2020. To date, 63,875 mystery boxes have been sold. Order from loststock.com.

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What is Lost Stock? Introducing the mystery box scheme where you get half-price clothes

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With many of us not feeling quite so in need of a regular fashion fix during lockdown, the knock-on effects have been huge. Millions of Bangladeshi garment factory workers have been left out of work by the coronavirus pandemic, after major fashion brands cancelled orders en masse to the tune of $3.5bn, according to a report by The Independent.

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Sitting in empty shops and piling up in distribution centres, excess stock has become a multibillion-pound problem for fashion retail as the coronavirus pandemic continues to decimate trade.

Last week, Next revealed that a "fast and steep " drop in sales has left the business with "a lot more stock" clogging up warehouses than previously anticipated. It warned this could inhibit operations and prevent it from being able to take in new product.

To mitigate the risk, Next has started to use third-party storage facilities and is holding some stock in source countries, at an estimated additional cost of £2m. It has also cancelled £450m of orders.

The industry is facing the largest stock clearance in a century

Chris Griffin, CEO of flash Sale site SecretSales

Primark owner Associated British Foods has written down the value of the chain's stock by £284m to reflect realistic pricing when stores reopen.

A key question for fashion retailers now is what to do with all that excess inventory.

Cancelling orders and carrying unsold stock over into future seasons is one solution to the stock conundrum. Next has identified £330m worth of spring 20 stock - mostly basic products, such as summer T-shirts and chinos - that can be carried over to next year.

However, retailers are still likely to be left with a glut of seasonal, trend-led product that has a short shelf life, and many fear this will lead to aggressive - and potentially brand-damaging - discounting.

"The industry is facing the largest stock clearance in a century," warns Chris Griffin, CEO of flash Sale site SecretSales and former director of ecommerce at Superdry.

"The longer the lockdown lasts, the larger the stock issue becomes. Retailers need to find a way of clearing stock that enhances, rather than damages, their brand equity. Constant discounting on your own platform devalues your brand and your full-price stock.It becomes a spiral.

It will be a Sale to remember for consumers, but the questions facing retailers are very difficult

Raffy Kassardjian, founder of Parker Lane Group

"Retailers need to take a strategic approach that spans different geographies and not flood a single international market with product, particularly as this is likely to be an issue that affects several seasons."

Raffy Kassardjian, founder of Parker Lane Group, which works with retailers to redistribute unsold stock, agrees: "It will be a Sale to remember for consumers, but the questions facing retailers are very difficult. How much stock are you going to be able to shift in a few months when you have missed the peak of the season?

"Warehouses are beginning to fill up with autumn 20 product, putting logistics and warehouse capacity under pressure."

Discounting routes

Selling through off-price channels is one option. A report on the impact of coronavirus on retail by management consultancy McKinsey & Company last month points to the benefits for off-price retailers such as The Outnet, Yoox and McArthurGlen.

The report also argues a new wave of discount digital players will emerge to seize the excess stock opportunity. At the end of April, Chinese ecommerce giant Tmall launched an online outlet, Luxury Soho, which is aimed at premium and luxury brands.

The size of the Chinese market is just vast and there's a real opportunity there

Sarah Curran-Usher, entrepreneur and a non-executive director at French Connection,

Some brands are also launching their own off-price platforms and flash Sale events to move excess stock. This prevents discounted product sitting side by side with full-price inventory.

Contemporary womenswear brand Ganni, for example, launched a six-day pop-up digital Sale at the end of April offering discounts of up to 70% on 400 items. The brand will donate 20% of profits to UN Women projects that support female health workers on the frontline of the pandemic.

Fellow womenswear label Lazy Oaf has relaunched its "Oaflet" discount channel, where it is offering customers up to 80% off.

Selling unwanted stock in other countries is another avenue. Although coronavirus has hit nations around the globe, some international markets have been less affected or are recovering more quickly than the UK.

Business partners Sarah Curran-Usher, entrepreneur and a non-executive director at French Connection, and Nicola Mathews, a former brand director at Ted Baker and Pentland Brands, are collaborating with John Lau, founder of Chinese commerce specialist Ecargo, on a project to help brands and retailers move unsold stock from the UK into the Chinese market.

"The size of the Chinese market is just vast and there's a real opportunity there," explains Curran-Usher.

We teamed up with some other sustainable brands to order some of the abandoned stock

Dea Baker, founder Aqua Rock

"I have been on the other side of the desk as a retailer myself [Curran-Usher was previously managing director at Very's designer discount channel Very Exclusive and founded My-Wardrobe] and know how big the stock challenge facing retailers is. When moving unsold stock to other countries, retailers have to think carefully about matching the stock to the right retail partner and the right consumer - you don't want to end up just transferring the problem."

She adds that in the long term, the pandemic could provide the industry with a valuable opportunity to rethink its approach to stock: "The reality is the industry has not necessarily bought [according] to consumer demand and has been left with excess stock season after season. This could force the industry to look at how to buy more efficiently to reflect the fact that consumers are much more about 'buy now, wear now', and to rethink old patterns."

Mathews adds: "You need to keep that stock moving to be able to pay your teams and your rent. Stock is a huge asset and if you can't find a way to turn into cash then it becomes a ticking clock."

Parker Lane Group's Kassardjian points to opportunities in closer markets: "Some markets have been less affected by the pandemic than others - north African markets, such as Egypt and Tunisia, are easing restrictions, and there's also been interest in unsold stock from eastern European markets, such as Poland."

Donating products to good causes is another option for those left with too much stock, argues Ronen Lazar, co-founder and CEO of Inturn - a platform that helps retailers manage their inventory.

Even before the pandemic, some brands were choosing to support charitable causes and move excess stock. Burberry, for example, has donated product to Smart Works, which provides free clothes and training for unemployed women with an upcoming job interview. Boden has donated more than £770,000 of clothing to 15 NHS trusts across the UK.

"Donation is an interesting option," says Lazar. "These are tough times for everyone, so rather than letting inventory sit and incurring costs to hold it, retailers could donate product to those who really need it. It may not be at the top of retailers' minds at the moment, because of the current challenges, but the sustainability issue will be even more pronounced coming out of pandemic. Retailers will need to double down on reducing waste."

Buying power

Excess stock is providing opportunities for some. Debenhams has been purchasing discounted stock unwanted by other retailers to help fill gaps in its seasonal ranges, although the department store would not confirm whether the stock comes from new or existing suppliers and brand partners.

Some smaller brands are also finding innovative solutions to help mop up excess stock in the market. Sustainable brand Aqua Rock, which usually produces womenswear and accessories made from waste plastic, has created a range of T-shirts made from cancelled stock produced by factories in Bangladesh. All profits will go to charities that support the NHS.

"The yarn we use in our normal product range comes from a supplier in Spain and a supplier in Italy, both of whom have had to temporarily stop operations," explains founder Dea Baker.

"We teamed up with some other sustainable brands to order some of the abandoned stock - it means that the factories are able to pay workers and it helps us survive what is a very difficult time. We hope that other brands will join us and that we can expand the project, which has had a great reaction from European boutiques now able to resume trading in Germany and the Netherlands."

Retailers have a relatively short window to sell spring and summer stock in a period where demand is likely to remain low due to the economic impact of the coronavirus pandemic.

Heavy discounting is inevitable, but risks perpetuating the already-vicious cycle of constant promotions in fashion. Retailers should look to the opportunities in off-price and international markets, to clear some of the stock without damaging their brand equity.

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What can retailers do with their spring 20 stock mountain?

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Sitting in empty shops and piling up in distribution centres, excess stock has become a multibillion-pound problem for fashion retail as the coronavirus pandemic continues to decimate trade. Last week, Next revealed that a "fast and steep " drop in sales has left the business with "a lot more stock" clogging up warehouses than previously anticipated.

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COPENHAGEN, Denmark - You know the fashion industry has an inventory problem when even Danish "it" label Ganni is scrambling to offload piles of unsold clothes.

The brand's clothes and accessories normally fly off the shelves at luxury department stores, whose customers see a $400 Ganni dress as the key to completing their accessible yet Instagram-ready look. But most of Ganni's best stockists closed in March, and online shopping hasn't made up the gap, so the label is sitting on extra leopard print wrap dresses and light neon sweaters that are rapidly falling out of season.

Ganni is sending some of that merchandise to online outlet The Outnet and luxury resale site The RealReal. It's planning an online "archive" sale at the end of April that will see some out-of-season items marked down by as much as 70 percent for five days. A new website, modeled on the brand's concept store in Copenhagen that sells past seasons' collections at a discount, is in the works. And finally, some clothes will be "upcycled" into new garments.

"Typically, we are the bread and butter of our average wholesale customer's store," said Founder Nicolaj Reffstrup, explaining that the brand has seen no order cancellations, which are plaguing smaller brands. "But having said that, of course, we have a massive inventory problem that we are trying to deal with."

Ganni's inventory woes are shared by just about every fashion brand and retailer. Brands always factor discounts into their business models - they only need a portion of inventory to sell at full-price to turn a profit - but the coronavirus store closures have escalated the problem exponentially. Many brands have mountains of unsold clothes so big that they are running out of places to store it. With economists predicting a sharp downturn in consumer spending, and department stores already cutting back on orders for the summer and autumn, the overstock problem is only going to get worse.

Excess inventory is more than a space issue. Each unsold shirt or bag represents money spent on production and marketing that hasn't been recouped (and renting a warehouse just to store unwanted clothing is expensive too).

Many brands desperately need that money to pay employees and suppliers now. But getting rid of inventory is harder than ever: off-price stores like T.J. Maxx are closed until lockdowns lift. Burning clothes, once routine at some luxury labels, has become riskier after B urberry faced a consumer backlash for the practice in 2018 and France banned it in 2019.

The remaining options: offer flash sales on new items now, wait for off-price stores to reopen (or work with their online equivalents), hold out-of-season sales, or, as a last resort, throw the unwanted clothes away. The goal is to extract as much cash as possible while minimising damage to the brand.

"Whatever ability [brands] have to liquidate it, they need to liquidate it," said Gary Wassner, an investor and founder of Hilldun, a factoring firm that provides designers with credit, about spring and summer inventory. "They need to accept the losses."
Sell It
Rixo, a London-based label known for its vintage-inspired patterned dresses, found itself stuck with 50 percent more inventory than expected after retailers cancelled spring and summer orders. Last week, the brand offered customers 30 percent off new pieces online, the first time it ever marked down new merchandise. The response was so strong that Rixo's website crashed in the first hours of the sale.

Rixo wants its sale to be a one-time event. The brand hopes to open a pop-up shop in Australia this autumn, betting that loyal customers there will want to pay full price when they see the clothes in person when the weather warms there.

"Everything we do with Rixo is all about longevity and not about a quick win with two seasons, that doesn't get you anywhere," said Henrietta Rix, who co-founded and self-funded Rixo with Orlagh McCloskey in 2015.

Luxury labels are rebranding off-price promotions as "archive sales," with Alexander Wang and Proenza Schouler among those offering older merchandise at deep discounts. Rosie Assoulin is putting one item on sale each week.

"There will be the biggest markdown season ever, and many brands will suffer a lot," said Mario Ortelli, managing partner of luxury advisors Ortelli & , who advises brands to try to delay markdowns whenever possible.

But discounting can be a tough habit to break, especially when the entire industry is relying on markdowns to move excess stock. Spring merchandise is already discounted by around 30 percent at online luxury retailers like MatchesFashion and Moda Operandi, while is marking down some items by 60 percent.
Shift It
Some brands are looking for new ways to move products with their usual wholesale partners shut down.

German online retailer is expanding its concession platform during the crisis, signing on brands to sell products through the site. The sellers hold the inventory but can ship through Zalando's network.

Some European and American boutiques that were forced to close are selling their inventory on Farfetch, which reported better than expected preliminary first-quarter results last week. The marketplace said sales in China in February and March grew faster than they did in the same period in 2019.

"[We are] on the phone every day with boutiques and telling them there is demand for luxury and very strong in China and other countries in [Asia]," Chief Executive told BoF.

While the off-price channel is hurting with thousands of stores closed, particularly in North America where it exists mostly off-line, it will likely come roaring back when the lockdowns are lifted.

Some major off-price retailers, like the brick-and-mortar dependent T.J. Maxx, are reportedly not taking new stock right now, as they have plenty of inventory already and nowhere to sell it.

Smaller off-price retailers in places where life has begun returning to normal, like Asia and parts of Europe, are buying but tend to only want highly sought after brands and deep discounts, said Ronen Lazar, chief executive and co-founder of Inturn, a software platform that helps apparel companies connect with off-price buyers.

"There is so much inventory and it is from every brand under the sun," he said. To stand out with off-price buyers, Lazar recommends bringing available merchandise to life with "rich visuals that allow you to position your brand and your product in the optimal light, as opposed to just sending spreadsheets."

There is so much inventory and it is from every brand under the sun.

As with sales on their own sites, brands risk becoming associated with year-round discounting if consumers see too much of their inventory on discount racks or off-price websites.
Trash It
Fashion's waste problem is nothing new: brands always produce more items than they can sell each season, because it is cheaper to destroy the leftovers than produce less to begin with. Between 10,000 and 20,000 tonnes of textile products are destroyed every year in France, according to a government report when it banned burning in 2019. But as burning and trashing extra products becomes more of public-relations liability, more brands are finding alternatives, like donating to NGO's and charities like Smart Works in the UK.

"Upcycling" is becoming more popular, too, as more brands invest in sustainable production to appeal to conscious shoppers. More brands are likely to incorporate this year's unsold clothes into future collections. Many independent designers have made using deadstock materials (or leftover , unsold clothes and vintage textiles) a sustainable, trendy approach in recent years.

At Ganni, upcycled capsules have previously served more as marketing opportunities to showcase the brand's environmental values, but Reffstrup, the CEO, wants these garments to become a more consistent and commercial part of the business.

But upcycling requires more work than a normal garment, cutting into profits. "We need to tweak and figure out how to make decent money off of this," he said.

Brands can also collaborate with designers and artists, many of whom are out of work right now, to give old inventory new life through screenprinting and embroidery, said Céline Semaan-Vernon, founder of sustainable fashion agency The Slow Factory.
Keep It
Brands can always roll the dice and try to sell their spring and summer collections next year, assuming they can afford to store it in the meantime. That strategy makes the most sense with brands that sell basics and other timeless items; a trendy piece won't age as well.

Ultimately, the best strategy may be to assume a heavy loss on inventory currently sitting in warehouses, and plan to produce less in the future to avoid a repeat.

Some brands are skipping the upcoming resort season, or relocating their pre-autumn deliveries to hit stores in October and November instead.

Ganni plans to create smaller, more frequent collections moving forward, Reffstrup said, which will keep online channels supplied with new products that stand a better chance of selling at full price because of limited availability.

Rixo also produced a "very tiny" pre-autumn and autumn collection to minimise the risk of needing to hold more sales.

Other brands are shifting their aesthetic to a more classic look that will wear well over multiple seasons.

"What is going to make the consumer happy when they return to the market? It's going to be a different product mix," Wassner said. "It's going to be a different consumer."
Additional reporting by Sarah Kent. We're tracking the latest on the coronavirus outbreak and its impact on the global fashion business. Visit our live blog for everything you need to know.
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What to Do With All That Excess Inventory

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COPENHAGEN, Denmark - You know the fashion industry has an inventory problem when even Danish "it" label Ganni is scrambling to offload piles of unsold clothes. The brand's clothes and accessories normally fly off the shelves at luxury department stores, whose customers see a $400 Ganni dress as the key to completing their accessible yet Instagram-ready look.

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Drapers' Covid-19 coronavirus survey sheds light on the number of businesses across the UK and Ireland currently battling to survive amid the devastating outbreak, with more than a third of respondents already reporting staff cutbacks. It found that the industry will require rapid and transparent support from the government for it to be able to bounce back.

As the coronavirus pandemic grows, so does its impact. Like every industry, fashion has been heavily affected. Events such as Graduate Fashion Week and manufacturing trade show Make It British Live have been postponed indefinitely, while suppliers and manufacturers are grappling with refused shipments and weaker forward orders.

Elsewhere, retailers and department stores have been forced to shut their doors and reduce staff working hours.

Against this backdrop of instability, Drapers conducted a survey of the fashion sector to gather and disseminate information regarding the challenges businesses are facing and to find out what national support they need. The survey was open to fashion-based businesses from across the UK and Ireland, and received 301 responses between 19 March and 23 March.

Respondents described the situation as "heartbreaking" and "devastating", and many feared their businesses would be wiped out as a result of the epidemic. Immediate and potentially long-term impacts include store closures, "significant" declines in revenue, anxious colleagues, "drastically" reduced footfall, a build-up in deferred payments and debt, cancellation and delay of orders, and job cuts (see the survey methodology below).

"We have gone from implementing a growth strategy this year to creating and implementing a survival strategy," the founder of one Scotland-based fashion brand said.

Worryingly, more than one-third (37%) of participants revealed their businesses have had to cut back on staff as a result of coronavirus. Of those who said their businesses had not done so yet, 49% said it was being considered.

Even before the government ordered non-essential retailers to close their doors on 23 March, 50% of respondents said the retailer or brand they work for had been forced to close stores, while 52.5% of respondents said opening hours had been reduced. However, 80% said they were still accepting online orders.

With many customers isolating in their homes, companies' best-performing products were jeans, denim, leggings, loungewear and athleisure.

Of the suppliers, manufacturers and agents who took part, 77% said their business functions were still operating, while 51.5% of those who had not closed their businesses said they had reduced working hours. Many said this was because they still had to work to deadlines: 52% of respondents were still taking orders, and a further 22% were still taking orders on a reduced basis.

However, 59% said they have had to cancel orders, which they claimed would have a "catastrophic" impact on company finances in the short and long-term.

"Although it is a setback with customers returning items and stores now shut, on top of reduced sales, we are trying to remain positive and thinking of other ways we can keep the business going through online platforms," the managing director of one London-based independent retailer said.

Respondents said they have put measures in place to mitigate the impact. These included bringing payroll and other controllable costs to a bare minimum; reducing supply chains to ensure stock intake is brought in line with reduced sales; discounting; increased cleaning; recruitment freezes; offering unpaid leave; staff allowed to work only contracted hours; driving omnichannel; payment plans with suppliers; applying for business interruption loans; cancelling orders for summer stock; and asking landlords for extended rent payment holidays.

Last week, the government announced business grants to cover 80% of wages of those employees not working as a result of coronavirus, introduced a year-long business rates holiday, and said it would introduce £330bn of government-backed loans and guarantees for UK businesses.

Many respondents said they believed the government has been "outstanding" so far, and is doing as much as it can in such difficult circumstances. However, some said it was too slow in announcing the closure of retail stores and called for it to move faster when reacting to changes, avoid deferring costs, and ensure proposed actions "actually happen".

"We need more clarity on things, as so much is in the fine print and we need access to cash now, not in the future," said the managing director of another London-based independent retailer.

We sit down on a daily basis to decide who we're going to pay
Managing director of a high street retailer

The nature of working in fashion is that often what we sell is a "want", rather than a "need". We've got to respect that the things we're selling are suddenly not so important in the minds of the consumer and that's a level playing field across the entire sector.

[Before the closures] we were almost disregarding the obligations that we've got in the shopping centres and on the high street in terms of opening hours, and then saying we were going to trade with what suits us. It's a very brave landlord that is going to come and give us a doing in these uncertain times.

At the moment, we are reviewing all of our payments going out - to landlords, suppliers, the government - and then prioritising to ensure we have the cash liquidity to pay our staff.

We're not asking anybody anything - we're just making decisions. We're trying to be as dynamic as possible, and sit down on a daily or weekly basis to decide who and what we're going to pay.

Even if shops [hadn't been] forced to close, we'd be in a position perhaps where if people weren't coming in, then it wouldn't viable [to stay open]. What we did was work out store by store what's a viable level of turnover and once we get below that it would make sense for us to just close the store.

This is going to be the biggest hit the retail industry has seen Lord Wolfson, CEO of Next

Any estimates that we have made during the coronavirus epidemic are guesswork. We have no better understanding than anyone else on how long this will play out, and what effects it will have on consumers. We have got some experience from what we've seen in our online business in overseas territories, where the disease is more advanced, and that has informed the modelling that we've done. But it is still anyone's guess.

Our worst-case scenario - or what we believe to be the worst-case scenario - we've called at -25%. That's not during the affected period - it's more like -55% during the affected period and -25% of our whole-year sales. That would be equivalent to the company being completely shut for three months. We think that's the most extreme things could get, but clearly, we don't know.

The models we have done are in three steps. The first is that we've come up with three different sales scenarios. There's a -10% scenario, a -20% scenario and a -25% scenario. The first scenario is spread over 12 weeks, and the second two are spread over 24 weeks. We have assumed that the second half of the year returns to normal, which may be optimistic.

The important point is the cashflow modelling that we've done. We have £1.6bn of the cash resources out of bank and bond facilities. We think that even in the worst-case scenario, as long as we take mitigating action within the business, we can still have our peak cash requirement as £110m of cash resources available to the business.

We do not think the business will need to draw on government facilities, although that option is open to us. The conclusion we've come to going through the modelling exercise, is that because our balance sheet is very strong and because the margins of the group are wide, we are placed to weather this storm without needing to seek outside assistance.

Having said that, as a precaution, we are in discussions with our banks about extending our facility by another £200m. Those conversations are going well, and it is likely we will have those in place within the next month.

World War II is the closest we've got Chairman of several high street retailers to this

There are some businesses that so far are relatively unscathed by the crisis, but there are some that have already been absolutely killed by this. This will have a significant impact on jobs, which will ultimately impact spend.

No business leader in the industry at the moment has been through something like this before.

World War II is the closest we've got - this is not

the same as SARS, or the ash cloud, or Brexit - therefore we need to be employing the same strategies as war times.

It is impossible to predict what will happen in both the short and long term. It could be that the virus lasts for three months, and then things drift back to where they were. I do think we're in for a long period of economic downturn.

It will impact jobs for quite some time, then we should hopefully see a healthy economic bounce. That's what happens in war time. Ultimately, there will be three shocks. We'll think [everything is] back to normal [after the first wave of the virus] and then it will be back again in the winter, and then there will be a significant economic bounce.

We're being asked Marc Querol, wholesale and communication manager of Double H Agency to put autumn 20 orders on hold

Regarding the situation and the actions taken by the government, we feel that it is a bit of breathing space for all our customers and for the sector.

Having said that, we honestly don't know what will happen in the end. But if we are able to get more answers like the one we had [about loans and grants] from the chancellor, it will definitely help. We are getting a few emails asking for us to stop deliveries and put autumn 20 orders on hold.

We are waiting for answers from the different brands we represent in the UK as to what they want to do next. The main challenge will be how we will face trading afterwards, because I cannot see people going to trade shows or other massive events, so we are starting to find new ideas and concepts.

The social media side Hayley Attridge, owner of womenswear independent Blue Boutique in Saffron Walden, Essex of business is very much alive to see if that helps us to stay afloat

I am scared. The effect was immediate: nobody's going away, so nobody's buying summer clothing.

We're doing a 30% off offer to encourage spending and to keep cash flowing through the business. I'd never dream of doing something like that usually, but there were mornings where I'd seen one person in an hour, when normally I'd see five or six.

We stayed open as long as we could. One member of staff is self-isolating because she's had a kidney transplant, and I had already had to cut hours for the other two ladies by half to keep our heads above water.

We've not had issues with suppliers, but we stopped doing top-up deliveries. I already have a stockroom full of clothes.

Part of the trouble is that the messages we're receiving are so conflicting. There is no clear-cut message because the government doesn't know what it is dealing with. It's new ground for them too - they're damned if they do and damned if they don't.

The chancellor's message [for the £330bn aid package] was incredible, but I need to know how we get that help. Lots of independents and cafes around me had already closed. It's like a ghost town.

I've been trying to boost the business by sending out emails, and the social media side of it is very much alive to see if that helps us to stay afloat.

We all need to do Ecommerce director of one mass-market fashion retailer what we can to maintain jobs

I am hearing clothing businesses were down anywhere from 40% to 60% in sales over the last few days of trading. Customers were not in the mindset to shop for clothing at all, so fashion was among the hardest hit sectors.

There are many decisions and trade-offs to make about virtually every area of the business. People's safety is uppermost in the mind but, equally, we all need to do what we can to maintain jobs for staff to come back to.

Forward planning in the supply chain is one massive issue, including when to cancel orders because of the collapse in demand, and how to balance that against potentially putting factories out of business.

There is also what to do about the immediate variable cost base and marketing spend (what is committed versus uncommitted) and the tactical trading strategy, as well as proposition (home delivery and returns windows).

Honestly, what we do may realise only very marginal offset gains, but we must figure out what those things are to help businesses survive.

Good things, David Segal, digital and creative manager at Raeburn like creativity and innovation, can come out of challenging times

[Even before all non-essential stores were ordered to close], we were encouraging people to buy online, and are currently offering free domestic shipping.

A lot of customers are UK- or London-based and come into the store to buy things, so we were trying to make things easier for them. We didn't know what the situation would be for the store over the coming day, and a lot of stores had closed nearby, but we had to wait and see.

We always have a lot of events and workshops going on in our studio in Hackney, east London. We had a lot lined up for the coming weeks, which have had to be frozen. However, rather than just cancelling every event and workshop, we're looking for ways to engage with our community when people work from home.

We usually host lab tours every two weeks - people can meet the team, and learn about the brand. We're launching Lab Live from the end of March. It will replicate the studio tour via Instagram Live, and it will enable people to join in from all over the world.

It's a big opportunity for the brand. This is something we've wanted to test for a while but lends itself perfectly to this situation. We could use the platform to teach people how to sew or how to repair garments - virtual workshops, Q&A sessions, all sorts. We don't have all the answers but we're trying to find ways to engage with our audience.

Sometimes it's the case that a lot of good things, like creativity and innovation, can come out of challenging times. The virtual tour, for example - we've been thinking about it for a couple of years, but now we're having to make quick decisions for the future.

Our seamstresses Creative director of a premium fashion brand can do the work at home now that the schools are closed

We've been trying to get all the fabrics and trims we could possibly need from our suppliers based in Europe and the UK before the potential situation of everything closing down. If we can get the bulk of everything in now, then our seamstresses can do the work at home now schools have closed and they need to be there to look after their children.

We're doing a lot by video call. Design meetings are being held by Skype. Obviously, this could never come at a good time, but in terms of where we are in the season, we can make it work. Right now we're in a research and design phase, so I've been able to give everyone jobs they are able to do from home.

The real struggle will come when we're supposed to be getting products made. A lot of our stuff is made in the UK. It is hard to tell yet if that will be an advantage. It could be that the factories are overrun with orders because of production issues in other countries and we lose our slots.

We've heard from buyers that retailers are cancelling orders. We had one very frank email from a boutique saying that it couldn't accept deliveries now and if we do send its order, they won't be able to pay for it.

We can kiss goodbye Womenswear agent to profits this season

I've had a few retailers wanting not to cancel but add in terms and special conditions that were not part of the original sales agreement, which has left me a little bit in a dilemma. While you want to be supportive - and I'm very aware we're working in a partnership - it seems a little bit one-sided. We're picking our way through the situation and how it's going to impact on us. It's a very delicate time.

The government announcement of [business loans and grants] will certainly allay people's fears, and a loan is always welcome. But people will ultimately be thinking how long will it take to get that help and what will the impact be on the business before it kicks in. Will it be too late? Retailers will worry that there are a lot of businesses out there and if we're all applying for this loan at the same time, then the help is going to take a long time to come.

I was talking to one retailer about offering a kind of Deliveroo-type service. This store has such good customer service that perhaps they would be able to offer a personal shopping service. But that's not going to be for everybody.

The problem is there are no social gatherings and that's what really propels sales. If there are no social gatherings and we're all just sitting watching TV, you don't need a new dress.

In terms of stock, everyone has been quite tight already - the budgets we used to see are a thing of the past. Retailers aren't going to be massively overstocked in the first place, but when no one is coming in to buy the product, then it leaves them in a position where they're going to have to mark down.

We can kiss goodbye to huge profits - or even any profits at all - this season.

We're confident Nika Diamond-Kredel, founder of east London-based leather goods brand Paradise Row that we will get through this"

It goes without saying that events such as these will be challenging for businesses such as Paradise Row as any luxury purchase during times of uncertainty may seem unnecessary. That said, as a small local business, we are better protected against the disruption to global supply chains and do not have the burden of lengthy payrolls and bricks-and-mortar stores weighing us down.

And as a sustainable brand making timeless pieces, Paradise Row does not have to worry about getting rid of seasonal stock. Although there is uncertainty as to when this will end, we're confident that we will get through this and when we do, our beautiful handcrafted leather products will still be there looking for new owners.

Paradise Row is a brand at the heart of its area and community, so as long as there is social distancing, the main cost will be a human one. Times like this give us an opportunity to reassess our priorities and think about the role we all play as considerate consumers and citizens. That is at the heart of everything we are trying to do at Paradise Row.

Carried out online on 19-23 March

301 respondents across the UK and Ireland

Respondents were 23.9% independent retailers, 22.6% multiple retailers or department stores, 29.2% fashion brands, 4.7% fashion agencies, 8% fashion suppliers, 13.2% manufacturers, 2% university and further education, and 13% other

86.1% of respondents said neither they, a family or staff member had contracted the virus

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Drapers Investigates: The cost of coronavirus to fashion retail

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Drapers' Covid-19 coronavirus survey sheds light on the number of businesses across the UK and Ireland currently battling to survive amid the devastating outbreak, with more than a third of respondents already reporting staff cutbacks. It found that the industry will require rapid and transparent support from the government for it to be able to bounce back.

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Fears that many of Britain's high street shops will be forced to close down permanently despite the government's emergency support were fuelled yesterday after a string of retailers said the coronavirus outbreak could make their businesses unviable.

As the Restaurant Group said it would shut the majority of its Tex-Mex Chiquito restaurants for good, Swedish fashion retailer H&M threatened landlords that it would walk away from its 300-plus store leases if sales fail to match pre-coronavirus levels once the pandemic passes.

Analysts said the likelihood that ministers would need to extend shop closures through the vital Easter trading period would push more retailers into handing back the keys to their shops.

Business groups warned that without extra government support, including an extension of the business rates holiday to the end of the year, financial pressures were growing on town and city centre shop owners.

Adam Marshall, director general of the British Chambers of Commerce, said he was worried that town high streets were especially vulnerable to an extended shutdown.

"My biggest concern is about secondary high streets [smaller retail areas] and those in towns that were already facing huge difficulties," he said.

"The government is going to need to act quickly to extend the business rates holiday to save retailers from going under, and many other service business threatened by the current shutdown."

A survey by analyst Retail Economicsof 2,000 consumers, due to be published next week, found that two-thirds of shoppers said they had switched to purchasing products online that they have always previously purchased in-store.

Britain's high streets have become blighted by shop closures over the last three years in response to rising costs and the increasing volume of sales over the internet.

A total of 143,100 jobs were lost in 2019, up by more than a fifth on 2018's 117,400 job losses, according to the Centre for Retail Research (CRR).

Retail casualties include Mothercare and Bonmarché, which filed for administration, while Sir Philip Green's Arcadia Group and Debenhams were among the firms to shed loss-making stores following deals with creditors.

Diane Wehrle, marketing and insights director at Springboard Research, said: "I fear for the independent sector, which is dominated by family-run businesses that are often subsistence operations.

"Their ability to survive with no income is going to be challenging when they have little working capital reserves and are based in small towns."

Springboard's latest retail monitor found that footfall across all destinations dropped by 70.1% last week on the same week last year. The drop in footfall on the previous week was 60%.

H&M, which has expanded rapidly in recent years and ranks as an anchor on many high streets, wrote to landlords last week asking them to agree to terms that could see the retailer break a store lease with one month's notice if trading conditions did not return to pre-outbreak levels.

In a separate letter, seen by industry magazine Retail Week, the fashion retailer also pushed landlords to agree to a variety of rent-free periods , a reduction in service charges to reflect drops in footfall and a change to paying rents monthly in arrears.

The letter said: "In all of the above scenarios, H&M is to have the right to close stores immediately without being in breach of the keep open clause" and "personal concessions are to remain and fixed rents will not be payable".

A spokesman for Usdaw, the shopworkers' union, said a shift to online shopping, which was likely to be accelerated by the Covid-19 outbreak, meant the government needed to go further than a business rates holiday and bring forward reforms that shifted the tax burden to online operators. "There needs to be a rebalancing between bricks and mortar shops and online operations, or we will see fewer shops opening up again after the lockdown has eased," he said.

Neil Leitch, chief executive of the Early Years Alliance, said rent demands by landlords could leave childcare provision "in tatters".

Access to childcare will be crucial to allowing other workers to return to employment, but Leitch warned the pandemic risks causing permanent damage to an industry that was already struggling to meet costs.

While help is available to them through business rate holidays and government scheme to pay the wages of staff, many have reported that they still face demands for rent. Meanwhile, largely self-employed childminders face waiting until June for financial help.

Childcare places had already been declining. More than 500 nurseries, pre-schools and childminders closed every month on average between April 2018 and March 2019, according to Ofsted figures. The government is honouring funding for free childcare places. However, childcare providers have long relied on private feepayers to make the sums add up.
Topics

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High street's survival under threat as lockdown hits stores

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Fears that many of Britain's high street shops will be forced to close down permanently despite the government's emergency support were fuelled yesterday after a string of retailers said the coronavirus outbreak could make their businesses unviable.

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The 1966 World Cup marked a low point for Brazilian soccer. Although the winner of the previous two tournaments, the team was eliminated in the first round, and its star player, Pelé, failed to perform. Fouled frequently and flagrantly, he threatened never to return to the World Cup. Many wondered if Brazil's glory days were over. Four years later, however, Brazil won again, with such grace and style that the 1970 team is not only widely regarded as the best team ever to take the pitch but also as the most beautiful. And Pelé was named the player of the tournament.

Making this turnaround required innovation, in particular, the creation of a unique attacking style of soccer. It required building a cohesive team, even as most of the roster changed. And it required leadership, both in management and on the field. The result: by reimagining everything, Brazil came back stronger.

As businesses around the world consider how they can return from the torment inflicted by the coronavirus, Brazil's journey from failure to triumph provides food for thought. In a previous article, McKinsey described five qualities that will be critical for business leaders to find their way to the next normal: resolve, resilience, return, reimagination, and reform. We noted that there would likely be overlap among these stages, and the order might differ, depending on the business, the sector, and the country.

In this article, we suggest that in order to come back stronger, companies should reimagine their business model as they return to full speed. The moment is not to be lost: those who step up their game will be better off and far more ready to confront the challenges-and opportunities-of the next normal than those who do not.

There are four strategic areas to focus on: recovering revenue, rebuilding operations, rethinking the organization, and accelerating the adoption of digital solutions.

1. Rapidly recover revenue.

Speed matters:it will not be enough for companies to recover revenues gradually as the crisis abates. They will need to fundamentally rethink their revenue profile, to position themselves for the long term and to get ahead of the competition. To do this companies must SHAPE up.

Start-up mindset. This favors action over research, and testing over analysis. Establish a brisk cadence to encourage agility and accountability: daily team check-ins, weekly 30-minute CEO reviews, and twice-a-month 60-minute reviews.

Human at the core. Companies will need to rethink their operating model based on how their people work best. Sixty percent of businesses surveyed by McKinsey in early April said that their new remote sales models were proving as much (29 percent) or more effective (31 percent) than traditional channels.

Acceleration of digital, tech, and analytics. It's already a cliché: the COVID-19 crisis has accelerated the shift to digital. But the best companies are going further, by enhancing and expanding their digital channels. They're successfully using advanced analytics to combine new sources of data, such as satellite imaging, with their own insights to make better and faster decisions and strengthen their links to customers.

Purpose-driven customer playbook. Companies need to understand what customers will value, post-COVID-19, and develop new use cases and tailored experiences based on those insights.

Ecosystems and adaptability. Given crisis-related disruptions in supply chains and channels, adaptability is essential. That will mean changing the ecosystem and considering nontraditional collaborations with partners up and down the supply chain.

Rapid revenue response isn't just a way to survive the crisis. It's the next normal for how companies will have to operate. Assuming company leaders are in good SHAPE, how do they go about choosing what to do? We see three steps.

Identify and prioritize revenue opportunities. What's important is to identify the primary sources of revenue and, on that basis, make the "now or never" moves that need to happen before the recovery fully starts. This may include launching targeted campaigns to win back loyal customers; developing customer experiences focused on increased health and safety; adjusting pricing and promotions based on new data; reallocating spending to proven growth sources; reskilling the sales force to support remote selling; creating flexible payment terms; digitizing sales channels; and automating processes to free up sales representatives to sell more.

Once identified, these measures need to be rigorously prioritized to reflect their impact on earnings and the company's ability to execute quickly (exhibit).

Act with urgency. During the current crisis, businesses have worked faster and better than they dreamed possible just a few months ago. Maintaining that sense of possibility will be an enduring source of competitive advantage.

Consider a Chinese car-rental company whose revenues fell 95 percent in February. With the roads empty, company leaders didn't just stew. Instead, they reacted like a start-up. They invested in micro-customer segmentation and social listening to guide personalization. This led them to develop new use cases. They discovered, for example, that many tech firms were telling employees not to use public transportation. The car-rental company used this insight to experiment with and refine targeted campaigns. They also called first-time customers who had cancelled orders to reassure them of the various safety steps the company had taken, such as "no touch" car pickup. To manage the program, they pulled together three agile teams with cross-functional skills and designed a recovery dashboard to track progress. Before the crisis, the company took up to three weeks to launch a campaign; that is now down to two to three days. Within seven weeks, the company had recovered 90 percent of its business, year on year-almost twice the rate of its chief competitor.

During the current crisis, businesses have worked faster and better than they dreamed possible just a few months ago. Maintaining that sense of possibility will be an enduring source of competitive advantage.

Develop an agile operating model. Driven by urgency, marketing and sales leaders are increasingly willing to embrace agile methods; they are getting used to jumping on quick videoconferences to solve problems and give remote teams more decision-making authority. It's also important, of course, for cross-functional teams not to lose sight of the long term and to avoid panic reactions.

In this sense, "agile" means putting in place a new operating model built around the customer and supported by the right processes and governance. Agile sales organizations, for example, continuously prioritize accounts and deals, and decide quickly where to invest. But this is effective only if there is a clear growth plan that sets out how to win each type of customer. Similarly, fast decision making between local sales and global business units and the rapid reallocation of resources between them require a stable sales-pipeline-management process.

2. Rebuilding operations.

The coronavirus pandemic has radically changed demand patterns for products and services across sectors, while exposing points of fragility in global supply chains and service networks. At the same time, it has been striking how fast many companies have adapted, creating radical new levels of visibility, agility, productivity, and end-customer connectivity. Now leaders are asking themselves: How can we sustain this performance? As operations leaders seek to reinvent the way they work and thus position themselves for the next normal, five themes are emerging.

Building operations resilience. Successful companies will redesign their operations and supply chains to protect against a wider and more acute range of potential shocks. In addition, they will act quickly to rebalance their global asset base and supplier mix. The once-prevalent global-sourcing model in product-driven value chains has steadily declined as new technologies and consumer-demand patterns encourage regionalization of supply chains. We expect this trend to accelerate.

This reinvention and regionalization of global value chains is also likely to accelerate adoption of other levers to strengthen operational resilience, including increased use of external suppliers to supplement internal operations, greater workforce cross-training, and dual or even triple sourcing.

Accelerating end-to-end value-chain digitization. Creating this new level of operations resilience could be expensive, in both time and resources. The good news, however, is that leading innovators have demonstrated how "Industry 4.0" (or the Fourth Industrial Revolution suite of digital and analytics tools and approaches) can significantly reduce the cost of flexibility. In short, low-cost, high-flexibility operations are not only possible-they are happening. Most companies were already digitizing their operations before the coronavirus hit. If they accelerate these efforts now, they will likely see significant benefits in productivity, flexibility, quality, and end-customer connectivity.

Rapidly increasing capital- and operating-expense transparency. To survive and thrive amid the economic fallout, companies can build their next-normal operations around a revamped approach to spending. A full suite of technology-enabled methodologies is accelerating cost transparency, compressing months of effort into weeks or days. These digital approaches include procurement-spend analysis and clean-sheeting, end-to-end inventory rebalancing, and capital-spend diagnostics and portfolio rationalization. Companies are also seeking to turn fixed capital costs into variable ones by leveraging "as a service" models.

Embracing the future of work. The future of work, defined by the use of more automation and technology, was always coming. COVID-19 has hastened the pace. Employees across all functions, for example, have learned how to complete tasks remotely, using digital communication and collaboration tools. In operations, changes will go further, with an accelerated decline in manual and repetitive tasks and a rise in the need for analytical and technical support. This shift will call for substantial investment in workforce engagement and training in new skills, much of it delivered using digital tools.

Reimagining a sustainable operations competitive advantage. Dramatic shifts in industry structure, customer expectations, and demand patterns create a need for equally dramatic shifts in operations strategies to create competitive advantage and new customer value propositions. Successful companies will reinvent the role of operations in their enterprises, creating new value through a far greater responsiveness to their end customers-including but not limited to accelerated product-development and customer-experience innovation, mass customization, improved environmental sustainability, and more interconnected, nimble ecosystem management.

Taking action. To keep up during COVID-19, companies have moved fast. Sales and operation planning used to be done weekly or even monthly; now a daily cadence is common. To build on this progress, speed will continue to be of the essence. Companies that recognize this, and that are willing to set new standards and upend old paradigms, will build long-term strategic advantage.

3. Rethinking the organization.

In 2019, a leading retailer was exploring how to launch a curbside-delivery business; the plan stretched over 18 months. When the COVID-19 lockdown hit the United States, it went live in two days. There are many more examples of this kind. "How can we ever tell ourselves that we can't be faster?" one executive of a consumer company recently asked.

Call it the "great unfreezing": in the heat of the coronavirus crisis, organizations have been forced to work in new ways, and they are responding. Much of this progress comes from shifts in operating models. Clear goals, focused teams, and rapid decision making have replaced corporate bureaucracy. Now, as the world begins to move into the post-COVID-19 era, leaders must commit to not going back. The way in which they rethink their organizations will go a long way in determining their long-term competitive advantage.

Specifically, they must decide who they are, how to work, and how to grow.

Who we are. In a crisis, what matters becomes very clear, very fast. Strategy, roles, personal ownership, external orientation, and leadership that is both supportive and demanding-all can be seen much more clearly now. The social contract between the employee and employer is, we believe, changing fundamentally. "It will matter whether you actually acted to put the safety of employees and communities first," one CEO told us, "or just said you cared." One noticeable characteristic of companies that have adapted well is that they have a strong sense of identity. Leaders and employees have a shared sense of purpose and a common performance culture; they know what the company stands for, beyond shareholder value, and how to get things done right.

How we work. Many leaders are reflecting on how small, nimble teams built in a hurry to deal with the COVID-19 emergency made important decisions faster and better. What companies have learned cannot be unlearned-namely, that a flatter organization that delegates decision making down to a dynamic network of teams is more effective. They are rewiring their circuits to make decisions faster, and with much less data and certainty than before. In a world where fast beats slow, companies that can institutionalize these forms of speedy and effective decentralization will jump ahead of the competition.

Many leaders are reflecting on how small, nimble teams built in a hurry to deal with the COVID-19 emergency made important decisions faster and better.

Organizations are also showing a more profound appreciation for matching the right talent, regardless of hierarchy, to the most critical challenges. In an environment with strong cost pressures, successful leaders will see the value in continuing to simplify and streamline their organizational structures. Experience has shown a better way, with critical roles linked to value-creation opportunities and leadership roles that are much more fluid, with new leaders emerging from unexpected places: the premium is placed on character and results, rather than on expertise or experience. This can only work, however, if the talent is there. To hire and keep top talent, the scarcest capital of all, means creating a unique work experience and committing to a renewed emphasis on talent development.

How to grow. Coming out of the crisis, organizations must answer important questions about growth and scalability. Three factors will matter most: the ability to embed data and analytics in decision making; the creation of learning platforms that support both individual and institutional experimentation and learning at scale; and the cultivation of an organizational culture that fosters value creation with other partners.

Those organizations that are making the shift from closed systems and one-to-one transactional relationships to digital platforms and networks of mutually beneficial partnerships have proved more resilient during the crisis. "Every business is now a technology business, and what matters most is a deep understanding of the customer, which is enabled by technology," remarked a retail CEO.

By organizing to encourage insight generation-for example, by linking previously unconnected goods and services-technology is revolutionizing how organizations relate to their customers and their customers' customers. Creating digitally enabled ecosystems is therefore critical because these catalyze growth and enable rapid adaptation. When the crisis hit, one company moved all its full-time direct employees into a virtual operating environment; meanwhile, its outsourcing partner, the CEO recalled, "hid behind their contract and played one customer off against another." It is not difficult to imagine who is better placed to succeed in the more flexible post-COVID-19 business environment, where value creation is shared and strategic partnerships matter even more.

4. Accelerate digital adoption to enable reimagination.

Over the past few months, there has been a transformation in the way we interact with loved ones, do our work, travel, get medical care, spend leisure time, and conduct many of the routine transactions of life. These changes have accelerated the migration to digital technologies at stunning scale and speed, across every sector. "We are witnessing what will surely be remembered as a historic deployment of remote work and digital access to services across every domain," remarked one tech CEO. He is right. Through the COVID-19 recovery, too, digital will play a defining role.

During the early recovery period of partial reopening, business leaders will face some fundamental challenges. One is that consumer behavior and demand patterns have changed significantly and will continue to do so. Another is that how the economy lurches back to life will differ from country to country and even city to city. For example, consumers may feel comfortable going to restaurants before they will consider getting on a plane or going to sporting events. Early signals of increased consumer demand will likely come suddenly, and in clusters. Analyzing these demand signals in real time and adapting quickly to bring supply chains and services back will be essential for companies to successfully navigate the recovery.

To address these challenges, leaders will need to set an ambitious digital agenda-and deliver it quickly, on the order of two to three months, as opposed to the previous norm of a year or more. There are four elements to this agenda:

Refocus digital efforts to reflect changing customer expectations. To adapt, companies need to quickly rethink customer journeys and accelerate the development of digital solutions. The emphasis will be different for each sector. For many retailers, this includes creating a seamless e-commerce experience, enabling customers to complete everything they need to do online, from initial research and purchase to service and returns. For auto companies, this could mean establishing new digital distribution models to handle trade-ins, financing, servicing, and home delivery of cars. For industries such as airlines, ensuring health and safety will be essential, for example, by reinventing the passenger experience with "contactless" check-in, boarding, and in-flight experiences.

Use data, Internet of Things, and AI to better manage operations. In parallel, companies need to incorporate new data and create new models to enable real-time decision making. In the same way that many risk and financial models had to be rebuilt after the 2008 financial crisis, the use of data and analytics will need to be recalibrated to reflect the post-COVID-19 reality. This will involve rapidly validating models, creating new data sets, and enhancing modeling techniques. Getting this right will enable companies to successfully navigate demand forecasting, asset management, and coping with massive new volumes. For example, one airline developed a new app to manage and maintain its idle fleet and support bringing it back into service; and a North American telecommunications company developed a digital collection model for customers facing hardship.

Accelerate tech modernization. Companies will also need to greatly improve their IT productivity to lower their cost base and fund rapid, flexible digital-solution development. First, this requires quickly reducing IT costs and making them variable wherever possible to match demand. This means figuring out what costs are flexible in the near-to-medium term, for example, by evaluating nonessential costs related to projects or maintenance, and reallocating resources. Second, this involves defining a future IT-product platform, establishing the skills and roles needed to sustain it, mapping these skills onto the new organization model, and developing leaders who can train people to fill the new or adapted roles. Third, the adoption of cloud and automation technologies will need to be speeded up, including bringing cloud operations on-premise and decommissioning legacy infrastructure.

Increase the speed and productivity of digital solutions. To deal with the crisis and its aftermath, companies not only need to develop digital solutions quickly but also to adapt their organizations to new operating models and deliver these solutions to customers and employees at scale. Solving this "last mile" challenge requires integrating businesses processes, incorporating data-driven decision making, and implementing change management. There are different ways to do this. A wide variety of companies, from banks to mining operations, have accelerated delivery by establishing an internal "digital factory" with cross-functional teams dedicated to matching business priorities to digital practices. Others, in addition to reinventing their core businesses, have established new business-building entities to capture new opportunities quickly.

For companies around the world, the qualities that brought Brazilian football to new heights in 1970-imagination, leadership, and on-the field execution-will be paramount as they consider how to navigate the post-COVID-19 environment. Business as usual will not be nearly enough: the game has changed too much. But by reimagining how they recover, operate, organize, and use technology, even as they return to work, companies can set the foundations for enduring success.

About the author(s)

Kevin Sneader, the global managing partner of McKinsey, is based in McKinsey's Hong Kong office. Bob Sternfels is a senior partner in the San Francisco office.

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From surviving to thriving: Reimagining the post-COVID-19 return

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The 1966 World Cup marked a low point for Brazilian soccer. Although the winner of the previous two tournaments, the team was eliminated in the first round, and its star player, Pelé, failed to perform. Fouled frequently and flagrantly, he threatened never to return to the World Cup.

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Navigating to the next normal: The first 100 insights | Coronavirus: Leading Through the Crisis

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Our first 100 articles addressing the challenges of tackling the COVID-19 pandemic, presented in four thematic collections. Curated insights to help leaders in the public, private, and social sectors overcome the crisis--and remake the future.

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Amid the coronavirus pandemic, every company's first priority is, of course, to protect the health and safety of employees, consumers, and business partners. Indeed, luxury companies have pivoted to address urgent public-health needs: factories that produced scarves and perfume now manufacture face masks and hand sanitizer, and many luxury groups have made monetary donations to hospitals and other not-for-profit organizations. At the same time, with millions of people relying on the luxury-goods industry to make a living-from factory workers and retail-store employees to small-town artisans and craftsmen-industry leaders are planning ahead and wrestling with longer-term strategic questions to ensure the survival of their businesses.

In this article, we discuss the impact of the crisis on the luxury-goods sector. We then recommend two sets of priorities for industry executives: short-term actions for "navigating the now" and longer-term considerations for shaping the future.

A hard reset or a short-term blip?

While it's too early to quantify COVID-19's total financial toll on the sector, the pandemic has certainly shaken some of the foundational aspects of the luxury industry-and some of these changes could be permanent.

Wholesale Darwinism. Even before the pandemic struck, independent luxury-goods wholesalers in Europe (many of which are small, family-owned boutiques) and some of the large North American luxury department stores were already struggling-in part because of luxury brands moving to vertical integration over the past 20 years and, more recently, the growth of e-commerce. This pandemic might force some of them out of business. The damage could extend to brands that have not yet fully transitioned to a vertically integrated distribution model, as well as to upstart brands that need wholesale channels to reach new customers and to finance the development of their full collections. To survive, wholesalers are likely to adopt aggressive commercial and discount policies-which, at least in the medium term, could hurt the luxury positioning of brands that don't have a concession model.

From global traveler to local shopper. The luxury sector appeals to a global consumer: 20 to 30 percent of industry revenues are generated by consumers making luxury purchases outside their home countries. In 2018, Chinese consumers took more than 150 million trips abroad; we estimate that purchases outside the mainland accounted for more than half of China's luxury spending that year. Asian shoppers buy luxury goods outside their home countries not only to benefit from lower prices in Europe, but also because shopping has become an integral part of the travel experience: buying a brand in its country of origin comes with a sense of authenticity and excitement. With the recent travel restrictions, an important driver of luxury spending has come to a halt, and we anticipate only a gradual ramp-up in international travel, even after the restrictions are lifted. That said, Chinese consumers remain the biggest growth opportunity for the luxury sector. Brands, clearly, will need a new approach to attracting luxury shoppers. To reactivate Asian luxury consumers in their home countries, brands can focus on creating tailored local experiences, strengthening their digital and omnichannel offerings, and engaging more deeply with consumers in tier-two and -three cities. The latter will be challenging, given the limitations in both retail infrastructure and customer-service capabilities in those cities.

Shows without live audiences. Fashion weeks and trade shows have been essential ways that brands have maintained vibrant relationships with consumers and trade partners. While we expect some return to normalcy on this front, we also believe that the luxury industry-in close collaboration with fashion-week organizers and trade associations-should explore alternative ways to deliver the same kind of magic that these events offer when there are restrictions on international travel and large gatherings. Industry players might also consider pushing for a coordinated revamping of the fashion calendar, with brands simplifying and streamlining their presentation calendars.

From ownership to experience, and back again. "Experiential luxury"-think high-end hotels, resorts, cruises, and restaurants-has been one of the most dynamic and fast-growing components of the luxury sector. Millennials (those born 1980-95) opted more for experiences and "Instagrammable moments" rather than luxury items. Baby boomers (born 1946-64), too, were moving in this direction, having already accumulated luxury products over the years. While we expect the positive momentum of experiential luxury to persist, it will slow down in the short term as consumers temporarily revert to buying goods over experiences.

Hyperpolarization in performance. Even before the crisis, it made little sense to talk about the sector in terms of averages because growth rates and profit margins were so widely spread out. Even within the same segment and price point, luxury brands' growth varied from 40 percent to negative percentages, and earnings from 50 percent to single-digit percentages. We expect further polarization based on three fundamentals: the health of a brand's balance sheet prior to the crisis, the resilience of its operating model (including its digital capacity, the agility of its supply chain, and its dependence on wholesale channels), and its response to COVID-19.

Another chance for 'rare gems.' Over the past decade, European luxury conglomerates, private-equity firms, and, more recently, US fashion groups and Middle Eastern investors eagerly snapped up attractive acquisition targets. As a result of the current crisis, some of these acquirers-particularly those that aren't luxury companies themselves-could find that they have neither the core competencies nor the patience to nurture these high-potential brands, and thus might be willing to put them back on the market. Acquisitions that were once forbiddingly expensive could become viable in the postcrisis period. Such developments could result in further industry consolidation or even the formation of new luxury conglomerates.

Time and again, the luxury industry has proved capable of reinvention. We are confident about the sector's long-term potential. But some brands will emerge from the crisis stronger, while others will struggle to preserve the integrity of their business. Much will depend on their ability to respond to the short-term urgencies related to COVID-19 while simultaneously planning and executing for the future.

'Navigating the now': Immediate priorities

Many luxury executives have demonstrated caring leadership during this crisis. They are prioritizing the safety of employees and customers and proactively communicating with all stakeholders about their new health and safety protocols, crisis-response activities, and the steps they're taking to keep operations running. At the same time, they must take quick action to ensure that their businesses weather the crisis. Here are short-term actions that company leaders should consider taking.

Review 2020 inventory and rethink 2021 collections. Sales for this year's spring season are as much as 70 percent lower than last year-not surprising, considering that consumers had little opportunity to explore the spring and summer collections in stores. Decide how to phase in the 2020 fall and winter collections and develop a plan for dealing with unprecedented levels of unsold 2020 inventory-without resorting to steep discounts, which jeopardize brand equity. Stay informed about wholesalers' and e-retailers' plans to clear extra inventory. In some cases, inventory swaps might be preferable to aggressive promotions and discounting. One way to use extra inventory could be to reward loyal customers with gifts or other types of giveaways to surprise and delight them, while also whetting their appetite to shop across collections or categories.

Enhance digital engagement. As stores remain closed in many parts of the world, e-commerce is a crucial channel for keeping sales up, communicating with customers, and forging a sense of community around a brand. Accelerate your digital investments and shift media spending to online channels, with a focus on customer activation rather than brand building. Aside from enhancing your own websites, also consider partnerships with reputable e-retailers. Digital marketing could help not only boost online sales but also entice consumers to visit stores once they reopen.

More than 40 percent of global luxury-goods production happens in Italy-and all the Italian factories, including small, family-based façonniers, have temporarily shut down.

Manage for cash. Set up a cash-control team, with representation from the procurement and sales teams, to examine spending and identify responsible reductions in cash outflow. Review lease contracts and all operating expenses, including marketing spending and events. At the same time, prepare to selectively support wholesalers and department stores by extending accounts-receivable terms and arranging inventory swaps. Work closely with government authorities on a country-by-country basis to find ways to alleviate cash strains with public measures.

Take a 'cleansheet' view of demand planning. Review your 2020 budget and inventory plans, assessing COVID-19's impact on each region and business unit. Adjust revenue and profit forecasts and create incentives for business-unit heads to set new targets. Resist the temptation to push sales at the expense of margins, as a sales-focused approach will likely yield inaccurate demand projections and, consequently, large amounts of unsold inventory.

Assess the strength of your supply chain. More than 40 percent of global luxury-goods production happens in Italy-and all the Italian factories, including small, family-based façonniers (a French term that loosely translates to "contract manufacturers"), have temporarily shut down. Luxury companies should assess, category by category and product by product, where the impact is likely to be felt most acutely. Potential short-term actions include moving inventory across regions and channels, privileging geographic markets that are less affected, and making sure to fulfill online orders. In the medium term, luxury companies should help production partners recover by making prompt payments and restoring production as quickly as possible. If Italy's façonniers do not survive, a signature element of the luxury ecosystem-the craftsmanship that is the result of excellence and skill passed down through generations, and the source of the "Made in Italy" aura-could be lost forever.

Adjust merchandising plans. As consumers' social routines adapt to lockdowns and physical-distancing restrictions, we are starting to see changes in buying behavior. For example, some luxury players report that, in terms of price points, high-end and low-end luxury items are proving more resilient than those in the middle of the range, perhaps due to a combination of "revenge spending" (a phrase that refers to pent-up demand for luxury items during or after crises) and a desire to maximize value for money by purchasing functional items. They're also seeing handbags and small leather goods selling better than ready-to-wear apparel during the crisis. Children's wear seems to be doing particularly well. Millennials haven't reduced their spending as much as other adult segments have. These are the observations of a few luxury players, but clearly there is no one-size-fits-all merchandising plan. Brands should carefully analyze sales data and embed consumer insights into their merchandising plans.

Shape the next normal: Longer-term considerations

Stabilizing the business during the crisis is crucial-but management must not lose sight of the longer term. Here are strategic actions to consider taking during the recovery.

Put digital at the center of your operating model. For many companies, this crisis has been a catalyst for developing and executing an online and omnichannel strategy. In China, e-commerce has attracted new customer segments and markets (exhibit); we can expect a similar pattern to play out in other geographies. Start by allocating a greater share of investment to the online channel. Explore new ways of partnering with established e-retailers. Step up your personalization efforts in digital marketing. Luxury consumers are accustomed to a high standard of service in stores; the emphasis, then, should be on creating a personalized digital experience of the same quality.

Build competencies related to resilience and transformation. For the past 30 years, the luxury sector has created value, thanks to its creativity and innovation. In addition to supporting core competencies such as design, marketing, and merchandising, luxury businesses now need to build the managerial talent to support the CEO in resilience and transformation. One possibility is to create a new C-suite position, the chief transformation officer, to emphasize the importance of these competencies.

Boldly reshape the ecosystem, including through M&A. Crises can create new avenues for growth. Companies should ask themselves questions such as: "Are there companies we could potentially partner with, both to keep them in business and to allow us to expand into adjacent markets or product categories? Are there moves along the value chain (such as vertical integration) that have become more attractive? What partnerships or acquisitions-perhaps in the technology arena-could we pursue now that were less viable before? What brands could we acquire to complement our portfolio or to initiate our journey toward becoming a larger luxury group?" As companies seek to form partnerships or make acquisitions, it will be important to consider not just economic rationales but social rationales as well: For example, could an M&A deal help a supplier in distress, save jobs in a struggling community, or strengthen the luxury sector for the longer term?

Anticipate shifts in consumer sentiment and behavior. Consumers are the ultimate shareholders of the luxury sector. We expect that, once conditions allow, consumers will want to resume their normal lives. However, the next normal might look quite different; luxury companies must try to anticipate and respond to whatever that next normal will be. For example, in our recent conversations with CEOs, one trend that is likely to intensify postcrisis is the trend toward sustainability and the desire for more-responsible consumption-reinforcing the need for companies to provide clear, detailed information about their processes and products. Experience also suggests that, after a large-scale crisis with a heavy emotional toll, consumer preferences could shift, at least for a time, toward "silent luxury"-paying more attention to classic elements, such as craftsmanship and heritage, and less to conspicuousness and "bling."

Digitize the end-to-end supply chain. Technology-from remote-working platforms to virtual showrooms-can help luxury companies maintain productivity during the crisis and, perhaps, even improve productivity for good. In addition, the commercial elements (such as virtual showrooms and digital prototyping and sampling) will be valuable in maintaining strong relationships with buyers, even during times when travel restrictions are in place. Digitizing the supply chain from end to end will, of course, require investment in innovative, leading-edge technologies.

While the COVID-19 pandemic has made for a challenging 2020, we are confident that, with careful planning and deft execution, the luxury-goods sector can successfully weather the crisis and emerge even stronger. The actions we've outlined here can help you and the other leaders in your organization navigate the challenges of today while building and strengthening your business for the longer term.

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A perspective for the luxury-goods industry during--and after--coronavirus

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Amid the coronavirus pandemic, every company's first priority is, of course, to protect the health and safety of employees, consumers, and business partners. Indeed, luxury companies have pivoted to address urgent public-health needs: factories that produced scarves and perfume now manufacture face masks and hand sanitizer, and many luxury groups have made monetary donations to hospitals and other not-for-profit organizations.

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'Future Consumer 2022 by WGSN-' by futureconsumer2022

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Online shopping could more than double its share of the retail market by 2028, according to a report that spells further difficulties for landlords, stores and communities.

The internet is expected to account for 53% of retail sales in 10 years' time, up from about a fifth at present, as younger people who have grown up with the internet become more than half the UK's adult population, according to a report by the analysts Retail Economics for the law firm Womble Bond Dickinson.

One in 10 people of all ages questioned for the report said they planned to shop more online in the year ahead.

Richard Lim, of Retail Economics, said: "Successful retailers have always had to reinvent themselves to stay relevant. However, the pace of change will inevitably prove too fast for many. It definitely feels like the digital retail revolution is only just getting started."

Lim predicts that new and emerging technologies such as artificial intelligence that could enable the automation of delivery and personalised marketing will drive future online growth.

The research is likely to fuel calls for action to protect communities and help to reinvent town centres after a wave of store closures.

Debenhams, Marks & Spencer and the Topshop owner Arcadia have all announced plans to close stores in the year ahead. Last month Bathstore became the latest of a string of high street retailers to go into administration under pressure from growing competition online.

Landlords are being asked to slash rents and the government urged to take action on business rates, which are based on property and so hinder retailers with a physical presence. The British Retail Consortium says retail conditions are the toughest in a decade.

"The industry is undergoing a painful readjustment period," Lim said. "The acceleration of further store closures will eventually lead to a more 'inconvenient' experience for some groups of consumers across many parts of the UK. Inevitably, this frustration will be a catalyst for further online shopping with consumers turning to online as an alternative to in-store purchases."

The differing behaviour of younger generations poses particular threats for certain kinds of shop. People aged between 25 and 44 are far more likely to buy clothing, books, electrical goods or food online than those over 55, for example, according to the research.

But it may not all be plain sailing for online businesses. The research also found that people were increasingly questioning whether they benefited from giving corporate entities access to their personal information. More than a quarter of respondents said they had taken some action to limit the amount of data shared with companies, rising to almost a third among 16- to 24-year-olds.

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Half of UK retail sales will be online within 10 years, report predicts

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Online shopping could more than double its share of the retail market by 2028, according to a report that spells further difficulties for landlords, stores and communities.

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Over the last few weeks, as the coronavirus has swept across the globe, we have all had to dramatically adjust our daily lives. Even those of us who have worked remotely before find this new level of detachment a significant adjustment.

During this time, I have also begun to wonder, when we emerge from this, which we will, if we will quickly snap back to normal or if this has the potential to embed new daily habits and ways of working permanently?

Some studies suggest it takes a minimum of 21 days to form a new habit and two months for a new behavior to become automatic. Unfortunately, I'm already nearing the 21-day mark and can easily expect myself and the rest of the world to be in a similar state by the two month mark. During this period, we can also expect a series of new regulations and policies to impact the way we go about our daily lives.

So what are the potential habits and regulations that will linger after we emerge from this unprecedented challenge?

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In-home diagnostics

Wearables have been growing in popularity over the past 5 years, driven mainly by Fitbit and Apple, however, a new crop are emerging as sensor technology continues to advance. Everything from smart clothing to the Oura Smart Ring.

The pandemic will potentially change this space forever. Steps are great, my sleeping patterns are interesting, but what if this data was collected at an aggregate level to predict similar events in the future?

Kinsa, maker of a smart thermometer, has already given a glimpse into the value of this data. The snapshot below from Kinsa's Health Weather Map, on March 22, 2020 shows what appears to be a significant abnormality in body temperature in New York and Florida, potentially warning of an emerging situation, such as a rise in people with the coronavirus. This kind of overview would allow affected regions to intervene early.

Today neither the Apple Watch nor the Fitbit measure body temperature, though I predict that will change and soon.

However, I believe the bigger opportunity, outside of wearables will be the in-home diagnostics market. There will be a bigger shift towards virtual doctors appointments as a result of this. In many areas of the U.S., and globally, this shift has happened very quickly. Dr. Christopher Crow recently explained to The Dallas Morning News, "We're seeing a 180-degree change in how primary care medicine has been practiced in just a week or two. We're doing 10,000, 12,000 virtual visits a day on our network, and that number could double by next week." Crow is president of Catalyst Health Network, a clinically integrated network of primary care physicians.

However, virtual doctors appointments don't completely replace the need for in-person visits when patients need to take the standard flu test, strep test, or have their vitals read. The potential for in-home diagnostics to become as standard as the telephone once was or the computer is now, is real and a tremendous new opportunity. The amount of new investment and focus on this space will expedite the progress.

Grocery ecommerce

Only 4% of Americans ordered groceries online prior to this crisis. But since stay-in-place orders went into effect, droves of shoppers are shifting their shopping online. This has meant a significant increase in demand for grocery retailers who relied on ecommerce as a small percentage of sales. Suddenly they're dealing with many times their normal volume.

Here, habits are being formed on both sides. The consumer is learning that ordering online isn't as challenging as once thought, and the retailer is learning to properly staff and fulfill these orders at scale.

If we look back to 2003, during the SARS epidemic in Asia, we can see that it was the catalyst behind the ecommerce boom in China. With fewer people flying to China to source materials, many turned to Alibaba, a small 4-year-old company that matched suppliers online. Likewise, JD.com saw its success after having to shutter many of its brick and mortar stores, launching ecommerce as a last-ditch effort.

Could COVID-19 do something similar to grocery ecommerce, or conversely add to the exponential growth of Amazon, which is already fulfilling some of the demand?

The biggest risks to the lasting growth of online grocery are the current wait times and out of stocks that all grocery retailers are dealing with. If this crisis ends over the next few weeks, I can imagine the overall effect may be a negative one, turning off more people than it converts. However, if the crisis does last longer, retailers will catch up to demand, the experience will improve, and shopping habits will be altered.

Home cooking

Local restaurants and cafes have felt an especially difficult burden during this time. Hours and staff have been cut. And although they're launching new channels, such as delivery, this is a worst-case scenario for many. A remote workforce does not go out for lunch, and a populace urged (or forced) to self-isolate does not go out to dinner. Instead, we're cooking our own meals.

In the Great Recession we saw a sudden drop in total out-of- home eating, but this was mostly a measure aimed at conserving income.

Our current challenge is much more complex and could be more prolonged. If a greater percentage of us realize that working from home is now an option after this crisis, what are the long-term effects?

There may also be much longer-term economic effects that prolong a return to normal. While the Great Recession was followed by a 10-year bull run, the pandemic could fundamentally change or eliminate certain industries.

Within just two weeks, I find myself much less wasteful. I am cooking and preparing for multiple meals at once and looking for inspiration to try something new. I sense I am not alone in this regard and perhaps a result of the coronavirus will be that a whole new generation learns or relearns how to cook.

Remote working

Remote work has the potential to reshape our entire economy. While the geopolitical outcome will be a greater enforcement of borders, the economic outcome may be a removal of borders.

There is rarely a substitute for face-to-face, but technology has advanced to the point where it is not always needed. In fact, there are benefits to remote working that a few companies have known for a while and many more are now discovering.

One company, Stripe, a leader in the online payments space, announced last year, "We are establishing a fifth (development) hub that is less traditional but no less important: Remote. We are doing this to situate product development closer to our customers and improve our ability to tap the 99.74% of talented engineers living outside the metro areas of our first four hubs."

Automattic, the maker of the WordPress platform has been remote since day one and has been a leader in the movement: "Our creed includes the statement, 'I will communicate as much as possible, because it's the oxygen of a distributed company'."

The reality is that many companies have already integrated some aspects of remote work. At my own firm, for instance, we were already heavily distributed across the globe (30 countries) to be closer to our clients. However, we still tend to open formal offices in many of these locations. After this event, I wonder how many companies like ours will find that kind of office presence unnecessary.

The commercial real estate market may end up being one of the hardest hit. However, the positive implication is greater access to opportunity for a greater number of people and lifestyles.

It's hard to think ahead to what may change in the future as many of us are dealing with very serious health and economic challenges right now. My hope is that we emerge better as a result of this experience and see a wave of new habits and innovations that improve everyone's quality of life.
Kyle Fugere is Global Head of Ventures & Labs at Dunnhumby. He previously founded two companies in the B2B technology space, is a board observer for GrocerKey, Pulsate, and Askuity, and is a frequent speaker and writer on the subject of retail innovation.

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Our post-coronavirus world: How tech is influencing which new habits will stick

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Over the last few weeks, as the coronavirus has swept across the globe, we have all had to dramatically adjust our daily lives. Even those of us who have worked remotely before find this new level of detachment a significant adjustment.

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NEW YORK, NY - MARCH 31: General view inside Grand Central Terminal during the Coronavirus pandemic ... [+]
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The ongoing global pandemic is causing deep reflection about what this will mean for how our society functions. In a matter of weeks, we have seen working from home skyrocket to nearly 30% of Americans. Public transportation and traffic in major cities decreased dramatically as offices, factories and schools have shut down. In Europe and China, satellite images are showing lower levels of pollution as a result. If we wanted an experiment to see what the future of work would look like in a truly digital world, this is it.

Many of us have logged into Zoom ( NASDAQ NDAQ:ZM) and Slack ( NYSE:WORK) and adapted to our home and work lives coming into greater contact with one another. But as we look further out - to the point when the immediate crisis subsides and we see the long lasting effects on our lives - what could this mean for how our society functions? And how might our living and work environment evolve as a result?
The Internet-based Society (Almost)
Five years ago, remote working on this scale across multiple industries would have seemed unfeasible. That signifies the huge shift that has taken place, both in terms of technology (cloud technology, apps, remote working tools), but also infrastructure, including faster wi-fi and phone data.

Internet providers currently appear to be coping with the increased and shifting demand as people work from home. However, the roll-out of 5G has arguably become even more paramount for these companies; it will increase connectivity, particularly in remote or underserved regions, and provide the necessary infrastructure for the Internet of Things in a more decentralized society.

Even once the immediate crisis subsides, it seems likely that there will be a lasting impact on work habits. More people will feel that they can be successful working from home and may negotiate for it as a benefit with their employers (particularly if wages stagnate in a recession). Employers, for their part, will realize that cutting costs on office space outweighs any challenges to productivity. That may sustain an increase in remote working tools, such as Zoom and Slack, although no doubt there will still be a return to old working practices in many companies who don't have the option to work remotely.

What is clear is that we will need flexibility in our technology and infrastructure to cope with the change in demand from diverging work practices between remote workers and commuters. That will likely bring new innovations and solutions across commercial real estate, education, information technology, HR, telecommunication and energy.
A Step-Change in Smart Cities
If more activities need to be done remotely, then we can expect to see greater demand for smart city infrastructure.

Social monitoring technologies, including cameras, drones and security systems, will become more pervasive. Both as footfall decreases in certain areas, it will create more security risks for businesses who want to protect their premises. We may also see authorities use this technology in future health emergencies. In the U.K., local police have already been using drones to enforce social distancing. A more permanent response could see the use of sensors with data analytics to monitor for foot traffic in certain areas, such as shopping districts, and warn people if the crowds are too dense.

A picture shows a sign warning of police drones in operation in central London on April 6, 2020, as ... [+]
AFP via Getty Images

It will take a long time for society to adapt to these measures; there is an inherent and understandable distrust of governments monitoring its citizens, and public groups have already opposed Smart City projects where data monitoring is used.

However, the use of drones and sensors to monitor infrastructure will be more widely accepted as a way to reduce the need for essential maintenance workers to go outside. Both during health emergencies, but also in extreme weather events, which are likely to become more common. Rather than having to go on-site to check an out-of-service telecom pole, for instance, a worker will be able to check what the issue is from their smartphone - and possibly even fix it remotely.
A Shift To Cleaner Transport
With fewer people commuting to work or visiting urban areas for shopping, restaurants and leisure, as some of these services switch to online or delivery, we may see a permanent shift in demand for transport.

If vehicle traffic is reduced in city centers, that will leave more room for green highways: cycle paths and pedestrian routes that will enable people to move around the city and get exercise, while still maintaining a reasonable distance from each other. For municipalities and governments, that will affect urban planning, including changing road layouts, widening sidewalks, providing more alternative transport options in collaboration with private companies (e-bikes and e-scooters), and improving street lighting.

Providers of mass transit - train and subway companies in particular - may be expected to reduce overcrowding and create more distance between passengers, although it is hard to see how these measures will be effectively implemented. In all likelihood, demand for mass transit will grow if fewer people have a reason to own a car for commuting, and instead can rely on car services or rentals for occasional trips.

An empty New York Subway car is seen on March 23, 2020 in New York City. Train cars are currently ... [+]
AFP via Getty Images

Learning From This Crisis to Address Climate Change
If anything, the coronavirus pandemic has underscored the importance of listening to the experts and scientists. The biggest threat facing society is climate change. In a survey of 800 of the world's political and business leaders by the World Economic Forum in January 2020, climate action failure, biodiversity loss and extreme weather topped the list of risks in terms of likelihood and impact.

As a CEO of a publicly traded small-cap company, and as a citizen of Canada (which has a very large oil and gas industry), any actions we take must be in consideration of the economy and the way the world runs today. However, there is an opportunity here to change human behaviors and implement clean technology solutions that will make these effects more permanent.

We've already seen the powerful effect that reducing traffic and industrial activity has on air pollution levels in a relatively short space of time. We would also need to see a worldwide economic impetus for the adoption of clean tech, including hydrogen fueled transport, electric vehicles, renewable energy, carbon capture and storage and cleaner fuels across industries. In doing this, we will have the chance to change our course before the effects become unmanageable - in other words, to flatten the curve of global temperature increases.

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Coronavirus Will Permanently Change How Cities Work

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As we look further out - to the point when the immediate crisis subsides and we see the long lasting effects on our lives - what could this pandemic mean for how our society functions? And how might our living and work environment evolve as a result?

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With the economy virtually shut down, consumers throughout the world in lockdown and businesses struggling with the day-to-day challenges of the coronavirus, it's almost impossible to plan ahead. Still, WWD asked five futurists to take out their crystal balls and present their visions of the world, post-pandemic. How do these soothsayers conjure the future? By examining behavioral, technological and societal phenomena arising from past traumas, be it a world war, a natural disaster or 9-11, and researching current and evolving consumer behavior, product demand and lifestyle patterns across generations, geographies and demographics.

Among the key takeaways from the interviews:

* Brace for an acceleration of emerging trends in retail and fashion;

* Develop new businesses and take a deep dive into the business portfolio to examine what's losing or gaining relevance, and

* Be prepared as best as possible for another pandemic. It will happen again.

Paco Underhill

While keeping his social distance, Paco Underhill walks the streets of New York City, noticing garbage cans.

For the founder and chief executive officer of the Envirosell behavioral research and consulting firm, and one who travels the world consulting to retailers, banks, web sites, museums and airports, checking out the garbage seems prosaic. But there's a point to it. "As one of the consequences of being trapped at home, beyond going stir crazy, is we're reminded of the need to pick through the things we own, and think about what we really need to keep. I'm doing it myself - editing - and as I walk the streets I am seeing evidence of [purging] in the garbage. This concept has been long in coming. We need to do a better job of picking through the things we own."

Underhill is proposing that the pandemic motivates people to reassess what matters to them, whether it's the stuff they hang onto, or how they work and live. In an interview, he focused on COVID-19's impact on the home, work, consumerism and lifestyle, and looking into his crystal ball, he envisions:

* People rethinking where to live. Choosing towns over big cities.

* People of all generations developing better skills at using technology as they work at home more and teleconference.

* Reorganizing homes and furnishing them to adapt to working at home. Dining rooms and bedrooms become work stations.

* Shared workplaces like WeWork will be redesigned, altering conference rooms, offices and lounges.

* Dressing differently as more people work at home, retire and opt for comfortable, casual attire.

* Cooking more frequently at home.

"More people are using social media as a way to learn how to do cook things cheaply, quickly and efficiently," said Underhill. "It's interesting that Amazon reported [increased] sales of digital pressure cookers and crockpots." With the digital pressure cookers, "the cooking time is reduced by almost two-thirds....People are going to cooking sites, looking at YouTube videos, learning to make friends while learning about their ovens, stoves and appliances, and something about the storage of foods - what do I use my freezer for."

Underhill said he's working on a book about the future of eating and drinking that "gets into the conflict between what do I get from global suppliers and from my local farmers market and what are the differences."

With the pandemic, he predicted, comes "a recalibration of our sense of hygiene - a trend we have been watching for 10 years which ties into how people think about entering and exiting buildings, handling cash, touching and passing along pencils and pens and all kinds of objects. Thinking about things that get transferred between people gets "eminently more acute," said Underhill. Even home design gets rethought. "Twenty years ago, they started building McMansions," large homes designed to accommodate families, extended families and guests, and to impress. "Once you have a McMansion, the job of keeping it clean is a major headache."
See Also: 7 Grants Helping Small Businesses Impacted by Coronavirus
The notion of intimacy changes in the context of the pandemic and afterward. "When my wife just got home from Europe, she looked at me and said she was required not to touch me," Underhill said, half jokingly. The suggestion is that people could get in the habit of greeting others without that hug, handshake or kiss.

Underhill sees a shift toward village living as opposed to living in the big city. "It's about the revival of the village, living in places that are smaller in scale, walkable to transportation, retail and schools, where you don't have to drive a car, but can still have a home. You would be part of a smaller community, where work, education, recreation and retailing seem more integrated, and achieved in ways not requiring cars or subways.

"With the pandemic happening, people are living more local and forced to stay at home, and looking at the immediate environments they live in, and how they adjust. They could ask, 'Why don't I have a garden? One with fruits and vegetables rather than flowers and grass.

"Technology has made gardening imminently more viable and easy. It's less about farming and more artisanal farming - being able to grow a salad a day for yourself," said Underhill.

For Baby Boomers, the pandemic becomes a "punctuation mark," or pivotal point in their lives, Underhill said. Retirement, or the prospect of it, becomes reality, some of it due to businesses closing or cutting back. "People begin thinking about doing something different, and considering what is the safest place and most expedient place to live in," said Underhill. "The thing that bubbles up in my mind is whether I would like to live in a small town or a university town with a medical school and access to medical services."

As lifestyles change, so does how people dress. "What is a uniform for work at home, Monday through Friday, versus what was that uniform I wore to work at the office?" Underhill asked. "We are going to see an emphasis on comfort uniforms. We see it already in terms of the yoga pants movement, and that idea of something that is stretchable and comfortable and good to go from work to recreation without going through a change of clothing."

He sees two fashion trends, somewhat contrasting - toning down and brightening up. Monotones get more popular, enabling easy mixing and matching, and so does colorful, whimsical dressing since people are at home with greater freedom of expression. "The broader scope of the uniform world is going to be geared to more personal styles," he said. The thinking is, "Today I am going to tone down and tomorrow take it up. There's greater sense of choice."

At the same time, "People will focus on fewer and better things...as for consumers, financially speaking, it becomes more of a conflict between the Verizon bill and the Neiman Marcus bill, and determining which one is more critical."

Among those inclined to dress up for social occasions, which Underhill referred to as "the costumers," the role of renting and sharing on the costume side of the fashion equation increases, as does the appeal of vintage clothing. "The pandemic is going to serve as an accelerant for trends already out there," Underhill observed. "The issue of hygiene has already been out there. The issue of working from home has been around for awhile and is going to accelerate."

Marc Palatucci

It is safe to say that most consumers aren't expecting to return to life exactly as they knew it when the pandemic subsides. But Future Today Institute's Marc Palatucci is anticipating the nontraditional shopping habits that have been adopted will loosen up once the coronavirus gets under control.

Founded in 2006, the Future Today Institute researches, models and prototypes future risks and opportunity. Before the pandemic, it acknowledges how we were living in a time of tremendous uncertainty and anxiety stemming from information overload and the onslaught of technologies like automation, self-driving cars, genome editing, big data and cognitive computing. Add a global health and economic crisis and everything intensifies.

From Palatucci's perspective, several factors are colliding and are changing consumer behavior. He said, "The twin factors of temporary retail closures and widespread house arrest are certainly causing an uptick in online shopping. At the same time, many people are feeling less financially stable, so a good percentage of that online retail growth is likely to be in necessity: groceries and sanitary supplies, for example, rather than discretionary categories like fashion and entertainment."

Business and culture transformation authority Martin Lindstrom has some advice for all the cooped-up WFH-ers, recently laid-off creatives and dismayed business owners: don't panic.

However dismal the minute-to-minute pandemic updates may be, the optimistic executive believes there is a lot to be learned from other health catastrophes like the swine flu as well as the seismic shift caused by the 2008 financial fallout.

The way Martin Lindstrom sees it, people might try looking at the coronavirus as the world's fastest-growing, most powerful brand as opposed to a flu-like illness. More importantly, he wants people to ask themselves, "What would have happened if the virus had never achieved brand status."

That experiment is meant to help people to shift their perspective to try to imagine a more manageable scenario and one that is not laced with a constant current of fear. Addressing the massive amount of fear that complicates and magnifies the international COVID-19 crisis, Lindstrom said, "In a world fueled by fear with social media in overdrive, a steady stream of 24/7 news on television - all streamed directly to the devices in our hands - Hollywood trailers and all our personal amplifications of personal and public news - all this may be a root cause of the global situation in which we find ourselves in."

The author of "Small Data, the Tiny Clues That Uncover Big Trends" and "Buyology: Truth and Lies About Why We Buy" will publish a new book, "The Ministry of Common Sense," in June. In the meantime, he is trying to look at the coronavirus crisis constructively, despite the abundance of challenges it has created for varying degrees of entrepreneurs and conglomerates.

Well aware that business owners and creatives are trying to deal with everything that is happening, Lindstrom said, "I fundamentally believe that where there's a negative side - you'll always be able to find a positive opportunity. Instead of business owners going into panic by firing people, downsizing their business or just 'waiting' for customers to show up, you need to revisit your business platform and brainstorm about new products or services you can offer."
See Also: How Independent Accessory Brands Are Protecting Themselves Amid the Pandemic
Executives, designers and gig employees can look for answers in other difficult times and from nonfashion industries, according to Lindstrom. He drew the comparison to the 2008 financial fallout breakdown, when nearly every major U.S. car company had to be bailed out by the government. But the South Korean car company Hyundai decided not to lower its prices, but investigated and determined the underlying root cause of the issue. "The reality was that consumers indeed still had the funds to buy a car. They were just uncertain about the future - and thus were holding back. As a result, the Hyundai guarantee was launched. Ads ensured, 'If you buy a car and lose your job within the next 12 months, you just return the car and we'll return all costs,'" Lindstrom said. "Sales skyrocketed - and Lee Myung-Bak, Hyundai Motors' ceo, later told me that only five cars were ever returned."

Lindstrom added, "Despite the doom and gloom - see this as an opportunity to refresh your business idea, seek to understand the new market needs arising - then go full speed. Don't wait. In principal you've nothing to lose and everything to gain."

Without question there will be shifts in business platforms. Lindstrom chalks that up to "the simple reason that people are 'forced' to change behavior. And the longer consumers are 'forced' to stick with a new behavior (like shopping online rather than visiting the mall), the higher risk that they'll stick with it," he said.

Sometimes consumers need further convincing, though. Lindstrom pointed to such disruptions as the London Underground nearly being closed down some years ago due to a strike. Even though travelers would save six to seven minutes, due to the new travel path they were forced to adapt to, only 5 percent of them stuck with the new path once the strike was over after 48 hours, he said. Patterns or habits need to be in place for several weeks - if not months "before they have a profound impact on our permanent behavioral patterns," he said. "However, once that happens, we're likely to see that certain businesses, like open buffets in restaurants, gatherings in crowded rooms, etc., will vanish forever and will be replaced with other concepts."

In addition, there is also the second issue of a long-term halo effect taking place. As displaced workers from the 2008 financial crisis can attest to, once people are terminated from their jobs it often takes years before they get into the workplace again, Lindstrom noted. "With millions of people now terminated, their financial spending power will change for years," even though in the U.S. those earning up to $75,000 may receive onetime direct payments of up to $1,200.

That employment reduction will cause a lasting toll on the economy. "In short, we're likely not to rebound the second the virus is gone. The economy will suffer for at least a year if not two before things are 'back to normal,'" he said.

However grim that outlook may be to many, Lindstrom sees a silver lining. "Don't go into panic mode. In my opinion this is way too oversaturated. The swine flu infected 2,000,000,000 (yes, that is two billion people) - 203,000 people died. Do you even recall the panic then? No - because there wasn't any. Just as there wasn't any social media around. Facebook was five years old. Perhaps this is somewhat self-inflicted. Don't get me wrong - I feel for everyone impacted by this. But one rarely has sharp thinking when in panic."

Geraldine Wharry

While many are wary about what the coming months and year will bring, Geraldine Wharry is ready for what awaits.

The futurist, designer and educator is anticipating the end of overconsumption, the rise of biometrics, the acceptance of holograms for business and social purposes, and scores of other changes. Avatars, AR, video streaming and gamification will be on a major fast track, she said.

When the coronavirus crisis subsides, more retailers may start using heat maps for preventive medical purposes and brands may be more inclined to sell their designs to shoppers, who in turn will make the clothes at home. The global crisis is already accelerating practices that were beginning to take hold. The number of consumers who favor secondhand clothing and rentals will continue to increase and digital fashion will become more of a thing, according to Wharry.

"Innovators are creating virtual parties where you can attend through a VR set or a party where you can create your own avatar. This will influence how retailers can sell clothing online in the way that LVMH did with the Leagues of Legend for Louis Vuitton," she said.

Conferences and concerts will change as people take to delivering conferences through a hologram, Wharry said, adding that Facebook has been developing this for the future of Skype.
See Also: What Beauty and Wellness Products Sell In a Pandemic?
And for the future of traditional retail, Wharry said, "It's the end of overconsumption as we know it, which America is a huge culprit of. We can't just take outdated ways of functioning and bring them into new technologies. We need to rethink this idea, 'It's OK, I can still buy a lot because I can do it online.' What for? This is a life crash course. Many people are going to go after their dreams now...of course there will be a segment of the population that still wants to consume and shop. After not being able to shop in stores for months, some will miss it and others will realize they really don't need it. This is going to make us realize what is essential."

Wharry realizes that now is not necessarily a good time to try to sell things, but businesses should not give things away for free, either. Brands would be better off to strategize and to build their communities externally or internally, the futurist said. Advancements and mistakes should be recorded for the next time this happens, Wharry said. "Because this will happen again."

Given that, retailers may be invited to use heat maps, as airports did in China during SARS, Wharry said. Staying safe could lead to thorny ethical questions with big tech, likw should we need to give away personal information and biometrics to stay virus-free. "In the future, people may want instant feedback about their temperatures. We've seen that with [smart] watches. Haptic feedback and data is being woven into garments so that your heart rate and other biometric data is fed back. Those things were used for yoga and sports. They could have amazing benefits for avoiding pandemics, if all of a sudden you realize that you have a fever."

From her standpoint, there needed to be a time of reckoning due to the amount of products that we consume and the amount of resources we extract from the planet. "Potentially, this will lead to a whole new way of engaging with fashion, repairing clothes more, and businesses may teach consumers how to repair clothing and how to make their own designs from home. That's a different way of looking at intellectual property," Wharry said.

Referring to the numerous interesting things she has seen on social media recently, Wharry noted how one of France's biggest movie stars, Lou Doillon, Jane Birkin's daughter, is playing her music at 5 every day and designer Helen Kirkum, who has worked with Adidas, has offered sneaker design workshops using everyday reusable materials on Instagram. "That's bold because she is really sharing her IP there. This whole notion of exclusivity is potentially going to change," Wharry said.
Read more from WWD: E-commerce Not Enough to Save Fashion Retail Marketing in the Age of Coronavirus: The Dos and (Many) Don'ts Furloughs Sweep Across the Country WATCH: What Makes a Fashion Brand Successful?

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Life in a Post-Pandemic World: Reading the Tea Leaves

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With the economy virtually shut down, consumers throughout the world in lockdown and businesses struggling with the day-to-day challenges of the coronavirus, it's almost impossible to plan ahead. Still, WWD asked five futurists to take out their crystal balls and present their visions of the world, post-pandemic.

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Brands are engaging with the Millennial and Gen Z players of Animal Crossing: New Horizons with a variety of in-game events and downloads, including free the Animal Crossing outfits designed by Valentino. At a time when photoshoots can't be carried out as usual with models, stylists, photographers and others on the creative team, brands are creating virtual experiences that can be appreciated in a different way.

Valentino collaborated on a series of animated outfits for male and female avatars within the game that can be downloaded using a code and added to the new Animal Crossing game with the in-game Able Sisters' store. With venues of all sorts closed and people lacking occasions that call for getting dressed up, designer brands are offering alternative ways to outfit people via their in-game avatars.

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Brands are engaging with the Millennial and Gen Z players of Animal Crossing: New Horizons with a variety of in-game events and downloads, including free the Animal Crossing outfits designed by Valentino. At a time when photoshoots can't be carried out as usual with models, stylists, photographers and others on the creative team, brands are creating virtual experiences that can be appreciated in a different way.

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Trend - Fashion brands are changing the ways they present their new seasonal capsules to their consumers. Striving to find a medium different than photography, these brands tap pop cultural phenomena such as video games, anime series and virtual models to diversify their approach to product display.

Insight - Pop cultural artifacts like games and animation series impose a strong influence on Millennial and Gen Z consumers who have grown an attachment to some releases. Due to fandoms that are often described as "cult-like," many consumers are delighted when they see their favorite pop culture moments integrated into other industries. As a result, Millennials and Gen Z tend to pay more attention to such initiatives as it not only taps their fandom but also is a novel way of presenting products and content.

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fashion brands are debuting their collections in fully digitized lookbooks

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Fashion brands are debuting their collections in fully digitized lookbooks

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Trend - Fashion brands are changing the ways they present their new seasonal capsules to their consumers. Striving to find a medium different than photography, these brands tap pop cultural phenomena such as video games, anime series and virtual models to diversify their approach to product display.

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Trend - In tense and uncertain times, tech-specific relationship-building is becoming more of a need than a fixed habit among consumers. These services and the new ways consumers are using them are enhancing online relationships specifically, rather than functioning as a way to keep relationships going between meet-ups.

Insight - Self-reported loneliness was already considered to be an epidemic before the rapid and significant changes that have been made to peoples' lives around the world in recent weeks. Now, being isolated in one's home is quickly becoming a universal necessity, and the mental health risks related to long periods without social contact have the potential to be extremely harmful. Brands that are able to ease the burden related to current events by fostering digital social interactions between customers are quickly being viewed as a need rather than a luxury.

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socialization in the digital sphere becomes a necessity more than a habit

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Socialization in the digital sphere becomes a necessity more than a habit

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Trend - In tense and uncertain times, tech-specific relationship-building is becoming more of a need than a fixed habit among consumers. These services and the new ways consumers are using them are enhancing online relationships specifically, rather than functioning as a way to keep relationships going between meet-ups.

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Trend - Brands are integrating memes and online references to eject both humor and cultural relevance. More than just a humorous afterthought, these marketing campaigns are integrating meme culture in a way that more closely ties and links back to the brand itself, creating a more authentic reference.

Insight - Pop culture has a bold presence in the digital space as Millennials and Gen Zs continue to create, share, and engage with content on a daily basis. Phenomena like meme culture and the use of emojis move past their status as a means of entertainment and become a formative and integral part of the communication style of these demographics. As a result, younger consumers become more receptive to initiatives that tap digital pop culture as they perceive them to be more relatable and entertaining.

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brands focus on memes to better connect to younger audiences

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Brands focus on memes to better connect to younger audiences

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Trend - Brands are integrating memes and online references to eject both humor and cultural relevance. More than just a humorous afterthought, these marketing campaigns are integrating meme culture in a way that more closely ties and links back to the brand itself, creating a more authentic reference.

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The COVID-19 global humanitarian and economic crisis has forced individuals and companies to rapidly change how they live and work. Many elements of business and life are being challenged; in some cases, the next normal may look very different as new ways of working are carried over into the future. Companies are doing their best to manage through this pandemic-from ensuring an effective crisis response, to managing supply-chain disruptions, to safeguarding the well-being of their employees by adjusting daily working practices.

Customer experience takes on a new meaning against this backdrop. Executives are typically approaching customer experience by creating seamless, convenient and engaging customer journeys; however, the needs of customers at the moment have shifted dramatically towards more essential concerns. A recent McKinsey survey of US consumers found that 64 percent of respondents have felt depressed, anxious, or both over the past several weeks, and 39 percent stated that they would be unable to pay their bills after one month of unemployment.

Leading organizations are reorienting their customer-experience efforts to meet their customers' primary needs, such as safety, security, and everyday convenience. These actions will inevitably speak louder than words in a world where companies are increasingly advertising a message of "we are here for you." By consciously providing empathy and care during this crisis, companies can build a foundation of goodwill and long-lasting emotional connections with the communities they serve.

Seven actions to demonstrate empathy for customers

Over the past few months, companies have had to quickly adjust to COVID-19. The first step for many organizations was to stabilize operations and safeguard their own employees. From this position, companies can then find genuine, creative ways to show empathy and emotionally connect with their customers. Many have already begun to take seven actions related to individual safety, security and stability, convenience and ease of use, and emotional bonds and trust (exhibit).

1. Minimize risk by reducing physical interaction

Society's first responsibility during a pandemic of this scale is eliminating opportunities to spread the virus, especially among the most at-risk populations. Companies have been minimizing the risk of contagion when fulfilling essential tasks, particularly when they involve vulnerable groups.

Grocery retailers have responded by taking extra precautions, such as extending opening hours for the elderly and healthcare workers as well as free home-delivery for customers more than 65 years old. Many are limiting the number of people who can be inside the store at once and putting physical-distance stickers on the floor to aid compliance. E-commerce and online food-delivery companies around the world are offering new contactless delivery options to eliminate direct physical contact between customers and delivery drivers. Companies offering services that require customers to be in close proximity, such as airlines, are taking measures to reduce risk and ensure the health and safety of both their customers and employees. Of course, this approach requires more stringent standards for cleaning as well as new work processes, such as suspending drink refills or recycling to avoid touching passenger-handled items.

2. Actively contribute to safety by innovating the product portfolio

Companies should ask themselves two critical questions: Do we have a product the world needs right now? Or can we rapidly adapt our product portfolio to provide goods that are urgently needed? In pursuing this approach, companies can use their strengths to provide essential products, even if those goods are outside of their current product offering. For example, some distilleries are using their ethanol supplies to provide materials for hand sanitizers through partnerships with refineries.

Companies are also stepping up to meet the demand for more medical equipment and personal protective equipment. Apparel manufacturers are responding to a drop in sales by producing thousands of urgently needed face masks instead. Some automotive companies are shifting production to manufacture ventilators, for example, General Motors is partnering with a US-based medical device company to produce respiratory care products.

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Companies beyond manufacturing are still able to innovate their product portfolio to contribute to safety initiatives. Rideshare companies are looking to use their network of drivers to transport medicine and basic goods, rather than passengers. This effort could provide lifesaving drugs to individuals who are not able to go out to purchase them because of the quarantine or other conditions.

In all of these cases, company leaders have demonstrated their commitment to customers and society. At the same time, they are creating alternatives so they can continue providing meaningful work for their employees despite substantial demand reductions in their core business.

3. Provide pragmatic help to customers in financial distress

Once customers have secured their personal safety, their next concern is often financial. As companies are forced to decrease operations for an uncertain time period, individuals and millions of small business owners face massive income and liquidity issues.

Providing flexible solutions when dealing with financial challenges is now both a responsibility and a huge trust driver for companies. Financial institutions are not penalizing customers who cannot meet payment obligations for March. Telcos are not terminating service or enforcing late-payment fees for customers experiencing hardship for an extra 60 days. And energy companies are not shutting off power for nonpayment; in some cases, they are even reconnecting customers whose service had been turned off prior to the crisis.

In addition, companies are seeking to alleviate unexpected sources of financial stress as events unfold. Travel companies, including most major airlines, are waiving cancellation fees. Families who formerly relied on school lunches to feed their children can benefit from efforts such as those introduced by Burger King, which provides two free kids meals to Americans who make any purchase through the Burger King app.

4. Bring joy and support the emotional needs of customers 'trapped at home'

Many people are forced to stay at home, and experience all the concerns that come along with having to do so. Companies are acting to make homelife more enjoyable and to also ensure the well-being of their customers.

Families have to entertain their children at home for weeks to come, making access to online content a truly fundamental need. Telcos are providing free unlimited data for the next 60 days to all mobile customers with data plans. Entertainment companies have released content ahead of schedule: the Walt Disney Company, for example, released the family-friendly blockbuster Frozen 2 on its streaming platform, Disney+, three months earlier than planned. New York's Metropolitan Opera offered free digital shows to entertain virtual audiences, while Google Arts & Culture has paired with museums around the world to curate virtual tours.

Other companies are checking in with their customers to help relieve stress. Meditation and mindfulness providers, such as the Headspace app, will be providing free subscriptions to healthcare professionals and unlocking free content for consumers. Multiple organizations have launched online services that include food delivery and recipes, shared rides, online courses, and traditional financial services.

5. Actively shift customers to online channels

With so many directives around the world to remain at home, companies that previously relied on physical operations have had to direct customers to online offerings.

As an example, since many gyms have been directed to close all physical facilities, they are now offering hundreds of free online home workout courses to all members. Companies offering virtual capabilities, as with Cisco's Webex, are assisting schools and universities as they transition to remote learning by offering free tools for teachers, parents, and students to support the development of online-learning plans. Italian banks are encouraging the use of digital channels while providing tutorials for online banking. Medical providers are providing care through digital services, such as telemedicine, with health insurers supporting the initiative by offering zero copays.

Companies without online services can find ways to establish and scale online offerings with substantial demand from customers as their needs increasingly turn digital. This shift to online and digital channels has the potential to dramatically increase online traffic post-recovery.

6. Stay reachable and treat customers with care in personal interactions

With physical channels such as bank branches and nongrocery retail stores closed, many customers are turning to other channels for questions and requests that require personal attention and care.

Service companies in telcos and banking are currently experiencing increased inbound call volumes in their contact centers while at the same time having to shift their customer-service centers to remote-working arrangements. For example, a leading European telco equipped 10,000 call-center agents with laptops and tool infrastructure within a week, enabling them to take calls from their homes. Companies that provide customers with additional guidance and support can maintain communication and engagement. Other companies have enhanced options for seeking information digitally; Erdos Group launched a WeChat program in China to offer virtual product consultations. Airlines facing traveler cancellations or trip changes are urging customers whose travel is not within 72 hours to address their needs through the company's website.

While most companies must address reachability, some companies, such as those in the medical industry, face callers who have significantly different types of questions than they did prior to the pandemic. Another key priority is proactively responding to this shift by training call-center agents to effectively manage these new questions. Cigna has established a 24/7 customer-resource center specifically to help customers with claims related to the novel coronavirus. Companies should reevaluate how to prepare their agents to address these emerging needs.

7. Demonstrate care for the community through company values

Companies can stay true to their vision while showing that they genuinely care about their customers. Actions taken during crises can help build trust and reinforce brand values (see sidebar, "Forming a purpose-driven bond with customers").

One of the most talked-about company initiatives in Germany came from McDonald's and ALDI. The two companies initiated a staff sharing plan so that interested McDonald's workers from temporarily closed branches can redeploy at ALDI stores to ensure that the retailer can meet the currently increased customer demand. Supporting local communities while linking these efforts back to company values is exemplified by companies delivering free, fresh meals to medical workers in the cities they serve. Similarly, sustainable-footwear company Allbirds is giving free shoes to healthcare workers, and pharmacies and drugstores are also gearing up to donate space in their parking lots for medical testing.

The Alibaba Foundation has donated medical supplies to 14 countries in Asia and the United States and will also be publishing a digital handbook to share learnings from the COVID-19 experience in China. Tableau Software has developed a free data resource hub using case data compiled by leading educational and government research organizations to help stakeholders see and understand coronavirus data in near-real time. LinkedIn, through employee referrals, is providing free access to its premium features for a designated period of time to help employees at small businesses cope with the economic downturn.

Public service announcements and other on-brand communication can be used to send messages of unity: for example, Coca-Cola's marketing has been reminding customers that "staying apart is the best way to stay united."

All these efforts show a clear care for customers and an obligation to serve on the part of companies, bringing local or international communities together with new knowledge and resources. Every action taken by a company should reinforce what customers already know-that companies care and are willing to invest in helping their community.

Forging lasting connections with customers

During times of crisis, leading companies are pivoting from marketing to helping and from fulfilling customer desires to meeting customer needs. Socially conscious organizations across sectors and geographies are finding ways to get involved and support their customers and communities.

The current COVID-19 outbreak is a global crisis and an opportunity for leaders to support their customers and communities. Leading in a caring, empathetic manner during these difficult times has the potential to create real connections that will outlive the social and economic impacts of the pandemic. And large companies should consider it a duty to serve the communities in which they do business.

About the author(s)

Fabricio Dore is an associate partner in McKinsey's São Paulo office, Oliver Ehrlich is a partner in the Dusseldorf office, David Malfara is a specialist in the Miami office, and Kelly Ungerman is a senior partner in the Dallas office.

The authors wish to thank Tiffany Chan and Alex Levin for their contributions to this article.

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Connecting with customers in times of crisis

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The COVID-19 global humanitarian and economic crisis has forced individuals and companies to rapidly change how they live and work. Many elements of business and life are being challenged; in some cases, the next normal may look very different as new ways of working are carried over into the future.

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Fashion’s digital transformation: Now or never

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Some companies won’t survive the current crisis; others will emerge better positioned for the future. Much will depend on fashion’s digital transformation.