• Subject Code : MGMT5507
  • Subject Name : Management

Management and Organisations

The humanitarian criss has impacted fashion retail industry This essay highlights the impact of COVID 19 on apparel retail industry. The humanitarian crisis has impacted the industry with fall in revenue. The industry contributed 5% contribution in total revenue through sales (IBIS 2020)

The humanitarian crisis has led to restrictive measures and store closure due to safety issues and government guidelines . Reducing customer touch points and creating brand sales with fall in discretionary spending drop has impacted apparel retail . Loss of business had created credit crunch with supplier assessment. The stores have reduced physical expansion and developments and have force o develop channel avenues. The use of personal protective equipment, sanitisation and safety protocols have impacted industry heavily reliant in personal management and tangible aspect. Business impacted due to travel bans impact inbound operations for company operating through global network.

The new environmental operations are subject to brand focus

COVID 19 has added fuel to e-commerce players for expansion with rapid sully network and pre investment on end mile operations. The estimated Australian consumption has taken dip of 8-11%. Australian prelineary sales are down by 4.2 % with Victoria provisions as worst hit (Reuters, 2020). The major retail brands in the industry are Zara, H&M, Clavin Kein, Bec+ bridge , Camilla. Fashion store located in malls have borne the burnt as highest. Traditional malls had already saw reduction traffic it saw major influx to non fashion shops and essentials. The shift to cheaper product alternative amid popular brand store due to cost consciousness emerged as trend. The additional cost of maintaining brand collection has led to high cash burnout by the firms. The initial repose by retailers were practised by precautionary measures ad store safety and then diversification of work from home, casual wear branding on social media. Increase regionalisation has seen sustainable brands and CSR practice with environment friendly as top priority. Sustainability and digitalisation are the key issues that have emerged amid pandemic

The offline sales through stores have seen furloughs, reduced pay structure across Australia. The decline in consumer spending has impacted apparel sales market with only indoor fashion categories have remained active for sales. Brands have optimised for short term resilience but long run will lead to cost cutting and change in business model to stay relevant. The Australian retail is largely hybrid with major sales down from offline stores driving business revenue and new collection (FTI Consulting, 2020). Major brands have elevated their products for community, health and community aspect. The sully chain with stock pileup has resulted in brand loss with high rental the impact on sustainability has been immense. The spread of virus and no potential cure has changed consumer spending to online with monumental shit to complete change. The impact due to lack of fulfilment centres has shown return and replacement s long process. The focus on asetheits , safety and delivery has shaped fashion stores for digitalisation of store experience. The smartphone penetration has impacted merchant sales by fashion stores. The home grown brands have not faced inventory storage and production whereas Zara, H&M have retracted operations and faced crippling effect of non-localisation (Australia Post, 2020).

The millennials focused on brand personalisation , choosing alternative to best value prospect. Business marketing campaigns have reduced with sourcing approach decline through shifting to online model acceleration. Increase regionalism can be threat to global fashion retail brands with buyer supporting local operations for purchase post COVID 19. Government tax regulation reduce profit of the company and rise in price on the imported goods. uncertainty on price fluctuation rising debt will have impact on short term outlook with negative outlook Australia has directed for workers right and create support pool for the companies.

The PESTLE analysis indicate record high unemployment and longer recovery period ed industry. G star is worst hit with fall in retail sales and eventual filling of bankruptcy The assortment structure and no season reactivity had resulted in fall of recreational events promotion that aided cash flow finance for business. Australia has slipped with economic fluctuation arising with record breaking unemployment and decline in income that will further burden business operations as end user will have cascading impact (PwC, 2020). The importance of customer service is growing and a lot of retailers’ popularity will depend on how well they have crafted their customer experience.

he key strength of the industry shows large portfolio and design. Its weakness lies in fashion shows, marketing and commodization of design. The market is diverse and competition is intense from online retailers such as iconic creating value based and discounting sales. The market has expansion and recovery through using AI, merchandising and growth through developing supply chain to last mile with AI and ML. The change in consumer perception and lifestyle has long term impact on the store operations (SPG Global, 2020). Operational facility and current health sutra has impacted business with staggered operations between the merchants. The drop in spending with increase focus on spending due to rampant job loss and business shutdown has impacted pricing dynamics fr brands. Expansion of category and core business restructuring has impacted. The pandemic has resulted in consumer interest on suitability with 67% consider it as differentiating factor to purchase apparel (McKinsey, 2020). The traditional sales through stores operating in mall had higher stringent protocol than independent stores. The price range and discounting has led to loss of revenue for the stores with operating on flash sales facing deep cuts on profit margin. The distribution footprint has impacted cost of good soles with overcapacity of unsold merchandise. The cancellation of orders with inventor management on developing new collection has postponed with shift to work from home. The current workforce has not seen this unprecedented crisis and has posed challenge for company for re-skilling people and partner them for brand reflux. This includes reducing plastic component , brand consciousness advertising and support environment. Diligence based strategy for the industry firms based on a human-centric approach will help them navigate the crisis (Lyng, 2018). Improving fashion retails design and pricing and using extensive customer relationship for the consumers will create a realistic recovery trend and optimize as per the current paradigm on recovery. The remote lifestyle has decreased the discretionary spending for the consumers. Consumer migration to casual home wear design. Increase in price sensitivity has led to flash sales and discounting by industry retail chains, COVID has led to the assessment of suitability practice. Approach on organisational performance in People, profit, and planet. The shift in indigenous and regionalism will benefit inhouse production for firms. 45000 jobs have been impacted due COVID 19 Government regulation and practice has created support through Job keeper scheme and lease regulation for short-term viability (Australia Post, 2020). Traditionally the Australian economy consumer spending is $180 billion (Reuters, 2020). The workers shortage and pre-order cycle has led to stock pile and reduced collection as supplier payment was not done prior. The stores with long term rental were jeopardised with negotiation for payment terms and restructuring operations with identifying liquidity opportunities. The partial operation and complete shutdown has resulted in business income decline as remote working facility is not active for physical stores. Order cancellations within the industry has led to mistrust, inability to manufacture.

Recommendation for The Fashion Industry

The COVID crisis has impacted production. The brand can shift stock sale to casual wear to ensure dedicated segment is developed as per current customer demand and trend. The change in communication, branding through use of social medially try later buy now and easy exchange will smoothen consumer experience. Sales model development though omni sales by using leverage of social media will increase demand of the products through short horizon between order placement and fulfilment (Telstra, 2020). Modifying store design through use of technological resources such as AI to ensure the payment system is digitliazed and thermal screening cent for employe and customer safety. Modifying price range for increasing web traffic will help brands to develop long term sustainability. Brand focuses on technological experience has shifted retail industry fall due to location based selling. Communication Chanel through third party merchants had become aggressive for branding product during COVID 19. The government support has not been intense for firms to overcome shutdown of operations to manage upcoming seasons. The e-commerce pure play through discounting and established operations have garnered consumer attention due to price polarization. Flash sales and exclusive design check through try visually will help customer engagement and tangibility through online sales. Major brands have adopted defensive strategies by rebranding product on sustainable and work from home edits to stay relevant to new normal. Improving promotional activities will engage brand in using third party application as aggregator payments and sustainable brand building through precaution and staying top of the mind.

Reference for Impact of Covid 19 on Australian Retail Industry

Australia Post. Inside Australian- online shopping. Retrieved from https://auspost.com.au/content/dam/auspost_corp/media/documents/2020-ecommerce-industry-report.pdf

IBIS. (2020). COVID-19 Unravels the thread of clothing retailers. Retrieved from https://www.ibisworld.com/industry-insider/press-releases/covid-19-unravels-the-thread-of-clothing-retailers/

Lyng, R. (2018). Strategic Management. Wiley & Sons

FTI Conulting. Retail in Australia today:How to manage COVID-19. Retrieved from https://www.fticonsulting-asia.com/~/media/Files/apac-files/insights/articles/2020/may/retail-australia-today-manage-covid-19-disruption.pdf

McKinsey. (2020). The state of fashion 2020. Retrieved from https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/The%20state%20of%20fashion%202020%20Navigating%20uncertainty/The-State-of-Fashion-2020-final.ashx

PwC. (2020). Where next for retail and consumer ?. How retail and consumer industry can reboot for a post-COVID-19 Australia. Retrieved from https://www.pwc.com.au/financial-services/pdf/pwc-where-next-for-retail-and-consumer.pdf

Reuters. 2020.Australia Retail hit hard. Retrieved from https://www.reuters.com/article/us-australia-economy-retail/australia-preliminary-retail-sales-down-42-in-august-victoria-hit-hard-idUSKCN26E0EW

SPG Global. 2020. Global coronavirus spread may paralyze apparel supply chain for months. Retrived from https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/global-coronavirus-spread-may-paralyze-apparel-supply-chain-for-months-57456384

Telstra. (2020). How you can join the Omni channel shopper in transforming Australian retail . Retrieved from https://www.telstra.com.au/content/dam/tcom/business-enterprise/industries/pdf/business-australian-omnichannel-whitepaper-2012.pdf

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