Sales Plummet as People Stay Indoors... Fashion Industry Tense for Winter Season

Sales Decreased Year-on-Year in July-August
Winter Sales Account for 70%
Production Plant in Southeast Asia Also Stopped

[Asia Economy Reporter Lim Hye-seon] The fashion industry, which had shown signs of recovery after escaping the impact of COVID-19, is now facing renewed tension. The spread of the COVID-19 Delta variant is causing consumer sentiment to shrink, and production of winter season products is being disrupted due to lockdowns at overseas factories.

Fashion Industry Faces Off-Season Again

According to the distribution and fashion industry on the 24th, sales in the women's fashion category at Shinsegae Department Store from July 1 to August 23 decreased by 5.0% compared to the same period last year. Men's fashion also declined by 3.4%. This contrasts with the 15.0% growth in sales during the first half of this year (January to June). Lotte Department Store is experiencing a similar situation. During the same period, sales in the women's and men's fashion sectors dropped by 2.0% and 5.0%, respectively.

A distribution industry official said, "The third quarter is usually the off-season for the fashion market," but added, "Last year, sales already plummeted due to the COVID-19 crisis, and this year the situation is even more difficult." Fashion companies have been strengthening their own online malls to boost performance, but it is insufficient to recover to previous levels since offline sales still account for a higher proportion than online sales.

The problem lies with the winter season. As the spread of COVID-19 continues, outings have decreased, which could disrupt winter clothing sales. Winter clothing sales account for more than 70% of annual sales, so if remote work and similar conditions persist, the impact on sales will inevitably be significant. Additionally, overseas production factories located in Southeast Asia, such as Vietnam and Myanmar, have also stopped operations, delaying product launches. In particular, companies that own or use production facilities in Vietnam, where Ho Chi Minh City was entirely locked down due to the COVID-19 spread, are experiencing significant damage. Even if the Vietnam lockdown is lifted in September, it will take another 1 to 2 weeks to normalize. Typically, by the end of August, 70-80% of fall and winter products are produced. Midwinter padding is also completed by the end of September. From October, production of next year's spring products begins.

Shifting Volume to Korean Factories

E-Land Group, which operates clothing production facilities in Hanoi, Vietnam, is producing products by rotating employees who can stay on-site every two weeks. However, this is insufficient to meet delivery deadlines.

LF, which received products from partner companies in Vietnam and Indonesia, canceled all orders with deadlines more than two months away. An LF official explained, "Since the situation is expected to worsen, we shifted production to Korean factories even if the unit cost is higher." Outdoor brands such as K2 are also experiencing delays of more than two weeks in product production. Due to delays in new product launches, some stores are still selling summer products or last year's inventory.

A fashion industry official said, "We expect about 30% of fall and winter production to be disrupted," adding, "We are diversifying production locations to minimize delays in domestic stocking." He continued, "We had hoped for improved performance this year, but under the current circumstances, it seems difficult."

This content was produced with the assistance of AI translation services.