The novel coronavirus COVID-19 is now present in some 60 countries, but it began in China, where many New Zealand retailers source their stock from. Factory closures and shipping delays are slowing down stock replenishment and interrupting supply chains across categories, but apparel is perhaps hardest-hit.
The Warehouse Group’s Tania Benyon told Radio New Zealand earlier this week that some shipments from China, including winter clothing, could be delayed by up to eight weeks.
Unravelled consultancy founder and director Vanessa Thompson has worked in the New Zealand fashion industry for more than 10 years and has a deep understanding of sourcing. We asked her what retailers experiencing delays could do to mitigate the damage.
We’re hearing that supply chain disruption resulting from the COVID-19 outbreak is affecting New Zealand retailers, especially those in apparel. Can you elaborate on what’s happened for us?
The impact of the virus has been seen in a variety of areas in the apparel industry already, and I fear the worst is still to come. Some of the effects so far have been – 1) Further delayed shipments of goods after Chinese New Year, 2) Sourcing trips cancelled due to the virus outbreaks globally 3) Delay of workers after Chinese New Year from fabric and trim factories returning to work, due to being in isolation, which will impact deliveries for Apr, May and June.
What are the pre-existing factors that have contributed to this situation? Why is apparel worse-off than other categories?
Apparel businesses will be more affected due to the lead times it takes for clothing and footwear categories in manufacturing, then you also need to add shipping time on top. Also the majority of NZ apparel businesses currently use China business as their main manufacturing and sourcing partners, as China shipping times are shorter, the is often quality superior in some applications, and sharper pricing than some other destinations such as India and Europe.
Was there anything retailers could have done to avoid this disruption?
The outbreak was unprecedented, but it does make a timely reminder to businesses to not ‘put all their eggs in one basket’, and that if they haven’t already, it may be time to start looking at manufacturing locally or at other manufacturing countries.
Can you suggest any courses of action which might mitigate the damage for these retailers?
Holding and reviving the stock they currently, not slashing prices to move through stock like they normally might be at this time, so that they still have stock on the floor during this transition. Also look at exploring manufacturers in other countries that have not been affected by the virus to see what you can get turned around quickly.
What should retailers to do reduce the likelihood this disruption will hit their supply chains in future?
Hopefully this event will prepare retailers for future issues, and they will have spread their manufacturing base to other countries, or starting to manufacture locally. There is technology being developed which will allow for a more cost effective, local manufacturing market to evolve such as ‘on-demand’ ordering, the development of 3D printing, and automated manufacturing lines.