COVID-19 juggernaut jolts the fashion industry, big names in hot water

Summary

• The Australian fashion industry is bearing the brunt of coronavirus-induced crisis with many brands going under administration to survive radical changes. 
• Australian iconic fashion brand Alice McCall confirmed going under administration, as its brick-and-mortar retail shops wrangled with COVID-19 financial woes. 
• The retail and online stores are still running normally, however with the economic crisis and unrealistic rental obligations, the focus is on restructuring business in a sustainable way. 

Many Australian brands are joining the couture and focusing on creating a name globally. With pandemic hitting the fashion industry hard, many firms sought to adapt to the changing times and added face masks to their ranges, but everyone wasn’t as fortunate. Covid-19 continues to wreak havoc on the Australian economy, throwing many companies under the bus.

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Alice’s Brick-and-Mortar in Real Trouble 

Australian iconic fashion brand Alice McCall confirmed that the business went into administration on Monday, as its brick-and-mortar retail shops wrangled with COVID-19 financial woes. Famous Australian designer and fashionista Alice McCall is struggling to run the business as it is slowly being restructured to survive the pandemic crisis.

A Sydney-based insolvency firm SVPartners has been appointed to handle the process. This may also result in the closure of several of the brand's 14 stores across Australia, placing hundreds of jobs at risk.

SVPartners' Ian Purchas said that because the revenue stream is severely affected, few stores will be closed, and some workers will lose their jobs. However, the brand's brick-and-mortar stores and online shops are operating as usual. 

The company released a statement in which McCall said it was with a "heavy heart" that the company called in administrators. Because of the unprecedented COVID-19 effects on the Australian economy, along with the unsustainable brick-and-mortar rental obligations, the designer had to take essential steps to edit down the business. She further continued that with these changes, the brand now focuses on building a sustainable business for the future. 

In the statement, McCall thanked her staff and loyal brand customers and said that the customers' meaningful experiences and memories of the brand had given her the motivation to do the job. 

Also watch: Why Global G Star brand has appointed administrators to Australian Business? | Market Update

Who survived the heat?

Many other businesses entered administration this year such as Seafolly, Jeanswest, Kikki K, Colette by Colette Hayman, Bardot. However, iconic Aussie bikini brand Seafolly and Apparel chain store Jeanswest managed to come out of the collapse and rebuilt the business slowly. Its former owner saved Seafolly. 

Australian Fashion Council has joined forces with Ordre, a global B2B virtual showroom platform with a futuristic approach. The partnership will allow Australian designers to connect directly with buyers.

Fashion brands such as Arnsdoft, E Nolan, Kloke have added face masks to their ranges to continue with the trend emerging out of pandemic. Others are restructuring or making vital changes to the businesses to adopt radical change, not just in the industry but also consumer behaviour. 

Interesting read: Online fashion retailer City Chic and Baby Bunting braving the corona storm 

Who couldn't bear the heat? 

This year has been extremely challenging for the retail stores in Australia. A retail group which owns brands such as Noni B and Katies, Millers and Rivers announced to close additional 250 stores by mid-2021.

Mosaic Brands said that fundamentals of the rental real estate market had changed its course during the pandemic; while some landlords have accepted the change, some haven't. Their leases on around 87 per cent of its 1333 stores are expected to expire over the next two years The company still intends to close around 500 stores out of 1300 plus stores in the country in the next 12-24 months. 

Upmarket department store David Jones also announced to cut its operations by 20 per cent, shutting down about nine to ten shops in the country. Fashion label Colette by Colette Hayman plans to close more than 100 stores to save the business from shutting shop.

Another fashion brand CBCH Group that sells handbags, jewellery and accessories, went into administration this year. Deloitte Restructuring Services teamed up with Vaughan Strawbridge, Sam Marsden and Jason Tracy to take ahead the administration process. 

Myer, another Australian department store, is struggling to cope up with the coronavirus crisis. Its former head Bernie Brookes acquired 90 per cent stake in the group company in partnership with John Skellern and closed about 100 stores. Remaining 35 stories are operating in Victoria, New South Wales, Queensland, South Australia and Western Australia.

Jigsaw fashion chain also closed Australian stores in May to focus on its home market in the UK. 

Interesting read: Theory Behind Success and Failure of ASX-listed Retailers: Mosaic and Kogan