Britain's fashion industry is poised to lose hundreds of thousands of jobs and suffer a 25% drop in revenue in 2020 as the coronavirus pandemic hits brands such as Burberry Group PLC and Ted Baker PLC, according to new data made available by the British Fashion Council on July 16.
The data, compiled by research firm Oxford Economics, suggests that there will be 240,000 direct job losses in the U.K.'s fashion industry as a result of the pandemic. The industry employed 890,000 people in 2019. Including indirect jobs in the supply chain, job losses could mount to 350,000, the data showed.
"The COVID-19 recession could hit the fashion industry twice as hard compared to the U.K. overall, effectively wiping out the above-average growth achieved by the industry in the past 10 years," the British Fashion Council said in a statement. "The data shows that alongside the economic impact, an entire generation of creative talent is threatened to disappear."
According to the Oxford Economics estimates, the U.K. fashion industry's revenues are projected to drop to £88 billion from £118 billion in 2019, and the level of contribution to the country's GDP is forecast to fall to £26.2 billion from £35 billion in 2019.
Burberry on July 15 said comparable retail sales in June fell 20% and sales in the second quarter, which ends in September, would fall 15%-20%. It also announced 500 job cuts across its global operations.
"In retail, tourist flows are likely to remain negligible, and store operations are continuing to face significant headwinds, with some remaining closed and operating with reduced trading hours," Burberry said in a statement.
Britain's fashion industry is separately bracing for the disruption of a possible no-deal Brexit, which would impose tariffs and potentially reduce fashion and textile exports to countries in the European Union, the biggest buyers of its fashion goods.
The British Fashion Council said many businesses have not been able to access government schemes aimed at helping the industry through the pandemic. It wants the government to help brands renegotiate store leases, provide rent and tax relief, and boost funding for small and medium-sized companies.
Similar challenges are facing brands around the world. In an April 2020 report, consultancy McKinsey estimated that 2020 revenues for the global fashion industry, including clothes and shoes, would contract by 27%-30% year on year but could return to positive 2%-4% growth in 2021, compared to the 2019 baseline figure. Its analysis suggested that if stores remain closed for two months, 80% of publicly listed fashion companies in Europe and North America would be in financial distress.