The monsoon rain began in June. By the end of summer, huge swathes of Pakistan were fully submerged. More than 1,500 people have died in the devastating floods, and hundreds of thousands of people have been left homeless. Water only began to recede in the worst-affected southern Sindh province this week, officials said.
The disaster has wiped out crops across the country, dealing a critical economic blow to the world’s fifth-largest cotton producer and a major textile manufacturer. Nearly half of the country’s cotton fields have been washed away, planning minister Ahsan Iqbal told reporters.
The situation in Pakistan is the deadliest in a wave of extreme weather linked to climate change that is contributing to exceptional volatility in fashion’s supply chains. For now, cotton is at the epicentre of upheaval.
“With climate patterns becoming more erratic there is serious risk on the supply of cotton,” said Rui Fontoura, an expert at Textile Exchange, a sustainable fibre-focussed non-profit organisation.
In India, the world’s largest cotton producer, rainfall and pests caused such a dent in supply that the country has had to turn to imports. In the US and Brazil — the world’s third and fourth cotton producers, respectively — drought has ravaged crops.
The issues aren’t just climate-change related. A US law that went into effect this summer tightened a ban on imports from China’s cotton-producing Xinjiang territory, where the Chinese government is accused by Western nations of detaining Uighur muslims and other ethnic minorities in forced labour camps.
Together, India, China, Pakistan, Brazil and the United States make up the top five growers of cotton. Coinciding trouble in each and every region spells unprecedented disruption for the textile industry.
Preparing for the Unknown
The worst of the shortage won’t be felt until 2024, according to Textile Exchange’s Fontoura.
But retailers can prepare today by stocking up on supply earlier, strengthening their relationships with suppliers, leveraging data to better predict demand and investing in the circular economy to reduce dependence on new production. That’s the case across the supply chain, with the forces buffeting cotton part of a wider climate of uncertainty.
For instance, Zara-owner Inditex told analysts on an earnings call Wednesday that it will temporarily increase production to mitigate potential supply chain disruptions in the next six months.
Chief executive Oscar García did not point to a specific segment in the supply chain, but said that the decision involves manufacturing in Asia, the Financial Times reported.
In the case of cotton, experts don’t yet know the full impact of this summer’s climate disasters, or of restrictions on imports from China. The European Union proposed its own ban on products made with forced labour this week.
Broader global instability is feeding into the climate of uncertainty. Fluctuations in the oil price as a result of Russia’s invasion of Ukraine, for instance, has kept demand for polyester low. That could in turn put more pressure on cotton demand at a time of restricted supply.
Still, there are ways to account for the unknown. Using data analytics to better plan for and manage inventory is one solution, though a product that could predict the future on all fronts of the supply chain doesn’t exist yet.
“Improving flexibility and agility should be a priority for this year,” said Sheng Lu, associate professor at University of Delaware’s Fashion and Apparel Studies department.
Lu recommends, for example, cultivating strong relationships with suppliers and vendors so that even if disruptions occur, brands can rely on their partners to come through.
“In the long run, it’s about how to make the industry more sustainable,” he said.
THE NEWS IN BRIEF
FASHION, BUSINESS AND THE ECONOMY
Gap and Ye are ending their partnership. Gap Inc. notified employees in an internal email that it would wind down the deal with West, who had said he wanted out of the arrangement.
Burberry reschedules show, London Fashion Week updates schedule. All shows and events that had been scheduled for Monday, Sept. 19, the day of the late Queen’s funeral, will be rescheduled, the British Fashion Council, London Fashion Week’s organising body, announced on Monday. Burberry has already announced it would reschedule its show for Sept. 26 at 12 pm.
Prada CEO says no decision yet on dual listing in Milan, reports Reuters. A dual listing in Europe would help Prada widen its investor base, as some investment funds can only put money in European or US stocks.
H&M sales miss estimates as retailer falls behind rival Zara. Revenue dropped 4 percent excluding currency shifts in the three months through August, the Swedish retailer said Thursday. Analysts had expected a decline of 1.4 percent.
Inditex’s first half sales surge ahead of potential slowdown. In its first results since Marta Ortega took over as non-executive chairman, the company said revenue for the period rose to €14.84 billion ($14.82 billion) from €11.9 billion a year earlier. It booked a net profit of €1.79 billion from €1.27 billion last year.
Rent the Runway tumbles after unexpected drop in subscribers. The company said its active subscribers fell to 124,131 in the second quarter ended July 31 from nearly 135,000 in the prior three months.
Zara billionaire bets $700 million in move into US logistics. Ortega family investment company Pontegadea bought five logistics centres in the US states of Tennessee, South Carolina, Virginia, Pennsylvania and Texas from Realty Income Corp. for about $722 million, in a deal reported by Spanish daily El Pais on Tuesday and confirmed by a Pontegadea official.
H&M, Decathlon to dial back sustainability claims to avoid Dutch greenwashing crackdown. The two retailers have promised to “adjust or no longer use sustainability claims on their clothes and/or websites,” and ensure consumers are better informed, according to a statement by The Netherlands’ Authority for Consumer Markets.
Chiara Ferragni’s manufacturer to take on Just Cavalli. OTB is set to exit a licence agreement with Italian brand Roberto Cavalli for its junior line Just Cavalli.
EssilorLuxottica, Armani renew deal. The companies said they’ll extend their current cooperation deal for 15 years, continuing to focus on development, production and global eyewear distribution under the Giorgio Armani, Giorgio Armani Privé, Emporio Armani, EA7 Emporio Armani and A|X Armani Exchange brands.
EU proposes banning products made with forced labour. The EU proposal highlights the 27.6 million people the International Labour Organisation says were engaged in forced labour in 2021, 11 percent more than in 2016.
Everlane raises $90 million in debt. The basics brand just bagged a fresh round of funding to shore up its expansion plans. The direct-to-consumer company, one of the earliest digital native start-ups in apparel, has secured $65 million in revolving credit and an additional $25 million loan, its financial partners announced Thursday. Modern Retail first reported the news.
THE BUSINESS OF BEAUTY
Revlon to pay executives $36 million in bankruptcy bonuses. Revlon’s chief executive officer Debra Perelman could collect as much as $10.6 million, the company said in court papers seeking approval of the bonus programme. Under the proposal, eight senior executives would receive as much as $36 million, should the company hit certain financial and other metrics.
Makeup prices are soaring as social events eclipse tight budgets. Prices for makeup, perfume, bath and nail products rose 2.3 percent in August from a month earlier, the largest increase since December 2006.
Puig increases stake in Indian beauty and wellness brand Kama Ayurveda. The Spanish group has increased its stake in the company to a majority share, strengthening its foothold in the fast-growing Indian beauty and personal care market. The financial terms of the deal were not disclosed.
PEOPLE
Reed Krakoff joins John Hardy, named strategic advisor to L Catterton. The former Tiffany executive has joined the artisan jewellery brand as its creative chairman, a newly created role that will see him become a minority equity stakeholder in the business. Krakoff will also act as strategic advisor to the company’s majority shareholder, LVMH-backed fund L Catterton.
Ssense appoints first chief customer officer. Daniel Habashi will lead the e-commerce company’s marketing, retail and personal shopping divisions as it targets sustained growth. He has served on the board of Aritizia, as a regional general manager for TikTok, and the chief marketing officer of Soho House.
Coach taps Lil Nas X as its latest ambassador. The Tapestry-owned brand announced during its NYFW show that the American musician is the latest addition to its ever-expanding team of ambassadors.
Fila taps Haider Ackermann for latest collaboration. The Colombian-French designer will design a one-off collection of menswear, womenswear and accessories for the sportswear giant. The collection will debut with a fashion show in Manchester, UK on November 17.
William Klein dies in Paris. The legendary street and fashion photographer has died in Paris, aged 96, his son said in a statement to French news agency AFP on Monday.
Prada cuts ties with Chinese star held in prostitute scandal. Chinese actor and singer Li Yifeng, who was detained on prostitution charges as the government continues a crackdown on the entertainment industry.
MEDIA AND TECHNOLOGY
Walmart is rolling out its new virtual try-on on a mass scale. The feature will be available on more than 270,000 women’s clothing items.
Compiled by Joan Kennedy.
