At Risk Retail Suppliers

As the ripple effects from COVID-19 continue, retailers are trying to cut costs wherever and whenever. At least $1.5bn worth of orders from Bangladesh garment manufacturers have been cancelled, spanning 1,100 clothing manufacturing facilities. Another $2bn of orders have been put on hold.

Suppliers are being squeezed, with long-last reverberations. Retailers do not pay for orders until shipped, and unironically they determine the shipment date. Thus, order deferrals can negatively impact suppliers as much as outright cancellations.

We believe risks will not abate for suppliers, not simply due to ongoing lockdowns. Many retailers are in the process of making holiday orders - the biggest quarter of the year seasonally. Despite certain fast fashion retailers getting orders to the sales floor in a matter of weeks, the industry largely places orders far in advance. For example, spring 2020 orders were made last fall - those scheduled for April-June are being cancelled.