Italian Fashion Sector to See 26% Drop in 2020 Sales, 2021 Outlook Still Uncertain

MILAN – “Despite the dramatic situation our sector has experienced in 2020, even more disruptive given the steady growth registered in the years before, companies including small and medium-sized ones demonstrated dynamism and a great ability to react,” said Cirillo Marcolin, president of Confindustria Moda, the association made up of 64,300 companies in the fashion sector.

According to preliminary figures released by the association on Monday during a virtual press conference, revenues of the Italian fashion sector are poised to drop 26 percent to 72.5 billion euros in 2020 versus consolidated sales of 98 billion euros in 2019, with only 8 percent of the sector’s companies registering growth last year.

Marcolin ascribed the decrease to COVID-19’s impact on the category, scuppered by production halts during the lockdown last spring and a following drop in demand and production, in addition to issues regarding sourcing from foreign countries, including Asian ones.

As a sector that on average relies on exports for 65 percent of sales, the trade balance in the January to October 2020 period closed at 17.41 billion euros, above the food and furniture industries but significantly below the 25 billion euros registered in 2019. Responding to the survey, fashion companies said they are looking to China to boost exports, although the market is targeted mainly by big brands with financial strength and the means to approach it.

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“International markets can potentially become accustomed to not seeing Italian products and not attending trade shows and events in the country, so it’s crucial to get back to a ‘new normal’ as soon as the situation improves,” Marcolin said, noting that many SMEs have yet to embrace digital transformation and are still highly dependent on IRL events.

Providing forecasts on the 2021 business outlook, Confindustria Moda highlighted that only 26 percent of interviewed companies expect an increase in the first quarter of 2021, while others projected an average 18.4 percent drop in Q1 sales and a 10 percent fall in Q2. Overall a rebound is expected in the second half of the year provided that vaccines are widely distributed and that travel bans are lifted.

“A positive trend depends on the improvement of the overall situation that so far has seen us ping-ponging between multiple stops and go,” said Marcolin. His bet is on the vaccination campaign and he suggested that fashion companies are available to distribute vaccines to employees and their families, a move that would cover roughly 10 million people, or one sixth of the country’s population.

In terms of employment, 50 percent of the fashion companies said they reduced their workforce in 2020, despite Italy’s extraordinary measure preventing businesses from laying off employees. The mandate is currently in place until March 31, but the new government helmed by Prime Minister Mario Draghi could extend it until next fall.

In the first half of 2021, 39 percent of associated fashion businesses forecast a further reduction in the number of employees and Marcolin was vocal about what he expects from the government, in which he expressed his trust.

“I believe it’s essential to unlock layoffs because welfarism doesn’t provide any real opportunity,” he said. “Even if companies may still be provided with the ‘cassa integrazione’ wage support measure, others – especially big businesses – should be allowed to restructure, otherwise it’s just sweeping the problem under the rug,” he said.

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