Find out how democratic clothing brands like H&M, Oysho, Pull & Bear, Bershka handle lockdown and the pandemic
Businesses are overcoming the coronavirus-related challenges in various ways. Many industries are forced to lay off their staff, most work processes have gone online, some payouts are delayed or cut – tough times require tough actions. And yet some socially responsible businesses are finding the time and money to help communities fight the spread of malicious infections and their negative consequences.
Fashion and retail are the most vulnerable sections, greatly dependent on their bricks-and-mortar outlets which are now closed in most cities of the world. Today we’ve decided to discover how democratic brands are adapting to the quarantine limitations.
In February, the financial firm UBS included H&M into the list of the European retailers which are at the greatest risk from the new strain of coronavirus. Moreover, the retail giant topped that list due to the high corporate share of sales from China, the total value of products it manufactures in the country, and other relevant factors. For H&M, China accounts for about 50% of the total value of the products it sells. Therefore, the forecasts for the company were gloomy long before the COVID-19 spread over the entire European continent.
Sales development in the second half of the first quarter of 2020 was negatively impacted by the outbreak of the COVID-19 virus, particularly in China. At its peak, 334 of the group’s 518 stores in China were closed in February. Today, sales in China have gradually started to recover as the situation in the country has improved. 500 stores out of 516 have now reopened.
Following the European boom of coronavirus, all of the group’s stores have been temporarily closed in Italy, Poland, Spain, the Czech Republic, Bulgaria, Belgium, France, Austria, Germany, Luxembourg, Bosnia-Herzegovina, Portugal, Slovenia, Kazakhstan, Switzerland, Greece, Slovakia, Lithuania, Peru, Ukraine, the Philippines, the UK, Malaysia and Cyprus. In addition, the group has also closed all its stores for two weeks in the US and Canada. The online store in approximately 50 markets remains open.
H&M Foundation made a $500,000 contribution to the COVID-19 Solidarity Response Fund created by the UN Foundation, at the request of the World Health Organization (WHO). This donation will support WHO’s immediate global efforts to track and understand the spread of the virus, to ensure patients get the care they need, frontline workers get essential supplies and information, and to accelerate efforts to develop vaccines, tests, and treatments.
To help tackle the widespread effects of the COVID-19 pandemic, H&M Group is also arranging for its supply chain teams around the world to produce personal protective equipment for hospitals and health-care workers. The company has now opened access to the H&M social media channels for global aid organizations, such as the Red Cross, to spread messages concerning health and safety and how to help tackle the widespread effects of the COVID-19 pandemic. This way, the official information can reach 120 million people globally.
At the same time, the company is reviewing all parts of its operations, including all costs. Several measures are being taken with respect to buying, investments, rents, and staffing. Dialogue about temporary layoffs has been initiated in a number of markets. Globally, this is likely to affect tens of thousands of employees in all parts of the business.
The COVID-19 response changes are also going to affect shareholders. According to Stefan Persson, the chairman of the board:
“In the light of the current situation and the uncertainty about market developments, the board has today decided to withdraw its earlier dividend proposal of SEK 9.75 per share, approximately SEK 16 billion in total, and is instead proposing to the 2020 annual general meeting that no dividend is paid.”
However, the funds are not cut for the corporate annual innovation challenge. H&M is fully committed to supporting the Global Change Award winners of 2020 with a €1 million financial grant and Innovation Accelerator Program so that they can keep working and promote sustainable fashion. The COVID-19 pandemic should not hinder long-term sustainability objectives.
This Spanish homeware and sportswear brand is supporting the “workout at home” movement. On their website, they have published a schedule of Free Online Classes, mostly held through their IGTV channel or Instagram Live Sessions. You can either join one or watch it in your free time, as the recordings are available too. Sessions include various Yoga Lessons, Dancing, and Boxing. The experts in these videos also give advice on healthy eating habits and share recipes.
Responding to the new realities of quarantine, Oysho offers free delivery on all items until mid-April. Return periods have been extended to 30 days while some delivery and return methods (like shipping to the store) are temporarily unavailable and delivery times may be affected.
Its parent company Industria de Diseno Textil (Inditex) is considering laying off 25,000 employees in Spain temporarily. Most of the company’s administrative employees currently work from home. However, employees in logistics, central services, and manufacturing operations will not be affected by the possible decision.
Pull & Bear
Another member of the Inditex Group, Pull & Bear has also closed the majority of its European stores. Overall, the group had been forced to temporarily close over 3700 stores in 39 countries. Most of its stores in China remain open, following local health authorities’ guidelines. Sales for the group dropped 24.1% globally in the first two weeks of March.
Concentrating on online sales, Pull & Bear offers an alternative way of cashless payments to those who have no credit/debit bank cards. YouPay allows the person placing the order to ask another user to pay for their order. Linked accounts can also enjoy the discounts of the Affinity card. The person paying for the order can link up to 4 users.
Store deliveries, collection-point deliveries, and returns are temporarily out of service. Home deliveries over 20€ are free and made following new safety protocols. There is also a new deferred delivery option: if you’re in no hurry to receive your order, they can keep it in the warehouse and send it to you as soon as things get back to normal.
The returns period has been extended to 30 calendar days from the date Pull & Bear stores reopen, for both in-store purchases and online orders made from 13/02/2020.
While the business tries to continue its operation through online sales, it has found itself amidst the labor safety scandal. The UGT and CC.OO labor unions claimed that employees in Narón, Spain were dissatisfied with their working conditions, fearing for their safety. In the country with the third-highest COVID-19 death rate and the national lockdown measures, workers of Pull & Bear warehouses were said to be so alarmed that they were considering a strike. The unions stated that logistics staff complained about the absence of enhanced protective measures and Individual Protective Equipment (PPE) necessary to avoid contagion. They argued that the activity of Pull & Bear Logística “is not of primary necessity”, hence, workers are exposed to excessive risk.
Later on, the publishing company of Quincemil received an email with the protests of these workers, who say they disagree with the actions of their unions. Apparently, the employees have taken the initiative to collect signatures and deliver them to the company to notify them of their support. Many workers who contacted Quincemil assured the company that they didn’t plan any strike action. That decision was made by the representatives of UGT and CCOO of the works council without even consulting the staff. The vast majority of the staff does not agree with this approach.
Through its business model, Bershka aims to help the sustainable development of society and the environment with which it interacts. Their ‘eco-efficient’ shop management model includes using waste management, smart lighting, heating, and cooling systems for stores, organic fabrics, biodiesel fuels, etc. Now the business has become even more sustainable, going almost completely online amidst the coronavirus outbreak in their home country.
Bershka is also a part of the Spanish fashion retail giant Inditex, with sales that represent 9% of the total revenue for the whole group. The owner company itself started to implement remote working, temporarily closed its on-site gym and bus services at their headquarters, and reported its annual financial results via the phone rather than by usual live press conference. Inditex has also suspended its dividend to shareholders and will divert the cash to strengthen its balance sheet.
As with other members of the group, Bershka’s brick-and-mortar stores are closed in all countries where it’s requested by the governments. The online sales channel is maintained and the Group’s supply chain continues to function normally, demonstrating the flexibility of the business model.
Inditex recently announced it would make Zara and Bershka factories and logistics teams available to the Spanish Government to donate face masks for patients as well as surgical masks and hospital gowns for medical workers.
The company statement claimed it has already donated 10,000 protective face masks and is going to ship another 300,000 surgical masks soon. A process of sourcing medical grade fabric for hospital gowns has been launched too.