Harvard Case 6

TOMMY HILFIGER AND CALVIN KLEIN POST-COVID-19: WHAT’S IN STORE?

1. What challenges did the fashion industry face during the COVID-19 crisis? How did
the pandemic expose vulnerabilities in the industry?

The challenges that were presented for the fashion industry during COVID-19 were many

especially losing revenue, factory closures, shortage of supplies, and store closures along

with various other challenges. Challenges continued to surface as the COVID-19

pandemic continued to keep the world in lockdown to avoid exposure to the virus. This

led to factories and companies being closed thus halting global supply chain. This meant

that no new goods were going to be manufactured, produced, shipped, or distributed to

the consumers.

As Ahsan stated, China was one of the countries that was directly affected by COVID-19

because it makes up about 40% of the textiles imported into the US (Ahsan 2020). The

fashions industry reliance on China's raw materials and textiles meant that they were in a

shortage raw material since they were not able to be produced or distributed due to the

strict lockdown implemented by the Chinese government. The fashion industry tends to

outsource for factories into most of their workforce is in countries in Asia most of them

being from the following: Bangladesh, Cambodia, Vietnam, Pakistan etc. With COVID-

19 they were all under lockdown resulting in the closures of factories leading to factory

workers not working or losing their employment. This led to a downfall not only for the

fashion industry but also for the workforce because now many were left without a job.

The pandemic exposed vulnerabilities in the industry in their dependence on the global

supply chain and outsourcing labor force. Many retailers were forced to file for

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 bankruptcy, canceling orders, reducing their inventory, not paying manufacturers for their

raw materials, and other not paying for the goods already produced (Ahsan 2020).

2. What difficulties did PVH face due to COVID-19? How well equipped was the
company to deal with the sudden disruptions and market shifts and to capture
potential opportunities arising from the crisis?

The difficulties that PVH faced due to COVID-19 were similar to many of the other

fashion industries losing revenue, factory closures, shortage of supplies, and store

closures. This led to sells decreasing globally that impacted PVH revenue for 2020. The

decrease led to stores and factories closing temporarily to permanent closings of their

stores. And this affected PVH’s workforce as employees both those working in stores and

factories were either laid off or furloughed. Now the decrease of supplies and raw

materials affected 1200 factories in around 50 countries most were third-party suppliers.

That were also under lockdown due to COVID-19 and many of them were left with a

surplus amount of fabric, threads, buttons, zippers and etc. Most of the factory workers in

Asia left without work were not able to afford basic essential need such as food and a

home after they lost their jobs this led to a humanitarian crisis in Bangladesh. The

demand for clothing had was nonexistent as many were cutting back and trying to save

due to the unknown of COVID-19. The pandemic exposed vulnerabilities in the industry

in their dependence on global supply chain. Because without their factories and workers

overseas they were unable to manufacture or distribute any merchandise to their

consumers. They failed to have any factories in United States that could accommodate

any demand that they had without delay.

Unlike other companies they were not as well equipped to the disruption of the market

shifts, but e-commerce was what ultimately helped PVH’s online presence to increase the

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 company’s revenue by 47% in Q1 2020 in comparison to Q1 2019 and it overall

increased the online e-commerce to 70%. PVH’s Q2 2020 revenue totaled $1.581 billion

which was predicted to be much lower by financial analyst. Online shopping has become

essential and successful due to COVID-19 companies like Amazon have shown the effect

that e-commerce has on the global industry.

3. How will future developments in the fashion industry be affected by various

Corporate sustainability as mentioned is a major strategic pillar for the fashion industry. The

issues that arose about (un)stainability led to social and environmental problems within the

fashion industry that needed to be addressed. It is mentioned that the primary stakeholder in the

fashion industry is considered to be the consumer because they are the ones that determine the

demand and need for fashion. The consumers are the ones that are becoming more

environmentally responsible. It was mentioned that the media, consumers, investors, employees,

and government as well as stakeholders were being held accountable. the consumers were now

looking for sustainable fashion that they see as an investment or a luxury purchase whichever it

may be but they sought pieces that were made long lasting, so they feel more socially and

environmentally responsible. The growing demand for businesses sustainability for global

stakeholders led to the launching of a new corporate responsibility strategy 2019. Forward

fashion was launched by PVH, and it focused on reducing negative impacts, increasing positive

impacts and improving lives across the value chain. Reducing negative impacts was to lessen the

impact on the environment such as reducing energy by using renewable sources, diverting the

waste from landfills, illuminating water pollution from wet processors, and to fostering

innovation to design and manufacture products that eliminate waste. Positive impacts would

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 include promoting a safe and healthy work environment, offering livable wages, and raw

materials and textiles to be sustainably sourced. This is mentioned because the social and

economic impact that the fashion industry has on outsourcing labor to countries like Bangladesh

lead to humanitarian issues, human rights and environmental crisis. because they are exploiting

the labor force in those countries as well as exploiting the raw materials being manufactured and

distributed since they are being produced at a low cost. The stakeholders’ interest that PVH

should strategically consider is sustainability and capitalism. Because sustainability is the answer

to most of the social and environmental demands that the consumer is asking for and making

these changes will also help satisfy to the needs of financial stakeholders. Therefore, they must

work hand in hand together to prioritize all the stakeholders including consumers, suppliers,

shareholders, employees, and communities (Schwab 2021).

4. What recommendations would you offer for PVH's growth strategy? How can the
company achieve sustainable profitability and become more future-proof?
Elaborate at least two main solutions and explain how they would help PVH build a
sustainable competitive advantage?

It seems that the race for innovation is imperative to the expansion and continuous success

for the fashion industry. my recommendation for PVH would be to start shifting their focus

into more environmentally sustainable products and establish a domestic supply chain versus

outsourcing all their factories and workers overseas. Creating environmentally sustainable

products is going to not only retain but also regain the consumers trust and business. The

need for innovation in producing materials that are ecofriendly and made from biodegradable

materials are going to be the future of fashion. As even high-end fashion design houses such

as Chanel is developing a sustainable silk line. The need for collaborative efforts to

revolutionize the fashion industry and create new opportunities by creating innovative

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 sustainable fashionwear to accommodate social awareness and social issues that have arisen

drain COVID-19 are now becoming a staple in the fashion industry. These efforts are not

only going to help reduce pollution and waste but also help the consumers become and feel

more environmentally aware. My recommendation for PVH to redirect their focus from

being a global supply chain to a more regional supply chain. If PVH were to have a domestic

supply chain, it would have been able to thrive during COVID-19 such as stores like Zara.

Zara is a great example of retailers that did not outsource their supply chain but kept them

regionally. And this allowed them to accommodate to the growing needs of the consumers

during COVID-19. As they were able to roll out 24 new collections, manufacture and

distribute the merchandise within weeks rather than months as well as they were able sell the

products at full price. Simply because they were one of the only retailers that were able to

meet the consumers’ needs for on-demand fashion. These are just some of the

recommendations that could help PVH build a more sustainable advantage for the current

market and consumer conditions.

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 References

Ahsan, Mohammed, F. 2020. Textile and Apparel Supply Chain during COVID 19: A Perspective

from Bangladesh. University of Rhode Island.

Kotler, P., & Keller, K. L. (2016). Marketing Management, 15E. Pearson Education, Inc.

Schwab, K., 2021. Stakeholder capitalism. Wiley.

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