Company Failures and a Manufacturing Slowdown
Today we’re exploring an alarming increase in fashion company failures and a significant slowdown in manufacturing affecting the UK market. Clearly, these aren’t good signals for someone working in e-commerce fashion photography but it is important to look at the trends, results and views of experts to understand what this means moving forward for everyone in the industry.
So what is happening with company failures?
We’re inundated with news about the cost of living crisis, warnings of inflation showing no signs of stopping and as a result, it is no surprise to see the latest figures on company failures.
Reports by the insolvency service show that company failures in the UK increased by a massive 81% during April, May and June when compared to the same period in 2021. This number of insolvencies is actually a record for any quarter in the last 13 years.
The fashion industry isn’t protected from such dire news, with major brands suffering from going into liquidation including the online brand Missguided. As a result of being issued a winding-up petition and going into insolvency, it was eventually purchased by the Fraser Group. For those working in e-commerce fashion photography in London or anywhere across the UK, this is a warning sign that fashion and retail clients may start to struggle. This will in turn mean those in the supply chains and other services facing struggles of their own.
What have the experts said?
One of the partners at EY-Parthenon, Samantha Keen has said they expect further insolvencies among large businesses in the year to come as challenges around trading conditions and marketing volatility continue. Rising costs, supply chain challenges and falling consumer spending will combine to truly challenge fashion brands and retailers across the UK.
Manufacturing output shrinks
As we’re starting to move out of the pandemic and into a world of living with COVID, we have the opportunity to look at industry performance across all areas of fashion. Sadly, when it comes to manufacturing the news isn’t good and a recent survey suggests that the UK’s manufacturing sector is shrinking. This is the first time it has happened since May 2020.
A wide range of companies has said how they are seeing reduced orders thanks to weakened demand, combined with extensive supply chain problems.
This survey suggested the main cause of this output contraction are consumer and intermediate goods, those that form part of a consumer good that is then sold to traditional customers. Yet again we see the growing cost of living situation as a primary reason for a drop in demand, combined with continued problems caused by Brexit.
What does the future look like?
Experts suggest that whilst there are more pressures ahead in the form of potential interest rate hikes and continued market uncertainty, costs don’t seem to be rising as quickly as before and this could offer a break for some companies.
All of us working in the world of fashion and retail should monitor this situation carefully and think about how it could affect our businesses.