Russia’s invasion of Ukraine has impacted almost everyone on earth, but how has it specifically affected the fashion industry?
First, let us rewind. The past couple of years have been quite tumultuous for the fashion world. The COVID outbreak put a strain on retail, and the future of fashion was in question. Thankfully, throughout 2020, online shopping and eCommerce rose dramatically, fueling innovation and bringing hope to the industry. As travel restrictions lowered in 2021, fashion retail seemed to be transitioning towards a “new normal” – harnessing the technological advancements brought on by the pandemic to make for a more efficient shopping experience. Although Omicron hampered retail growth in late 2021, the future of fashion seemed to be back on track.
On February 24th, 2022, President Vladimir Putin launched a full-scale invasion of Ukraine. As a result of the ongoing conflict, there have been significant changes in energy pricing and consumer sentiment worldwide. The western sanctions on Russia’s considerable crude oil inventory increased the costs of man-made materials. Consequently, this could lead to an upsurge in demand for natural fibers, thus increasing their prices. In combination with the stock market downturn, inflation, and a slower world economy, the rise in prices has significantly decreased customers’ purchasing power, further impacting consumer sentiment.
Thus, the invasion of Ukraine has, directly and indirectly, increased the costs for producers and decreased the purchasing power of consumers. In the end, these changes will have a relatively minimal effect on the conglomerates of the fashion industry. However, due to macroeconomic instability, small businesses will be seriously impacted. That being said, consumer optimism will determine how harsh exactly the environment will be for small businesses. If consumer sentiment continues to decline, following purchasing power, struggling companies will fail, and the barriers to entry will be too high for future entrances. In other words, small businesses will have to temporarily modify their business plan to account for the lower margins to succeed until macroeconomic conditions are more favorable.
By Liam Fitzgerald
