ID: MRFR/CnM/1793-CR | February 2021 | Region: Global | 193 pages
Impact of Covid-19 Outbreak on Artificial or Synthetic Leather Market
The leather industry is one of the most significant market of the Asia-Pacific, Europe, and Latin America region. The leather market for synthetic/artificial leather has witnessed a sharp decline in demand. The viability of the leather industries is unravelling, as workers are asked to stay home, factories close, and global supply chains grind is at a halt. The cancellation of product or orders across the globe has hit thousands of firms and millions of workers in monetary terms. The quarantine measures, closure of retail stores, illness, and salary reductions have reduced consumer demand. Simultaneously, this highly globalized sector is struggling with severe supply-side disruption.
According to the International Labour Organization (ILO), in the European Union, the textile and apparel sector is forecast to face a potential 50 per cent drop in sales for 2020. Major brands are forced to close on their stores and warehouses. For instance, Adidas sales in China fell by 80 per cent between January and February 2020 with a loss of USD 1.13 billion for the first quarter of 2020. Inditex had closed 3,785 stores in 39 markets with over 50 per cent of its stores which are combination of offline stores and online sales had fall by 24.1% in the first half of March 2020.
In the line of production, at the outbreak of coronavirus in China, the raw materials supply was disrupted for the leather market more importantly in the leather producing countries in South-East Asia. While the epicentre of the pandemic shifted, first to Europe, then to US and the rest of the world, the economic impact has been escalated and factories in major leather manufacturing countries have been forced to close. The trade is expected to be decreasing due to low demand in major economies. The pandemic would affect the composition of global leather supply chains and trade and accelerate the re- or near-shoring of production.
The government organisations globally are implementing economic responses to limit the economic impact of the COVID-19 pandemic. The International Monetary Fund (IMF) has compiled a list of policy responses in 192 economies. On 26 March 2020, the governments of the Group of 20 (G20) collectively commented towards the protect lives; safeguard people’s jobs and incomes; restore confidence, preserve financial stability, revive growth and recover stronger; minimize disruptions to trade and global supply chains; provide help to all countries in need of assistance; and coordinate on public health and financial measures.
The regional governments and the global organizations are working towards opening factories and restore the working process to reduce unemployment and stabilise the economic conditions. The leather due to low consumption has been highly hit, owing to closure of retail shops, online stores, and other channels. Additionally, due to lockdown across the countries it is hard to procure raw materials for the manufacturing process. The market for artificial or synthetic leather is however expected to be restored once the logistics and various distribution channels across the globe opens, which would increase the rate the consumption and demand.