Mitigating the effects of COVID-19 on your fashion retail business

Best practices for counteracting Covid-19

The Covid-19 outbreak is a dramatic human issue affecting hundreds of thousands of people around the world. First and foremost, we sincerely hope that your teams are healthy and safe.

That being said, as Coronavirus continues to make its way around the globe, so is the gravity of its impact on the economy and businesses, especially as governments continue to take extreme precautionary measures such as in Italy and the US.

Covid-19 heatmap
Image: John Hopkins Covid-19 interactive heat map

The fashion industry has to fight to counteract business impact, and the response should not be paralysis, but rather preparation.

To help you assess the potential impact on your fashion retail business, in particular regarding your inventory and merchandising decisions, we’ve created a list of considerations and best practices to bear in mind.

Stock icon Understand your current stock levels

In order to counteract the potential risks of Covid-19, you need to know where you currently stand in terms of inventory.

What are your current, on-hand, inventory levels?

  • Assess your stock in distribution centers and coverage levels in stores: You may find that you have high coverage levels in stores over the past few days, especially if they are located in high-risk areas. With this in mind, consider the following factors:
    • Seasons: Do you still have A/W stock or are you mainly managing S/S products? Consider not over-discounting all items yet, especially if they are continuity products. You may consider other items for promotional activity, bearing in mind your cash flow needs.
    • Online & offline: How much stock is dedicated to your physical locations versus your online channels? Are you physically splitting the stock? This is an important consideration should you have to interrupt business temporarily in some stores or if you are experiencing higher online performance.

Are you expecting new stock soon?

  • Delays: If you are anticipating delays from your suppliers or DCs are anticipating them, determine whether you can meet demand with existing products or if you can postpone orders you’ve placed. On the contrary, you may need to push more product to stores if DCs need to temporarily shut down.
  • Adjustments to assortment: Can you redefine your assortment? Do you need to proceed with the predefined collection rotation? Consider maneuvering with the current in-stock items that can still be displayed at stores.

Megaphone icon Rethink merchandising and distribution strategies

Reconsider some of the decisions that have already been made and adjust current inventory levels.


  • Readjustments: Modify your replenishment strategy by adjusting your planning horizon (considering store capacity and DC delivery capacity), product sales thresholds, and adjust forecast weeks/weight of weeks to reflect those unaffected by Covid-19.
  • Switch from static to dynamic replenishments: Abandon static strategies (min/max or “sell 1, replenish 1”) and turn to a dynamic method that considers recent performance and the elasticity of the expected impact by weeks.

Graph showing potential impact on retail by level of crisis severity

Store Transfers

  • Transfers among stores/regions: Consider rebalancing your stock around your network. For example, you can prioritize transfer stock from stores in affected regions to those in non-affected regions.
  • Rebalancing among channels: You can also move stock to online fulfillment centers and other platforms from physical stores or consider reserving more stock in the warehouse. A unified view of your inventory is key in moments of uncertainty.

Agile icon Stay agile

Above all else, we recommend ensuring that you are able to remain flexible and adaptable to changes in demand, in light of potential upcoming macro/governmental policies.

Anticipate, don’t be reactive

  • Listen to your data: Avoid pure intuition when making rapid changes in terms of stock allocation and rebalancing. Be aware of what your data is telling you, as it might contain unexpected insights about the right course of action that you’d be unable to foresee yourself.
  • Define cross-functional response teams: Focus on outputs and decisions, empower these teams with the tools and procedures needed.
  • Negate effects in the long-term: Adjust your forecast now through the creation of promotional events for products and stores currently impacted so that the sales impact of Covid-19 doesn’t skew next year’s forecast and optimization calculations.

Nextail is here to support you and your fashion retail business

At Nextail, we’re keeping a very close eye on the impact of Coronavirus on the fashion retail industry and on our customers and retailers, so that we’re ready to provide the best advice on how to best adapt to this ongoing situation.

Our team of professionals has extensive retail experience and we always aim to support retailers by combining our industry knowledge with the potential that our advanced technology offers. Whether that means explaining how to adjust certain parameters built in to Nextail or providing other best practices, we are here to help retailers remain proactive.

If you are concerned about how Covid-19 may affect your fashion retail business, don’t hesitate to contact us for support on how you can overcome some of the risks posed by this global situation.

Retailers can tap into the power of AI for assortment planning

The evolution of assortment planning in fashion retail: F...

Tamara Verdugo Justo, Product Manager for the Nextail Assortment Planning solution, is a former Buyer for Zara, Buyin...

Merchandise platforms for planning retail operations are helping blur the line between planning and execution

Why fashion retailers need to rethink the traditional pla...

Guest blog by Brian Kilcourse, Managing Partner of market intelligence company RSR Research.   RSR Research monitors ...

3 Ways AI enhances WSSI for better merchandising and decision-making

Advanced retail tech picks up where WSSI leaves off

3 ways AI enhances WSSI for better merchandising decision-making Merchandisers are responsible for making mission-cri...