The crisis is a catalyst that will shock the industry into changenow is the time to get ready for a postcoronavirus world. Achim Bergis a senior partner in McKinseys Frankfurt office,Leonie Brantbergis an associate partner in the London office, andSaskia Hedrichis a senior expert in the Munich office. After a year in which the fashion industry posted record-low economic profits, business leaders are on the front foot, seeking to innovate while continuing to engage their core constituencies. The 16 percent year-on-year rise came largely from improved operating margins driven by cost cutting. The exhibit12To view exhibit, refer to The State of Fashion 2020: Coronavirus Update. a much steeper decline than that of the overall stock market. The bottom line going into 2022 is that the fashion industry faces a complex mix of challenges and opportunities, in which there is little room for missteps. As decision makers continue to manage uncertainty, the most successful will be those that get a grip on the trendsshaping the fashion landscape. By Imran Amed, Anita Balchandani, Marco Beltrami, Achim Berg, Saskia Hedrich, and Felix Rlkens. Consumers want to know where materials come from, how products are made, and whether the people involved are treated fairly. Our first two reports, last yearand the year before, laid the foundation for rigorous in-depth research and analysis, focusing on the themes, issues, and opportunities affecting the sector and its performance. SHANGHAI, March 15, 2023 /CNW . Achieving circularity in fashion is similar to the 10-year overnight success story. E-commerce players, such as ASOS, FARFETCH UK, Revolve, and Zalando, have consistently outperformed in 2020, as locked-down customers turned to digital devices to shop. Humanitarian repercussions are expected to outlast the pandemic itself. The authors wish to thank Sarah Andre, Althea Peng, Sonja Penttil, and Robb Young for their contributions to this article. We foresee that the differences between the shopping habits of low- and high-income households will become more pronounced, as cost-conscious customers are likely to cut back or trade down. While the luxury and sportswear sectors have dominated the industrys list of super successes in recent years, macroeconomic context might change that in the upcoming year. Successful companies will invest more to nurture local clientele: 2017 will be the year of organic growth by deepening relationships with existing clients, rather than through geographic, channel, and store-network expansion. External shocks to the system continue to lurk around the corner, and growth cannot be taken for granted: the McKinsey Global Fashion Index forecasts growth of 3.5 to 4.5 percent, slightly below 2018 figures. Not surprisingly, this regional divide is reflected in fashion executives sentiments, as respondents to the BoFMcKinsey Global Fashion Survey from emerging countries are more optimistic about the industrys outlook in 2018 than their European or North American counterparts. However, there will be opportunities. The coming year will be tough, as the digital shakeout gathers pace, customers demand more on sustainability, and slower growth puts pressure on margins. Member-News DNA markers can verify recycled cotton. As our ten trends indicate, new markets, new technologies, and shifting consumer needs present opportunitiesbut also risks. Indeed, recent data show that we have vaulted five years forward in consumer and business adoption of digital in a matter of months. Business of Fashion and McKinsey & Co. released their annual report, "The State of Fashion 2023," containing insights for the upcoming year and 10 key trends that are set to shape the. The main sources of growth are emerging-market countries across AsiaPacific, Latin America, and other regions; they are forecasted to grow at rates ranging between 5 and 7.5 percent in 2018 (exhibit).21To view exhibit, refer to The State of Fashion 2018. After nearly two years of disruption, the global fashion industry is once again finding its feet. But fast-forward a few months, and fashions outlook has gotten dramatically and suddenly bleaker. By August, such digital-first players were trading 35 percent higher, on average, than they did in December 2019. Those are some of the findings from our latest report, The State of Fashion 2021, written in partnership with the Business of Fashion (BoF). While the crisis has visited a devastating impacton businesses and jobs, it may also have accelerated responses that can lead to positive outcomes. Cotton and cashmere prices, for example, have increased 45 percent and 30 percent year on year, respectively.1Oliver Guyot, Caught between inflation and rising costs, fashion seeks to strike new balance, Fashion Network, July 19, 2022. Equally, consumers and advocates are calling for the industry to become more inclusive. When it comes to the environmental impacts of the. External shocks to the system continue to lurk, and growth cannot be taken for granted. Consumers are adjusting their behaviors, as many trade down to cheaper or discounted items to reduce their spending, though the luxury sector will remain strong, with affluent consumers less heavily affected by inflation. Download The State of Fashion 2021, the full report on which this article is based (PDF9MB). Imran Amed is the founder, editor-in-chief, and CEO of The Business of Fashion. So consumers expect it all: convenience, quality, values orientation, newness, and price. The industry continues to polarize: consumers are trading away from the midmarket price points even while the luxury, value, and discount segments are picking up speed. About 7 percent of companies left the market entirely, either due to financial distress or because they were bought by rivals. The authors wish to thank McKinseys Tiffany Wendler, as well as the Business of Fashions Robb Young, for their contributions to this article. Authenticity and employee well-being will be more important than ever. In the meantime, domestic markets are set to continue their recent strong performance. The outlook for the fashion industry varies across different value segments, too. Trip.com Group, together with Accor and McKinsey, launches whitepaper on sustainable travel in China and sets out series of industry and consumer recommendations. Among product categories, it was a breakout year for sportswear, with 42 percent of positive economic profit in the MGFI index coming from sportswear companies, amid strong growth for Chinese players. In all other regions and segments, executives are notably pessimistic, reflecting the potential challenges ahead (Exhibit 1).19To view exhibit, refer to The State of Fashion 2019. COVID-19 could spur the biggest economic contraction since World War II, hitting every sector from finance to hospitality.7UN chief says coronavirus worst global crisis since World War II, France 24, April 1, 2020, france24.com. With the majority of companies struggling to turn a profit, growth will be a key priority in the year ahead. Venue: Karnavati University, Gandhinagar. Companies that have performed the best over recent months tended to share at least one of two key characteristics (Exhibit 2). Top Recruiters at IIM Ahmedabad Placement 2023. Companies are adapting to new consumer priorities, and digital is providing a nexus for growth. By causing blow after blow to both supply and demand, the pandemic has brewed a perfect storm for the industry: a highly integrated global supply chainmeans that companies have been under immense strain as they have tried to manage crises on multiple fronts as lockdowns were imposed in rapid succession, halting manufacturing in China first, then Italy, followed by countries elsewhere around the world. However, amid increasing pressure on performance, shifting consumer behaviors, and accelerating demand for digital, there is an imperative to act decisively to prepare for the next normal. NIKE, Inc. reports fiscal 2020 fourth quarter and full year results, Nike, June 25, 2020, news.nike.com. Meanwhile, some of the shifts we will witness in the fashion system, such as the digital step change, in-season retail, seasonless design, and the decline of wholesale, are mostly an acceleration of the inevitablethings that would have happened further down the road if the pandemic had not helped them gain speed and urgency now. Indeed,fashion executives across different value segments have cited plans to increase prices in 2022, with an average expected rise of 4 % in luxury, 2 % in mid-market and 5 % in value, according to the BoF-McKinsey State of Fashion 2022 Survey. As I did last year,. But it is in the developing world, where healthcare systems are often inadequate and poverty is rife, that people will be hit the hardest. Achieving circularity in fashion is similar to the 10-year overnight success story. Performance will vary depending on the individual dynamics of specific market segments and categories. Download The State of Fashion 2019, the full report on which this article is based (PDF3 MB). An industry veteran of 15 years, she serves as the fashion strategy director at Infor, a global leader in business cloud software.And, as Behrenfeldt says, many companies have found it challenging to translate their fashion knowledge into more . Daily office attire will become more casual, and special-occasion dress will become bolder. Based on McKinseys analysis of fashion forecasts, the luxury sector is expected to grow between 5 and 10 percent in 2023, driven by strong momentum in China (projected to grow between 9 and 14 percent) and in the United States (projected to grow between 5 and 10 percent). Another is that Indiais on the riseits growing middle class, powerful manufacturing sector, and increasingly savvy tech have made it an essential destination for fashion companies. The trick in 2020 will be to prove to investors they can turn potential into profit. This will also be a time for collaboration within the industryeven among competing organizations. Fashion leaders are also watching global headlines closely in the year ahead, as macroeconomic and political uncertainties continue to obstruct business operations and escalate reputational risk. The Super Winners include three new entrantsAnta Sports, Heilan Home (HLA Corporation), and Lululemonreflecting the strength of sportswear and the growing influence of Chinese players. The authors of this article are Imran Amed (founder, editor in chief, and CEO of the Business of Fashion, and an alumnus of McKinseys London office), Anita Balchandani (a partner in the London office), Jakob Ekelf Jensen (a consultant in the London office),Achim Berg (a senior partner in the Frankfurt office),Saskia Hedrich (a senior expert in the Munich office), and Felix Rlkens (an associate partner in the Berlin office). Our first report, last year, laid the foundation for rigorous in-depth research and analysis, focusing on the themes, issues, and opportunities affecting the sector and its performance. NEW YORK, March 16, 2023 (GLOBE NEWSWIRE) -- CGS, a global . To thrive in this environment, companies must think strategically, sharpen their decision making, and keep their fingers on the pulse of customer demand. Navigating this uncertainty will not be easy for fashion leaders. New NASCA Report in Collaboration with McKinsey & Company on Bridging Talent Gaps in State Government. Download The State of Fashion 2023 All things considered, we expect fashion-industry growth will increase to 2.5 to 3.5 percent in 2017, although the days when the industry outpaced GDP growth by as much as two percentage points seem over. Other positive trajectories will include the growing influence of platform propositions as customers warm to marketplace experiences and renewed appetite among both brands and consumers for local engagementthe personal touch that reflects the priorities of many. The ones that will succeed will have come to terms with the fact that in the new paradigm taking shape around them, some of the old rules simply dont work. To keep up, leading fashion players are accelerating their speed from design to shelf. How will changes to the global economy and consumers behavior affect fashion in the postcoronavirus world? We also highlight the ten trends that will define the fashion agenda in 2019 (interactive). The textile sector still represents 6 percent of global greenhouse-gas emissions and 10 to 20 percent of pesticide use. Winners of the Federal 100 Awards will also be recognized for their accomplishments at the event . Looking forward, we see more research into sustainable materials and technologies, as well as the circular economy. The authors wish to thank Sandrine Devillard, Jolle Grunberg, and Michael Straub for their contributions to this article. Annapolis, Maryland 21401 . The beauty segment, covered for the first time this year in our The State of Fashion 2021 report, has remained relatively insulated from the pandemic, offering consumers a comforting pick-me-up in challenging times. Based on McKinsey's analysis of fashion forecasts, the luxury sector is expected to grow between 5 and 10 percent in 2023, driven by strong momentum in China (projected to grow between 9 and 14 percent) and in the United States (projected to grow between 5 and 10 percent). These can be embedded in items to support after-use activities such as resale and recycling. For some, the abyss beckons. Some 40 percent of executives we interviewed expect conditions for the fashion industry to improve in 2017, compared with the 19 percent who reported improving conditions in 2016 (exhibit).22To view exhibit, refer to The State of Fashion 2017. Good Tuesday morning! Imran Amed is the founder, editor-in-chief, and CEO of the Business of Fashion. With information and the ease of comparison at their fingertips, consumers are becoming less brand loyalamong millennials, two-thirds say they are willing to switch brands for a discount of 30 percent or more. This has a profound impact as purchase decisions are influenced by social media, peer reviews, influencer marketing, and traditional marketing, and even many purchases themselves are made consumer-to-consumer. The interconnectedness of the industry is making it harder for businesses to plan ahead. Plus, consumer companies are turning to chief transformation officers more often, and why it's important for leaders to demonstrate "deliberate calm." Fashion forward. That translates into a significant increase in the number of companies that are value destroyers, which we expect will rise to 73 percent of those in the index in 2020, compared with 60 percent in 2019. Moreover, precrisis levels of activity are unlikely to return before the third quarter of 2022. Amid these challenging dynamics, the imperative for brands will be to secure their recovery. But regardless of touchpoint, consumers expect a consistent brand experienceacross channels. From a geographic perspective, China was the standout performer over 2021, as its economy recovered much faster than those of other countries. Even online sales have declined 15 to 25 percent in China, 5 to 20 percent across Europe, and 30 to 40 percent in the United States.11McKinsey analysis, based on data from Amazon and Stackline. However, given the scale of investment required, it means nervous times for small and midsize players. According to McKinseys 2019 Apparel Chief Purchasing Officer Survey, while the absolute number of sustainable fashion products remains low, there has been a fivefold increase over the past two years. As athletic wear continues to grow, it will become a category with the ability to compete on equal terms with clothing and footwear, particularly in the midmarket and premium segments. According to our estimates, each racked up more than $2 billion in economic profit in 2017. Only the discount segment is likely not to be part of the recovery trend. Download the report to view the exhibit. New York, USA, 16 March 2023-/African Media Agency(AMA)/Essential workers who kept families, societies and economies going while the world was on COVID lockdown, need better pay and conditions urgently, if countries are to future-proof themselves from the next global crisis, UN labour experts said on Wednesday. In last years report, we did not publish our annual list of super winners, due to distortions and reporting gaps caused by the pandemic. Imran Amedis the founder, editor-in-chief, and CEO of the Business of Fashion. Although the duration and ultimate severity of the pandemic remains unknown, it is apparent that the fashion industry is just at the beginning of its struggle. This is in stark contrast to the fashion industrys performance over the previous decade, which saw the industry expand at 5.5 percent annually. 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