Not that the state of fashion was looking any good beforehand, Mckinsey’s coronavirus update paints a grim picture for the rest of 2020. The outlook for 2021 does not look bright either. So what are the key takeaways from the State of Fashion by Mckinsey?
- There will be a 27 to 30 percent reduction in revenues for the fashion industry mainly the apparel and footwear sectors.
- The luxury goods market which is mainly watches, handbags, makeup and jewelry will see a contraction of revenues of 35-39 percent.
- If stores are to remain closed for two months because of the pandemic, more than 80% of fashion companies listed on the stock exchanges in Europe and North America will be in financial distress.
- Companies which quickly change their business models and are able to stabilize their businesses may be able to find growth in a new world.
- Brands will have to find innovative ways to show value in their products to customers. A combination of the bargain shopping culture, anti-consumerism and consumers coming out of a recessionary economy will be a tough road to drive through.
- Go digital or go out of business. If stores open worldwide, there may not be enough walk in customers to justify keeping the store open. In China alone, foot traffic in stores has fall by 50-60 percent. McKinsey states that if brands do not invest in digital channels during this crisis phase, they will have to suffer longer.
- Companies that were already hanging by a thread before the pandemic started will go out of business faster. The companies which were performing strongly beforehand may be able to purchase insolvent brands for next to nothing in order to expand their business.
- Brands must adapt to the new mindsets of customers; pre-pandemic mindsets have shifted to a new reality.
- Pre-pandemic shifts in mindsets will be accelerated, consumers will be less materialistic and geared more towards sustainability
- Brands should have better control of their supply chain, re-shoring should be on the table for brands that want to survive.
We HIGHLY recommend reading the full report, it has got great insights. Here is the link: