Equally, consumers and advocates are calling for the industry to become more inclusive. In fact, not only does it touch everyone, but it would be the world’s seventh-largest economy if ranked alongside individual countries’ GDP. At the opposite end of the price spectrum is Primark, whose commitment to its core value proposition has made it a formidable competitor.
2. Regardless of size and segment, players now need to be nimble, think digital-first, and achieve ever-faster speed to market. Sales of the traditional fast-fashion sector have grown by more than 20 percent over the last three years, and new online fast-fashion players are gaining ground. But we are now detecting glimmers of hope: executives report optimism (even amid uncertainty), and the McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 and 4.5 percent. Just as China inched through recovery, outbreaks worsened in Europe and the United States.
View Asha Boyed’s profile on LinkedIn, the world's largest professional community. Moreover, precrisis levels of activity are unlikely to return before the third quarter of 2022. 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.
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 inevitable—things that would have happened further down the road if the pandemic had not helped them gain speed and urgency now. At the same time, we are likely to see more nuanced assessments of store ROI based on a combination of digital and physical lenses. McKinsey analysis, 2019.
Many consumers today expect perfect functionality and immediate support at all times, coupled with rapid delivery times as players constantly compete to expedite products. 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. COVID-19 lockdowns also have led to an uptick in first-time e-commerce shoppers—14% of consumers in the US and 17% in China bought fashion online for the first time because of the pandemic. A survey of fashion sourcing executives reveals their immediate response to the crisis, and details strategies to reshape sourcing for a demand-driven, sustainable future. The fashion industry’s economic profit rose year-on-year by 4 percent in 2019. 11
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A growing number of publicly traded and private companies have become “value destroyers.” The midmarket in particular is in the doldrums, generating negative returns for shareholders. 11. No company will get through the pandemic alone, and fashion players need to share data, strategies, and insights on how to navigate the storm. In 2016, the 8.0 to 8.5 percent growth for athletic wear is more than double any other category.
Over that period, the industry has grown at 5.5 percent annually, according to the McKinsey Global Fashion Index, to now be worth an estimated $2.4 trillion. For those leaning forward and willing to help design the new features of the modern fashion system, the opportunities at hand to truly connect with fashion consumers across the globe have never been greater.
And “woke” consumers are also pushing for greater transparency into supply chains—and rewarding their favorite brands for taking controversial political stands. They should bear in mind the three trends that we believe will shape the 2017 fashion industry: the global economy, consumer behavior, and the fashion business model.
We expect a period of recovery to be characterized by a continued lull in spending and a decrease in demand across channels. 2