The fashion industry, like so many others, is still struggling to come to terms with the new reality enforced by the coronavirus pandemic, as retailers, designers and employees alike strive to reclaim the normalcy of only a few weeks ago. The Business of Fashion, along with McKinsey & Company, have now suggested that even if a plan of action is put in place, a “normal” industry may never exist again, at least how we remember it.
Currently, sportswear companies are shiftingto produce masks and protective equipment as luxury houses join the cause and donate funds. However, these noble efforts are aimed to stem COVID-19, not provide a long term solution to the financial crisis caused by the disease. BoF and McKinsey’s report looks to the future of the industry, considering the likeliest outcomes and changes inflicted by coronavirus.
Importantly, the report predicts a post-crisis recession, which will dull consumer spending. Bluntly, “the crisis will shake out the weak, embolden the strong and accelerate the decline” of struggling companies. No one will be safe from shrinking revenues and costly ventures will be cut. The silver lining is that despite widespread hardship, the industry will be granted opportunities to embrace sustainability in rebuilding its supply chains, prioritizing innovation as old wares are discounted.
Gloomily, “we expect a large number of global fashion companies to go bankrupt in the next 12 to 18 months,” the report explains. These range from small creators to luxury giants, which often depend on revenue generated by wealthy travelers. Of course, developing nations will be hit even harder, as employees of manufacturers located in areas like “Bangladesh, India, Cambodia, Honduras and Ethiopia” cope with shrinking job markets. Meanwhile, 75 percent of shoppers in America and Europe expect their finances to take a turn for the worse, meaning fewer fast-fashion shopping sprees and opulent splurges.
Instead, the report expects consumers to engage in what Mario Ortelli, managing partner of luxury advisors Ortelli & Co, describes as cautious consumption. “It will take more to justify a purchase,” he notes. Expect more online shopping in second-hand and rental markets, with customers particularly seeking out investment pieces, “minimalist, last-forever items.” Retailers and customers able to tailor digital shopping experiences and dialogues to their clientele will fare best. Customers “want their sales associates to really talk to them, think about the way they dress,” explained Capri Holdings‘ chief executive, John Idol.
Read Business of Fashion and McKinsey & Company’s coronavirus impact report for the full findings, expectations and interviews, encompassing everything from the beauty industry to the virus’ different effects on the global market.
Before the crisis is over, however, America’s CDC health agency has created a video demonstrating how to make your own face mask at home.
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“Once the dust settles on the immediate crisis, fashion will face a recessionary market and an industry landscape still undergoing dramatic transformation,” says BoF Founder and CEO Imran Amed. “This will require unprecedented collaboration within the industry — even between competing organisations. No company will get through the pandemic alone, and fashion players need to share data, strategies and insights on how to navigate the storm. The crisis is a catalyst that will shock the industry into change — now is the time to get ready for a post-coronavirus world,” he adds. BoF and McKinsey & Company’s in-depth report, The Coronavirus Update to The State of Fashion 2020, focuses on the themes, issues and opportunities impacting the sector in the wake of the coronavirus crisis. Tomorrow on #BoFLIVE, Amed will be in conversation with McKinsey & Company’s Achim Berg to further explore the report. Learn more and register for the event at businessoffashion.com/events and download your free copy of The Coronavirus Update to The State of Fashion 2020 through the link in bio.