LONDON, United Kingdom — With much of the fashion industry facing an existential crisis, BoF has worked with McKinsey & Company to compile The State of Fashion 2020: Coronavirus Update in line with what has become the new normal.
The coronavirus, which has caused nationwide lockdowns, store closures and widespread unemployment, is causing “disruption and dislocation,” said Imran Amed in conversation with McKinsey’s Achim Berg in this #BoFLIVE event. “But it is also important to underscore that there are opportunities that come out of this situation.”
Amed and Berg stress that the fashion sector will not return to a pre-pandemic normal. Store closures have led to huge drops in consumption and financial uncertainty is causing consumers to cut back on their spending. This, combined with disrupted supply chains and inventory misalignment, will hit the industry very hard. Even if demand comes back, it will be difficult for brands to deliver.
But the crisis is not specific to just one market or geography, Amed said. Across the globe consumer sentiment has taken a huge hit. “When consumers are thinking about survival — protecting themselves and their families — fashion has in many respects taken a backseat in their shared mind,” Amed said.
In the Coronavirus Update to the The State of Fashion 2020, Amed and Berg lay out five key themes on which fashion leaders and industry insiders should focus once the dust settles.
- Companies must now focus on survival and prepare a recovery action plan. This is essential as one in three fashion industry employees consider their recovery planning as insufficient.
- Brands must adopt a discount mindset. More than 65 percent of consumers in US and Europe expected to decrease their spend on apparel in the first two weeks of April 2020, so retailers must adapt accordingly and cater to customers looking for a deal.
- Now is the time to undergo a digital upgrade. With brick-and-mortar stores closed, e-commerce is expected to get more advanced quickly. “Something that we would have seen in the next two years, we are seeing in the next two months,” Berg said.
- The industry will see a “Darwinian shakeout” as the crisis is likely to widen the gap between fashion’s winners and losers. “The ‘super-winners’ have already accounted for 177 percent of industry profit before this,” according to Berg. “In our opinion they will continue to come out on top… assuming they survive the crisis.”
- Innovation is key to overcoming the crisis. Virtual sampling, 3D design and virtual shows are likely to take centre stage as players adapt to the fashion’s new landscape.
“Make changes to the way you work and make changes to the way you lead your organisations,” said Berg. “This is a great opportunity [for change].”
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