Time Will Tell. The State of Fashion 2021

Diminished, downsized, and discerning is the current normal of the fashion industry.

Fashion companies will post approximately a 90 percent decline in economic profit in 2020, after a 4 percent rise in 2019.

– BoF and Mckinsey & Company, The State of Fashion 2021 report

Times of change are inherently rich with opportunity, but BoF and McKinsey & Company’s The State of Fashion 2021 predicts further shocks from the pandemic.  The fifth report, in their annual series, sees disruption and uncertainty playout in two scenarios of recovery:

  1. “Earlier Recovery”, a more optimistic scenario, predicts global fashion sales will decline by between 0 and 5 percent in 2021 compared with 2019.  The industry would return to 2019 levels by third quarter 2022.
  2. “Later Recovery” would see sales growth decline by 10 to 15 percent in 2021 compared with 2019.  In this scenario, the return to 2019 levels would be by the fourth quarter of 2023.  This worse case scenario assumes the virus continues to wreak havoc despite containment measures.

At the time of this writing is a new wave of infections, worse than the onset, with many regions requiring new lockdowns and restricted travel.  The two recovery scenarios were based on September 2020 data, so the “later recovery” may be more the reality.  There’s an anticipation of a variation between geographies with as much as a two-to-four year lag between fast and slow recovering markets.

2021 Report highlights, ten key trends:
  1. Living With the Virus.  45% of fashion executives and stakeholders surveyed say this is the top challenge.
  2. Diminished Demand.  As much as a 15% decline in global fashion sales compared to 2019.
  3. Digital Sprint71% of fashion executives expect their online business to grow by 20% or more.
  4. Seeking Justice.  55% of consumer will expect companies to offer more dignity, security and justice to workers.
  5. Travel Interrupted.  66% of fashion executives expect recovery in 2-3 years. They will need to find better ways to engage local customers.
  6. Less is More.  The industry is finally awake! More product and collections do not yield better financial results. 58% of fashion executives consider assortment planning a key area for data and analytics.  Reduce complexity, take a demand-focus approach.
  7. Opportunistic Investment.  48% of fashion executives expect market share redistribution to be a top theme.
  8. Deeper Partnerships.  The pandemic exposed the vulnerability of the supply chain. 35% of fashion executives expect resilience and deeper partnerships that bring greater agility and accountability.
  9. Retail ROI.  One-half of European consumers have shopped less in physical stores since the lockdowns started.
  10. Work Revolution.  89% of fashion executives expect a hybrid model of working to be part of the new normal.

Time will tell if the industry hit the reset button or just mitigated the headwinds.  Mitigating and reacting to the unforeseen colossal effect of the pandemic is what good business people do.  Making bold, courageous moves are what visionaries do and that’s a rare trait in the fashion industry.  Once in a lifetime are there game changing events to change the game like the pandemic.

It’s disappointing that the survey of these key players shows herd movement to digitization, which they see as the biggest opportunity for 2021 [sustainability was 2020’s biggest opportunity].  In my opinion, digitization should already represent a strong segment in their operating model, but this movement appears like a survival play.  A visionary would see the long-term rewards in brick and mortar.  When it’s safe to physically engage and socialize again and consumers are fatigued by a digital shopping method, where will an in-person experience be if most channels are e-commerce.  With billions of pounds of textile wastes thrown out each year, trend #6, Less is More is the most disturbing.  Maybe it’s a reckoning that the industry finally woke up.  Another survival tactic: chasing opportunities, such as merger and acquisitions or more market share in a region, is all sound business, but to excel in a “new normal” is to lead with unconventional ideas.

Inventing a new infrastructure to support a balanced ecosystem is bold, no, it’s expected.  We have been at a crossroads in the industry where greed takes the place of innovation, quality, equality, ethics, and sustainability.  2021 may be another year of uncertainty and disruption, but bold infrastructural changes can be an intelligent new beginning.

Francesco Rasola | Photo Francesco Rasola and Pavel Lesko
Francesco Rasola | Photo Francesco Rasola and Pavel Lesko
Images, a throwback in time:

Francesco Rasola’s collection, “It’s Just Matter of Time”, expresses this Italian fashion designer’s gift in executing a look that defies mainstream [repetitive] fashion, brings meaning to the artistry of fashion, and showcases how the trajectory of our culture impacts fashion. He embraced the concept of time and has given us something we never expected, not only in the collection but in the actual catwalk, where the models, hindered by the fabric stiffness, metaphorically stop in front of time.

The interview with Francesco – https://atomic-temporary-64778243.wpcomstaging.com/2017/03/11/stop-in-front-of-time-edge-interviews-francesco-rasola/

Photo credit: Francesco Rasola and Pavel Lesko

The State of Fashion 2021, McKinsey & Company, Business of Fashion, full report [pdf]

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Rhonda P. Hill

Founder, Publishing Editor