Consumers (and increasingly, investors) will reward companies that treat their workers and the environment with respect, and the deeper relationships that emerge will bring benefits in agility and accountability. This annual report from McKinsey & Company and LeanIn.Org is the largest study of the state of women in corporate America. 3 We explore all these changes and their ramifications in our 2019 report on global retail banking. This is consistent with its 10 percent CAGR of the past decade, driven by consumers’ more active lifestyles, the rise of “athleisure,” emerging brands in the high-end segments, and product innovations. R Tre 2019 15 POP-UP STORES Pop-up stores have become a canvas for retailers to experiment with new types of products, technologies, and services, while also acting as a tool for branding. We'll email you when new articles are published on this topic. Nonetheless, our report finds that fashion companies are hopeful they can improve their performance through a combination of organic growth and leveraging new technologies. McKinsey Global Institute. In fact, 2017 signals the end of an era, as the West will no longer be the global stronghold for fashion sales—more than half of apparel and footwear sales will originate outside of Europe and North America. According to the report Automation in retail: An executive overview for getting ready, margins in the retail industry are constantly under pressure as a result of intense competition, growing e-commerce, and rising costs. Given the standout performance of digital channels in the current environment, we expect digital to remain king in 2021. For workers in low-cost sourcing and fashion-manufacturing hubs, such as Bangladesh, Cambodia, Ethiopia, Honduras, and India, extended periods of unemployment will mean hunger and disease. As noted in our previous articles on “getting woke,” radical transparency, and sustainability first, the consumer mindset was already showing signs of shifting in certain directions before the pandemic. Product categories are expected to grow in line with the overall industry average, but the biggest winners will be those companies with coherent channel strategies and clear value definitions. Many of them have already undertaken significant cost cutting and restructuring, and they are now primed to capture the benefits. However, there will be opportunities. It’s a trap that leaders need to make a conscious effort in order to escape. Kom werken bij McKinsey & Company Amsterdam en maak het verschil. He helps small and medium enterprise owners understand what's most important to their company's growth and success. Based on our executive survey, the words on everyone’s lips are sustainability, digitization, and innovation (Exhibit 4). After a challenging stretch, has fashion turned the corner? Unleash their potential. At the same time, they are demanding ever-quicker and more seamless fulfillment, from mobile shopping to drone delivery. McKinsey analysis, 2019. Dire consequences for fashion, one of the biggest industries in the world, generating $2.5 trillion in global annual revenues before the pandemic, 2 Perspectives on retail and consumer goods Number 7, January 2019 A new year is an opportunity for renewal—a fresh start, a time to recommit to long-standing goals or to pursue new ones, a chance to get reenergized and build momentum for the year ahead. Polarization continues to be a stark reality in fashion: fully 97 percent of economic profits for the whole industry are earned by just 20 companies, most of them in the luxury segment. 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. Blockchain's Appeal Is Limited for Retail Banks, McKinsey Says By ... according to the report. 10 8. The trick in 2020 will be to prove to investors they can turn potential into profit. As decision makers continue to manage uncertainty, the most successful will be those that get a grip on the trends shaping the fashion landscape. 9 Partner & Director. All this comes against a backdrop of the fashion industry having turned a corner in 2018, with increased growth justifying the optimism expressed in last year’s global fashion survey. The report includes the third readout of our industry benchmark, the McKinsey Global Fashion Index. McKinsey State of Fashion 2021 Survey; McKinsey analysis. Strikingly, only 9 percent of respondents think conditions will improve next year, compared with 49 percent who said the same last year. Looking forward, our base case is cautiously optimistic, with the virus more effectively controlled over the coming year, thanks to a strong public-health response. McKinsey Quarterly. While automation makes retail operations up to 65 percent faster, employees must shoulder more responsibilities, and leverage (real-time) data and analytics to make smarter decisions more quickly. With companies in China leading the way, brands will engage even more closely with social media to offer shoppers exclusive content and personalized experiences. The research is a snapshot of some surprising shifts in consumer behaviour that highlights the importance of adaptability and versatility. We predict a 5 to 10 percent sales growth in China in 2021 compared with 2019. More and more, they base their purchase decisions on whether a company’s practices and mission aligns with their values—while at the same time they are highly price sensitive. To survive, businesses will need to automate. Never miss an insight. 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. Everyone. 1 In-store revolution 2 New store experiences 3 Innovating at scale 4 Re-defining convenience 5 Re-inventing retail 6 Re-commerce 7 The personal edit 8 Social discovery 9 East beats West 10 China leads the e-commerce revolution 11 The Chinese consumer market goes global 12 Obviously, this means that employees will need to be trained and built into a workforce that can be redeployed to more for the business. The interconnectedness of the industry is making it harder for businesses to plan ahead. Now, the resulting “quarantine of consumption” The survey shows that social and environmental sustainability has become a key priority for apparel companies, just as it is becoming an increasingly important issue for consumers and governments. McKinsey analysis, based on data from Amazon and Stackline. We estimate that revenues for the global fashion industry (apparel and footwear sectors) will contract by –27 to –30 percent in 2020 year-on-year, although the industry could regain positive growth of 2 to 4 percent in 2021 (compared with the 2019 baseline figure). It’s a sentiment shared by industry executives: 40 percent expect conditions for the industry to improve in the year ahead. Notably, the top 20 group of companies has remained stable over time. We expect a similar trajectory in the United States, with sales down 7 to 12 percent next year compared with 2019, and only a modest recovery before the first quarter of 2023. “Zara Owner to Invest $3 billion to Expand Amid Covid-19 Crisis,” Bloomberg, June 10, 2020, At the same time, government interventions will partially offset economic impacts, and global travel will pick up, alongside the possibility of larger social gatherings. These are some of the findings from our latest The State of Fashion report, written in partnership with the Business of Fashion (BoF) to explore the industry’s fragmented, complex ecosystem. Tokyo. Even online sales have declined 15 to 25 percent in China, 5 to 20 percent across Europe, and 30 to 40 percent in the United States. The bottom line is that amid this uncertainty and change, our analysis suggests cautious optimism is warranted. However, there may also be new opportunities from growing south–south trade and the renegotiation of trade agreements. 10. The average market capitalization of apparel, fashion, and luxury players dropped almost 40 percent between the start of January and March 24, 2020 These short-term retail spaces serve as a natural setting for retail experimentation. Stock-market valuations of tech players have reached dizzying levels, reminiscent of the dot-com boom of the early 2000s, while a number of private companies have reached unicorn status. “We believe that Amazon can expect a five to 10 percent top-line improvement thanks to additional transacting traffic from reduced wait times and the use of customer insights to optimize assortments and personalize promotions. As with everything in this fast-moving sector, we’ll just have to wait and see. Although the fashion industry appears to be turning a corner, the rebound is not being felt evenly across the globe. Frontrunners are building agile supply chains supported by higher-quality consumer insights—with the frontier being close to a real-time supply chain fed by “test and learn” and data analytics. But speed and flexibility bring added complexity. But it is in the developing world, where healthcare systems are often inadequate and poverty is rife, that people will be hit the hardest. This joint report by the Business of Fashion and McKinsey is an effort to advance the discussion beyond crisis management and immediate contingency planning by outlining the areas in which the fashion industry must focus once the dust settles on the current crisis. Earnings before interest, taxes, and amortization. Deal Day Spending. They don’t go through the day with […] By Imran Amed, Anita Balchandani, Achim Berg, Saskia Hedrich, Jakob Ekeløf Jensen, and Felix Rölkens. McKinsey analysis, based on data from Amazon and Stackline. 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