So, what’s fuelling the fast fashion boom? Please click "Accept" to help us improve its usefulness with additional cookies. Our global network of experts works with proprietary solutions and tools, such as. The report also includes the fourth readout of our industry benchmark, the McKinsey Global Fashion Index (MGFI): its extensive database of companies allows us to analyse and compare the performance of individual companies against their peers, by category, segment or region. Our pioneering expertise and global network enable our Apparel, Fashion & Luxury clients to drive change and flourish in a fast-moving and unpredictable industry. store operations, they will be ill prepared for the post-COVID-19 future. What are they doing right? The McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 to 4.5 percent. Fashion players are under pressure to be digital-first and fully leverage new technologies, For fashion players, 2019 will be a year of awakening. Long-term leaders include, among others, Nike, LVMH and Inditex, which have more than doubled their economic profit over the past ten years — according to MGFI estimates each racked up more than $2 billion in economic profit in 2017. According to the report, the global fashion market is dominated by 20 companies which account for 97 per cent of global economic profit in the retail sector. Companies big and small, successful and struggling, streamlined operations in order to account for the sudden dip in sales. Since 2017, we have partnered with the media company. Louis Vuitton’s CEO on Navigating the Pandemic and the Future of Luxury 2. This helps streamline processes and clarify roles and responsibilities within an organization. Further, rising transparency may increase the pressure on prices, and there is limited room for further cost cutting following recent initiatives. Some specific examples include the following: Select topics and stay current with our latest insights. Die Sorgen steigen angesichts der allgemeinen … For many in the fashion industry, the glass is half empty. We have done some analyses based on the MGFI (McKinsey Global Fashion Index) that show there will be around EUR 35 billion to 45 billion in overstock from the spring/summer 2020 season. Share Comment. In fact, 2017 signals the end of an era. The mood among respondents to our executive survey is sober across geographies and price points, and the pockets of optimism seen last year in … It is a fascinating list; it’s also a diverse list—lots of different types of companies in there. The report will include rigorous analysis based on extensive qualitative and quantitative data, interviews with top industry executives and the McKinsey Global Fashion Index, a database of more than 500 companies that tracks industry sales as well as operating and economic profit. The West will no longer be the global stronghold for fashion sales. Learn about Increased competition is also a factor, suggesting the need for rationalization. 91 McKinsey Global Fashion Index The squeezed premium/bridge and mid-market players drove nearly 80 percent of the absolute decline in industry economic profit between 2010 and 2016. We see Latin America (in particular Brazil), Middle East and Africa and Russia experiencing more economic and political challenges that are likely to dampen their consumer spending. We assess international growth potential through initial market screening, creation and selection of a value proposition, development of a detailed market-entry plan, and design of the regional country organization. Drawing on data including executive surveys, the report casts a bleak outlook for next year, forecasting a 3 to 4 percent decrease in global, fashion industry growth. ever before. Optimism can be found only in pockets, notably in North America and in the premium and luxury segments, aided by their strong performance in 2018. Use minimal essential Advises apparel and retail companies as they set new strategies and pursue large-scale transformations for profitability and growth, Leads our apparel, fashion, and luxury work in EMEA, with deep expertise in multichannel and digital transformation. Companies big and small, successful and struggling, streamlined operations in order to account for the sudden dip in sales. We expect margins in aggregate to remain steady through 2019, despite caution among industry players. Over the last 5 years, we have brought our expertise and industry insights to more than 1000 apparel, fashion, and luxury projects. Announces Senior Leadership... TRANSFORM traditionally managed companies to... Distinguishing factors between traditionally managed... Face shields for COVID-19 infection control. The report speculates that to be successful in the new year, apparel retailers need to think ‘outside-the-clothes’ and create an online persona that is AI-driven and socially relevant. Our flagship business publication has been defining and informing the senior-management agenda since 1964. We use cookies essential for this site to function well. Prospects for affordable luxury are likely to be more fragmented, with some regions expecting above-average growth (e.g., emerging and mature Europe and China), while others such as Japan, Latin America and North America underperform. Two of three new entrants to an exclusive club of 20 high performing fashion companies are Chinese, according to the 2020 edition of The State of Fashion report released today by BoF and McKinsey. distress. Which fashion brands and retailers are the most shopped and visited and which attract the most positive sentiment among their customers? “Combined with the McKinsey Global Fashion Index (MGFI) analysis, which found that 56 percent of global fashion companies were not earning their cost of capital in 2018, we expect a large number of global fashion companies to go bankrupt in the next 12 to 18 months,” McKinsey warned. Fashion is one of the past decade’s rare economic success stories. The McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 to 4.5 percent. Much will depend on their digital and analytics capabilities. Our partnerships with leading IT companies help to optimize and accelerate clients’ processes from planning through distribution to better manage costs and inventory along the way. Given the ongoing uncertainty, our predictions for industry performance next year are focused on two scenarios. For the first time this year, they took a closer look at the drivers of economic success in … So what unites them? Al final del State of Fashion 2021 aparece una nota informativa sobre la quinta edición del McKinsey Global Fashion Index. Companies able to differentiate on price point/efficiency or brand have performed best. A darkening mood. Insight on The Massive Growth of Textile Global... H&M Group and Renewcell expand partnership in... H&M HOME to collaborate with renowned fashion... Marks & Spencer Partners with Optitex and First... Levi’s aims to hit 70-80% of its pre-COVID... Levi Strauss & Co. The good news for the industry is that 2017 was a record-breaking year for overall value creation among listed fashion companies, with aggregate economic profit reaching its highest levels for 10 years, after a steady decline between 2012 and 2016. The West will no longer be the global stronghold for fashion sales. Two of three new entrants to an exclusive club of 20 high performing fashion companies are Chinese, according to the 2020 edition of The State of Fashion report released today by BoF and McKinsey. The interconnectedness of the industry is making it harder for businesses to plan ahead. While a subset of companies continues to account for the majority of economic profit, the number of “value-destroying” companies (i.e., companies generating negative economic profit) has almost doubled between 2010 and 2017. Postmerger, we help clients identify and tap into the right synergies, build capabilities, shape new corporate cultures, and streamline integrations. These are the facilities that do the cutting, sewing and finishing of garments in the final stages of production. 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. 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. How did Anta and HLA do it? However, after a period of accelerating out performance, leaders in 2017 gave up some of their advantage. In 2019, the predicted overall fashion industry’s growth was between 3.5% and 4.5%, according to the McKinsey Global Fashion Index. Try removing some filters. Well-known European luxury companies tended to be over represented in the top 20, with North American companies coming in a close second. It is useful to view the industry’s potential future through four separate lenses, each of which offer a perspective on the most important drivers of growth and key topics covered in this report. Combined with the McKinsey Global Fashion Index (MGFI) analysis, which found that 56 percent of global fashion companies were not earning their cost of capital in 2018, we expect a large number of global fashion companies to go bankrupt in the … hereLearn more about cookies, Opens in new This is a global phenomenon that can be observed across industry sectors (beyond fashion), regions and cities, as outlined in McKinsey Global Institute’s recent “Superstars” study. Which fashion brands and retailers are the most shopped and visited and which attract the most positive sentiment among their customers? McKinsey Global Fashion Index. Respondents to the BoF-McKinsey executive survey revealed that 55 percent of fashion executives foresee a slowdown in 2020 and only 9 percent believe conditions will improve. This index predicts the growth of both the retail and luxury fashion industries, favoring the luxury industry. Through digitizing processes and consumer-data analysis, we apply insights to merchandising and right-sizing of assortments to ensure consumer centricity is top of mind. To do this, we tap into our network of global sourcing centers, We begin by setting the right strategy in place, targeting sources of commercial and operational value as well as nonfinancial drivers that serve as indicators of future performance. Unleash their potential. And this was not just part of an overall stock market trend: between 2008 and 2017, fashion sector equity returns have beaten both the S&P 500 and MSCI world indices. 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