The Upcoming Year Looks Tumultuous for the Fashion Industry

by SHOWstudio on 22 November 2019

McKinsey and BoF explore the challenges brands face in 2020 in their newly released report.

McKinsey and BoF explore the challenges brands face in 2020 in their newly released report.

A recent report by McKinsey and The Business of Fashion entitled The State of Fashion offers an in-depth look at the challenges and opportunities the fashion industry will encounter next year. The 2020 forecast gathered a combination of statistical research, wide-ranging analysis and insight from leaders in the fashion community to compile their fourth annual report with unsurprisingly pessimistic results.

The State of Fashion, courtesy of McKinsey and The Business of Fashion

Over 290 fashion executives worldwide were interviewed about their industry (worth a staggering 2 trillion pounds) to find out their predictions and thoughts on the upcoming year. As an industry in a state of uncertainty, 55% of the respondents expected a decline in sales in 2020, due to shifts in consumer needs and geopolitical upset. This anxiety was noted across all markets regardless of price point or geographical location and only 9% of surveyed executives believe conditions for the industry will improve next year, compared to 49% who said the same in last year's questionnaire. This is due to a 'purported slowdown in global economic growth' and disappointing retail sales aggravated by Brexit uncertainty and changing consumer sentiment.

The State of Fashion, courtesy of McKinsey and The Business of Fashion

Despite the negative outlook, The State of Fashion compiled the top 20 brands looking to succeed in 2020 in terms of economic profit. Using the McKinsey Global Fashion Index's extensive database of companies, the report compared the performance of each company against their peers in a number of categories to compile the group dubbed 'Super Winners'. The top brand named was sportswear giant Nike, who's position in the top 20 was described through the saying 'in troubled times, fortune favours the bold.' Also making the top 5 were several comglomerate companies such as Inditex who owns Zara, Bershka and Massimo Dutti and LVMH who looks after Louis Vuitton, Loewe, Celine and Kenzo. Further analysis into the 'Super Winners' saw the presence of the Kering group whose labels include Gucci, Saint Laurent and Balenciaga.

The State of Fashion, courtesy of McKinsey and The Business of Fashion

The report also outlined the 10 biggest themes influencing the fashion industry in 2020. Sustainability was highlighted as both the single biggest challenge and single biggest opportunity' brands faced, with an emphasis on being authentic in their delivery. The fundamental changes and subsequent slowdown of how customers buy mean the industry needs to 'swap platitudes and promotional noise for meaningful action and regulatory compliance.' Another theme shaping the industry in 2020 is selling to the large Chinese market. Whilst the audience continues to provide exciting opportunities, many brands are still struggling to crack into the collasol consumer market and need to think about other international markets like Russia and Brazil instead. A lot of the key themes in the report are about growth and opportunity, however one of the biggest trends of 'continued caution' harks back to the industries sense of unease. The report found companies were worried about another recession and were therefore putting risk plans in place and rethinking brand strategy.

The State of Fashion is released by McKinsey and The Business of Fashion and can be read in full here.