As the women’s ready to wear shows start off yet another digital season, what will happen to the fashion industry in 2021? Companies must pay attention to five trends that Covid-19 accelerated as our new normal, according to insights by McKinsey. These are a drop in demand, a substantial shift to digital shopping, renewed consumer attention to brand values, retail travel in flux and a ‘less is more’ mentality. This is the key data from new research conducted by McKinsey entitled ‘Five charts that set the tone as New York Fashion Week 2021 kicks off.
In a possible scenario of an economic recovery this year, China could see sales of clothing and accessories exceed that of 2019, Europe could stay at the level of 2019 (down from 2 to 7 percent), and the United States could see a slower recovery (down from 7 to 12 percent). McKinsey suggests companies should seize new opportunities and double on best performing categories, channels and territories. Some possible positive areas to look out for: the luxury segment in China, athleisure and activewear (given the continued interest of consumers in health and wellness), and casualwear as people continue to work from home.
61 percent of fashion executive said they would reduce the number of SKU’s in a bid to avoid overstock. With less than two thirds of all manufactured clothing sold at full price, the overstock issue will only get worse if companies fail to adapt to consumers’ new “less is more” mindset—which includes a preference for longer-lasting, higher-quality, sustainably produced goods.
Offline retail may regain some of its market share this year, but online sales are expected to remain high and shoppers will demand increasingly sophisticated digital interactions. This will be the year in which fashion operators will embrace and optimize the online experience and the mix of channels, while at the same time finding ways to integrate an authentic “human touch”.
Expect more livestreaming, branded virtual clothing for avatars, and collaborations between fashion and video game companies. Sustainability in fashion is going beyond the impact of industry on the environment, to embrace issues related to social justice and human rights: after the Covid-19 crisis, consumers are becoming more aware of how vulnerable employees are in the fashion value chain and about 66 percent said they would stop or significantly reduce purchases of a brand that does not treat its employees or the employees of its suppliers fairly. Social media and the rise of Generation Z will likely make this a long-term trend. So it’s time for authenticity and action: brands must make a significant commitment to workers’ rights.
Travel retail remains in flux
Other scenarios by McKinsey and Oxford Economics suggest the travel industry will go through three post-crisis phases: recovery from the pandemic, economic recovery and a new normal, with times and pace of recovery varying from region to region. International tourism may not return to pre-pandemic levels before 2023 or 2024. This means that fashion companies should focus on better engagement with local customers and strategic investments in rapidly recovering markets like China.
Image: Pexels; Article source: McKinsey report “Five charts that set the tone as New York Fashion Week 2021 kicks off”