MILAN, Dec. 7 (Class Editori) – In order to partially mitigate the fashion field crisis, which, in 2020, has experienced the worst year ever with a reduction between 15% and 30% in global sales, online sales have almost doubled in few months, upsurging from 16% to 29% of the total; therefore, this has contributed to an upswing in the fashion field which had never been recorded in the past years, equal to six years of growth in only eight months.
For this reason, the digital-oriented players, with a particular focus on Asia, China and luxury, may gain a competitive advantage for their recovery, already expected by 2021.
Over 70% of the managers in the field is expecting their own online business to record a growth equal to - or higher than - 20% in 2020, even though almost three fourth of the fashion companies listed on the Stock Exchange are currently recording losses. According to McKinsey's gurus-, the most appraised and renowned strategic advisor- the humanitarian and economic crisis caused by COVID-19 may lead companies to experience a drastic drop by 90% in profits, compared to an increase by 4% in 2019.
However, as it is well known, the crisis did not have the same impactand intensity everywhere. According to the McKinsey Global Fashion Index, Europe should be the most affected area, with an expected drop in revenues between 22% and 35%: a real recovery is expected only in the first months of 2022, with the tourism flows return.
The U.S. revenues may record a drop between 17% and 32% and the recovery may be postponed to the first quarter of 2023. In China, the reduction in sales in 2020 is expected to be between 7% and 20%, while a return to pre-crisis levels is already ongoing or, at the latest, will be taking place in the first quarter of 2021.
Luxury and accessible luxury have turned out to be slightly more resilient, with an average drop in sales by 30% and an average decrease in EBITDA by 20 percentage points in the quarters of the February-June 2020 period. The global beauty market is recording better results: already next year, profits should come back to 2019 levels or even overcome them.
Lastly, McKinsey analysts have highlighted two possible scenarios for the recovery in the fashion industry. In a forthcoming recovery scenario, related to the virus spread containment and the stop to movements' bans within a couple of months thanks to the vaccine distribution, sales in the global fashion industry could reach the 2019 levels during the third quarter of 2022.
In a late recovery scenario, instead, related to frequent increases in infection cases worldwide, with the consequent implementation of new lockdown measures, sales could come back to pre-crisis levels only by the last quarter of 2023.
"After the strong decrease in profits, the value creation process in the fashion industry has further involved only a few top players: the esteems about the impact of companies which destroy value have grown from 60% in 2019 to 73% in 2020", as Emanuele Pedrotti, McKinsey partner responsible of the Apparel, fashion & luxury practice for the Mediterranean area, has explained.
"In this context characterized by a strong disruption, leaders have stood out for their capability of developing innovative strategies through fast changes, by adjusting their own offers to the new consumers' needs and exploiting new technologies not only to increase sales, but also to modernize the way of doing business and have an impact on traditional retail channels."
If the global economic and health crisis endures, as the analysis has concluded, 2021 will act as a transition moment between the pre-pandemic world and a recovery period which will probably continue for a long time. The recovery pace will be different according to categories, segments and geographical areas.
(Source:Class Editori)
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