According to the most recent estimates by The Business of Fashion magazine and McKinsey, the global fashion industry (apparel and footwear) is expected to contract by -27 to -30% in 2020. The outlook is that it will return to positive growth, probably between 2% and 4%, only in 2021.
Fashion revolution news
For that segment of fashion more markedly oriented towards personal luxury goods, McKinsey in cooperation with Pitti Immagine and the National Chamber of Italian Fashion, estimate, in the most optimistic case, a loss of over 100 billion Euros in 2020. The recovery to 2019 levels could arrive in a period between 2021 and 2023.
It should be noted that according to the latest Mediobanca annual survey, in 2018 the total turnover for our country was 71.7 billion Euros, up 3.4% on 2017. Of the 46 major European fashion brands, 14 are Italian.
In the meantime are mounting the reports of the damage caused to the sector by the health emergency. The Swedish fashion group Hennes & Mauritz saw its second quarter sales sliced by 50%. Its online sales, up 36%, helped to offset the drop in revenues caused by the closings of its stores, but there are still around 900 stores temporarily closed worldwide.
Stores and digital channels, a sole remedy
The Spanish giant Inditex (with brands such as Zara, Pull & Bear, Stradivarius, Bershka, Uterque) paid heavily for the effects of the pandemic and the lockdown. The group reported a loss of 409 million Euros in the first quarter of 2020, following a drop in turnover to 3.3 billion Euros compared to 5.9 in 2019.
Its restructuring involves the closure of 1200 stores across Europe and Asia, with a significant strengthening of the integration between brick-and-mortar stores and e-commerce. For Pablo Isla, CEO of Inditex, “greater store quality also means greater e-commerce results”.
Online commerce, in fact, should be understood as part of a global strategy and not, as is often misconstrued, as a panacea for all ills. Also because, according to the same source, between March and April the sales volumes on the digital channel have gone from -5 to -20% in Europe, from -30 to -40% in the United States and from -15 to -25% in China.
The ‘opinion movement’
By reading the letter of Giorgio Armani to Women’s Wear Daily, considered by most the ‘fashion bible’, the change in the way of making and selling fashion was in the air from last April. For the fashion pioneer, the “decline” started when the luxury segment began adopting the typical fast fashion mode, based on the continuous delivery cycle of new garments and collections. “I find it absurd that in the middle of winter, in boutiques, there are linen clothes and in summer, alpaca coats, for the simple reason that the desire to buy must be satisfied immediately. Who buys clothes to put them in a closet waiting for the right season to wear them?”
The same concepts were also taken up by Alessandro Michele, Gucci’s creative director, who insists: “enough with the multiply of collections every year; and enough also with the lightning-fast life of the garments in the shop, moreover in complete disagreement with the weather season. From now on two collections, ideally presented in October and March, that’s all”.
On the same line of thinking also many other top fashion names, such as Michael Kors who even decided to stay away from the September fashion week in New York. And lastly, but not the least, the position taken a few weeks ago by the Council of Fashion Designers of America and the British Fashion Council with the recommendation to stylists to “focus on no more than two main collections per year”.
What changes will there be?
After these announced intentions, it will now be necessary to await their effective impact on the way of selling fashion and on the balance between the various market players. The typical fashion processes established over the past twenty years, from design to production and to distribution, will inevitably have to be modified taking into account, over and above the ethical and wider sustainability issues, their compatibility with volumes, profitability and operations.
Nonetheless, some effects will already be evident in the short to medium term. The fashion stores will emphasise the importance of the shopping experience, integrated into a single relationship with the customer on the different channels. Personalisation will be more focused, with greater significance given to the technologies useful for supporting it and engaging the customer.
And probably also the typical phenomenon of the last decade will pay the price, as already seen in the United States where about 30 percent of fashion brands have already cancelled their agreements with influencers.
The recovery of competitiveness, volumes and profitability is, today, a problem common to both brands and retailers. Of course, there will be winners, maybe newcomers, and losers, perhaps illustrious, but at least in this, there will be nothing new.