In 2021, the gap between fashion’s winners and losers is set to widen even further, creating the conditions for a wave of consolidation in the industry, according to a joint report by consultancy McKinsey and trade publication Business of Fashion (BoF).
Companies with healthy balance sheets will be on the lookout for smaller upstarts and floundering rivals they can scoop up. At the same time, shoppers are expected to spend less on clothing, while companies plan to trim their product ranges to reduce the complexity of their operations and focus on what they feel certain they can sell. In various ways, the industry as a whole is poised to shrink.
It won’t be an easy year. Even though much of the industry started to recover from the first round of global lockdowns more quickly than McKinsey expected and vaccines are now beginning to roll out in several countries, new cases of Covid-19 are spiking in different regions and it will be some time before populations develop immunity widespread enough for life to return to normal. Much of the global economy will see diminished growth. With uncertainty lingering and spending power down, demand for clothes among shoppers is likely to fall.
McKinsey predicts sales across the fashion industry in 2021 will be as much as 15% below 2019 levels. What’s more, it forecasts the industry won’t see a full recovery until the third quarter of 2022 at the earliest. If Covid-19 proves more difficult to get under control than