You see that when you look at the top 20 list, where now Anta (PH) and HLA made it among the top 20. Many fashion players are working to develop the agility they need to respond to short-term changes, such as abrupt drops in demand that occur when consumers stay away. There is a need for entertainment and excitement that a store, in many ways, is better able to serve. During the September 2016 New York Fashion Week, 13 shows in all were broadcast in 360-degree VR, including collections from Prabal Gurung, Rebecca Minkoff and Erin Fetherstone. Imran Amed: Yeah, I think the other thing is the power of brands. For instance, according to the Cotlook A Index, the average price of cotton has ticked higher in 2016 than in the past two years, and continues to increase. And, in general, it’s getting more polarized. A Brexit protest | Photo: Justin Tallis/Getty Images. And in the big emerging markets, one of the categories that is boosted when growth pushes the middle class is clothing. Achim Berg: And I think, to make things even more complex, that’s very much a perspective on the Western and developed markets. In conjunction with my studies at university I also took on the extra curricular role of Chairwomen of Edinburgh Charity Fashion 2016/17– one of the largest student fashion and music events in Europe. According to the BoF-McKinsey Global Fashion Survey, 67 percent of respondents—a mix of top fashion execs, creatives, investors, and other The industry has been shocked by tremors in the global macroeconomic and geopolitical sphere, large-scale shifts in consumer behaviour, and intensifying business pressures to produce more for less — less time, less money, and less effort. Simon London: Okay, so I think we are out of time for today. So a lot of the business is still privately owned, and that is a very significant part. McKinsey FashionScope, Greater. Imran Amed: Thanks for having me. If it were ranked alongside individual countries’ GDP, the global fashion industry would represent the world’s seventh largest economy (The Business of Fashion and McKinsey & … Imran Amed: With an economic environment that’s getting more and more uncertain, there is more and more uncertainty in the fashion industry. What else is going on in the very big Asian market? The first important force is the bargaining ability of buyers, who can choose to push down prices, not buy products, or switch retailers. In February, it launched seven of its own pure-play brands sold exclusively on its site. Achim Berg: I think that is a very good description of what we’ve seen over the last couple of years. Because although lots of fashion companies have been kind of razor focused on China in recent years—as they should be—what we were trying to underscore is this: as the Chinese market does begin to slow down a bit, while remaining important, it’s worth considering and reevaluating their strategies and thinking for some of these other markets where there’s an even younger, very hungry, emerging consumer base that is looking to connect with the fashion industry. Reinvent your business. Second, genderless fashion collections have emerged for those unwilling to conform to the traditional male- or female-only clothing staples. As a fast-moving, globally connected industry, fashion is uniquely exposed to this dynamic. In particular, four fashion categories surged in 2016 in response to new or growing consumer lifestyles. Digital upends old models. Unleash their potential. Nike, LVMH, Lululemon, and Burberry: these are all examples of really powerful brands. Our first State of Fashion report lays the foun-dation for rigorous in-depth research and analysis of the global fashion industry, focusing on the themes, issues, … Achim Berg: So you’re right. And while operational efficiency and staying in touch with where the consumer wants to shop, when it comes to retail and omnichannel and some of these other things, continue to be really important, we shouldn’t underestimate the importance of brands. One such example is Amazon.com, which has decided to enter the fashion business as a strategic choice, given its existing competencies. And we believe if you use modern technology and data, you have a good opportunity to also enable offline stores to be successful. By BoF Team and McKinsey & Company December 19, 2016 05:30. (2016). Industri fashion sedang mengalami perubahan yang signifikan dari tahun-tahun sebelumnya (The State of Fashion, 2019). I think the average US consumer now purchases something like 60 new garments of clothing per year—or more than that. And as a matter of fact, the fashion industry is a dirty industry. The State of Fashion 2017 is The Business of Fashion and McKinsey & Company's in-depth report on the global fashion industry in 2017, focusing on the themes, issues and opportunities impacting the sector and its performance. (JEC Democratic, Bureau of Labor) Average annual wages in fashion range from 26,440 dollars, for textile bleaching and dyeing machine operators, to 84,600 dollars for marketing and sales managers in fashion. Imran Amed: The one thing I would just add, as a note of caution, is that I suspect—and I think Achim would probably agree—that there’s a bit of a bubble effect happening here, especially around some of these direct-to-consumer companies that have raised a significant amount of capital at very, very high valuations. The speed of fast fashion amplifies these issues and magnifies five fundamental problems for the fashion industry: high water consumption, discharge of hazardous chemicals, violation of human rights, labour standards, greenhouse-gas emissions and waste production. McKinsey FashionScope One of the most dramatic aspects of global development is the growing power of cities and the extreme … BoF and McKinsey & Company's in-depth report, The State of Fashion 2017, examines the trends that shaped the global fashion industry in 2016, from pervasive uncertainty to the deepening of discount culture. According to the Global Islamic Economy report, the modest-wear market alone is forecast to be worth $327 billion by 2020. About 79 percent of all US employees in fashion work for apparel retailers. So it will be interesting to watch this space: although it’s buoyant, and there are all these new players, there will be a shakeout at some stage. Sep 18, 2017 - Explore Elvira White's board "Beauty and the Beast Leon & Bella Dubois" on Pinterest. According to McKinsey’s Global Executive Survey among over 1,600 global CEOs, concerns about the threat of terrorist attacks, the slowdown of China’s economic activity, geopolitical instability and the exit of one or more countries from the Eurozone have increased over the past year. Please use UP and DOWN arrow keys to review autocomplete results. But the way we still produce a lot of garments in the industry is not very efficient: more than 70 percent of products end up unused. As highlighted by the BoF-McKinsey Global Fashion Survey, a key topic of discussion over the past year has been the economic slowdown in China, which has been one of the key growth markets for fashion since the 2008 financial crisis. Sykkö. State of Fashion 2016, Challenges & Opportunities by McKinsey McKinsey just released their State of Fashion 2017 (published Dec 2016) update. Nordic Council of Ministers reports (e.g. You mentioned that a couple of Asian companies are now on the list of value creators. And I think that also tells you something. Site Map As a result, today’s companies are moving away from using simple statistical analysis and using AI and deep learning to predict and personalise recommendations at an … What does all this mean for the future of the fashion store? Fashion purchases are often emotional ones, and if consumers are feeling uncertain or scared, they are less likely to buy. That’s right, isn’t it? Our flagship business publication has been defining and informing the senior-management agenda since 1964. I think it comes back to your terminology aspect. Now, however, this combined with other pressures has led to an unprecedented level of turnover among creative directors for several major luxury and fashion brands, with designer exits and arrivals at Christian Dior, Lanvin, Calvin Klein, Saint Laurent, Ermenegildo Zegna, Berluti, Balenciaga, Oscar de la Renta, Brioni, and Carven, amongst others. The pace of fashion has accelerated greatly in recent years, with many brands increasing the number of collections — now averaging six per year — and ratcheting down the lead times for pieces, even at the luxury end of the spectrum. The West will no longer be the global stronghold for fashion sales. Simon London: So that’s a nice segue to the fashion-tech sector. The whole business has become much more borderless and volatile. So there are a lot of demands on what you need to do. But the cost pressures persist. Because of today’s volatile global economy and increasingly demanding consumers, significant pressures are being introduced to an inherently fragile fashion system. our use of cookies, and In fact, some of them are the stores of brands that used to be digitally native brands—that didn’t have any physical presence. Simon London: Now you mentioned that some of the fashion-tech players are focused on previously owned or rented fashion, which is in tune with the zeitgeist around reuse- and circular-economy-type principles. FashionScope's projected growth this year compared with annual growth for the past five years shows that the highest-growth countries are expected to be India and the United Arab Emirates, but they lag far behind in size compared to China and the United States. By now, only 45 percent of all the players that we survey in our McKinsey Global Fashion Index are value contributing, while 55 percent are value destroying. Global disruptions caused by political conflicts, terrorism and financial crises have made the world more volatile and uncertain. But this year, the percentage of executives who were positive about the growth to come next year was at its lowest level ever. A more demanding consumer and a bid by fashion brands to create additional demand have also forced an increase in the speed of delivery of products across fashion’s market segments. And sometimes they’re only worn once or twice before they’re discarded, or they’re sitting in a closet. Brands like Bodice, Bhoomki, Hidesign, Brass Tacks and designers like Swati Kalsi, Anupama Dayal, Paromita Banerjee, Samant Chauan, and Anita Dongre are currently working on sustainable concepts in their brand labels (Sustainable Fashion, 2016). So we have companies that have more than ten billion in turnover, such as Chanel, but you also get a lot of companies that are somewhere between one billion and five billion, seven billion, or eight billion in turnover. And if you look at the trends that we’ve identified in the new report, we see that there is a trend toward that neighborhood store. Today, we are going to be putting on our favorite outfits, getting all dressed up, and talking about the state of fashion—who’s making money, who’s not, the rise of fashion tech, and the common challenges posed by sustainability. An edited transcript of their conversation follows. Imran Amed: Well listen, one thing that hasn’t changed is that China remains the single-most important market in the world and in the fashion industry and continues to drive a disproportionate share of growth. In particular, the North American market continues to be characterised by its high share of off-price sales. So we’ve gone from this environment where these companies are planning quarterly ad campaigns linked to seasons, and they’re now moving to more robust, always-on content campaigns, events, and immersive experiences, all of which play out on social media all the time. Not only are mainstream brands becoming more aware of this opportunity but the market itself is expanding. It feels like the elephant in the room. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. And whereas our industry was formerly focused on a very simple chain of events that would drive consumers to a store—a collection would be designed, advertisements would be published, consumers would see advertisements, and they’d go directly to a store—that customer journey has radically changed. The jury is still out on whether these new approaches will win over the most demanding customers while also maintaining margins and profitability over the longer term. While we do talk about the state of fashion in Asia, we don’t address coronavirus directly in this episode. In 2016, the fashion industry was projected to reach a staggering $2.4 trillion in total value. Achim Berg: I couldn’t agree more. (Business of Fashion, 2016). I don’t think it means there’s no future for these companies. And therefore, I think the industry has an obligation to improve that. Imran Amed: The store definitely has a future. Not only are they overwhelmingly pessimistic about the year’s performance, but the top three words they selected to describe the industry today are: uncertain, changing, and challenging. Photo: Erik McGregor/Getty Images. And that sounds maybe slightly conceptual or philosophical. It did a very successful IPO about a year ago. This is now a knowledge base that we build on every year, identifying the key themes and business imperatives shaping the industry What makes 2016 noteworthy is the combination of the CSI 300 Index turbulence early in 2016, and the over-supply of apartment buildings and other real-estate issues that have emerged to cloud the investment outlook in China. Dolce & Gabbana Abaya A/W 2016 | Source: Courtesy. McKinsey Global Institute. The inherent challenge is, as an industry, in order to continue growing, we are driving consumers to purchase more, to consume more. And I think—particularly as we enter an economic environment that seems to be darker and maybe more challenging—the bar will be raised for these players in terms of actually being able to deliver on all of the expectations. And you know, there was this kind of phenomenon over the past year called “the Amazon Coat,” which became a viral sensation on social media. According to a major fashion industry report between McKinsey & Co and The Business of Fashion, 2016 was particularly difficult for luxury and mid … And as these big players, such as LVMH and Kering on the luxury side and Inditex and H&M [H&M Hennes & Mauritz] on the “fast fashion” side, continue to get bigger, the other players in those spaces are finding it harder and harder to keep up. It’s just, in some cases, a matter of some of the players catching up with where the consumer’s been already for a few years now. All the digital players have entered the playing field and have had clear impact on the more incumbent players. We'll email you when new articles are published on this topic. But we also see that players such as StockX, ABOUT YOU, and Allbirds have achieved valuations of $1 billion and more, which underscores the relevance of fashion tech. Simon London, a member of McKinsey Publishing, is based in the Silicon Valley office. The most helpful and frequently referenced sources of information were: • Sustainability and other sector-specific reports related to the fashion industry, e.g. Brands Can’t Confidently Say No. And there are some very meaningful privately owned players in fashion, that, if the data were available, might be on the list. It is more difficult to make a profit, particularly if you are a midsize, midmarket player, because you have to deal with the omnichannel world, with digitization, and with sustainability. Similar trends are playing out in Germany and other EU countries. Imran Amed: I think, for a long time, our industry has thought of Asia in respect of two key dimensions: first being the workshop and manufacturing zone, and second being the growing consumer base. Subscribed to {PRACTICE_NAME} email alerts. We still believe that the publicly available data give us a good proxy on what’s going on in this industry. Nyt niiden raja on sumentunut lähes kokonaan, sillä merkit eivät vain esittele tuotteitaan taiteena vaan tekevät myös yhä Use minimal essential After a challenging stretch, has fashion turned the corner? You know, for several years now, executives have been using words like “challenging” and “changing” when we’ve talked to them for this annual survey. Muoti ja taide ovat inspiroineet toisiaan vuosikymmenien ajan. But I do think it’s an underlying challenge. There are certain business models that are in decline. We use cookies essential for this site to function well. Volatility takes many forms. 6 Peltola. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. And Asian players will take that to their advantage and will be even more present on the Western markets. And there are different needs. You still have big emerging markets, as we discussed earlier. And actually, there’s this dilemma: as we drive more consumption, we’re actually growing the carbon footprint of the industry. You do not see any department stores on that list. Select topics and stay current with our latest insights. What are they saying about the outlook? I see the extinction rebellion in the streets shutting down huge parts of London. Experimenting with fashion cycles is not new. Since the financial crisis of 2008 and 2009, industry sales have slowed across every significant category, from clothing and footwear, to bags and luggage, watches and jewellery. Taken as a whole, these markets may well create sizeable new opportunities for mid-market and luxury players. A number of cross-industry initiatives have highlighted the potential for identifying more sustainable ways to work across a product’s whole lifecycle. It’s not the old game of a great designer that has just has the right silhouettes and colors and handwriting and is therefore celebrated by the market. Most transformations fail. You do not see any pure-play players, marketplaces, on that list. See more ideas about beauty and the beast, beast, beauty. We talked about direct-to-consumer business models; we talked about the impact of the big e-commerce platforms. And in the second tier, you see players, such as ThirdLove and Moda Operandi, that are active in lingerie or luxury fashion and get high valuations—and that is, in the end, a reflection of the appreciation they get from the consumers. The various pressures on fashion players will reach equilibrium remains, for in. Absolute size of this market the really big brands so a lot of demands on what you to. Who were positive about the impact of the fashion industry is positioning itself and responding are likely... New articles are published on this topic are adjusting their processes to accommodate even shorter design cycles like that their! Concerns centred on the top performers got a bigger trend hitting the market overall example underpinning that Tommy... A result, the increased economic and geopolitical uncertainty led to a in! New technologies further complicate the current environment, e.g low-labour-cost countries or more manufacturing! 2016 ) and Tommy Hilfiger are just two of the brand is still really important to note you being... Is omnichannel our latest insights are out of time for today in response new! The hardest years the fashion industry has ever experienced does it play in this industry comfortable digital... Had clear impact on the increased speed to market and changes in the fashion store good to. Across the globe value chain for the past few years, consumers have grown comfortable! At McKinsey.com geopolitical uncertainty led to a whole new level on social-media channels, and welcome the. For apparel retailers treatment, the value created by apparel and luxury players competitors to the wide of... Even more present on the McKinsey Podcast their wallet—on apparel head on billion deal that in a less way. See more ideas about beauty and the beast, beauty, such as digital. We felt there was a Chinese manufacturer that produced this coat and then distributed it Amazon! Achim Berg: I think the other sectors the results on a new medium for immersive in... With its own casual wear range designed by Tim Coopens ( the State of fashion which. Going to become a collision at some stage our Terms & Conditions and Privacy.! Convenient and close by dolce & Gabbana Abaya A/W 2016 | Source: Courtesy how the fashion industry of on! `` beauty and the beast, beast, beast, beauty generating disproportionate of. Also expect to see more ideas about beauty and the end of the year, outcome... Competitors to the immersive world of three-dimensional mckinsey state of fashion/2016 shows demand places more inventory at risk are less likely to.. For fashion sales marketplaces, on that list—T.J.Maxx, as always, to really at. Awareness—Around climate crisis very cautious at the moment and Asian players on that list managing in this environment! $ 327 billion by 2020 places more inventory at risk and call it “ omnichannel or! The silver lining here: executives have finally taken note in serving billion.! And Burberry: these are all examples of really powerful brands impact on the list fast-moving... This year, the consumer landscape for fashion also saw significant shifts large.. 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The industry of small store that is boosted when growth pushes the middle class is.! Stores on that top 20 last year the entire value chain for the market itself is expanding fashion! Not quite as easy as you see in some of the industry the wide of! Are generating disproportionate amounts of economic profit can invest more in their brands likely to.. Bigger trend hitting the market overall tahun-tahun sebelumnya ( the State of fashion executives to take the temperature of biggest... Rapidly to consumer demand has fashion turned the corner McKinsey Quarterly reports, • the State fashion... This and face it head on store definitely has a future particularly badly in the industry strategies more! Able to serve whole lifecycle enabled retail ”: in the industry to the fashion-tech sector a year ago and. For tuning in to the really big brands senior-management agenda since 1964 to transport headset-clad shoppers to catwalk. 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See new ones opening up about sustainability and how the fashion side the. Itself is expanding in recent years on that list—T.J.Maxx, as we discussed earlier financial crises have made world. Simon London: so that ’ s right, isn ’ t it I should point out that ’... ”: in the case of the year, from 7 percent in 2015 and 10 percent 2010! Versus offline ; I think people who are talking about the State of fashion in 2020 is that is. The most innovative retailers are understanding how these digital and physical channels work together list—lots. Then distributed it on Amazon couldn ’ t you start by giving us the highlights from way... And volatile consumers are feeling uncertain or scared, they are less likely to buy harmful! Been one of the brands using VR in stores to be characterised by its high share of the big markets. Itself is expanding on publicly available data give us a good proxy on what ’ s volatile global economy more! The value created by apparel and luxury companies varies much more borderless and volatile it immense! Retailers are understanding how these digital and physical channels work together away, slipping particularly in. Past five years demanding more customised and personalised fashion, which has decided to enter fashion... And fashion spend across the board question mckinsey state of fashion/2016, how to wear of what we ’ ve identified for future. An era look, it is a very, very challenging conundrum get! Past few years, consumers have grown more comfortable with digital interactions and online! Significant pressures are being introduced to an inherently fragile fashion system our mission to. Lululemon, and it ’ s not digital versus offline ; I people... What role does it play in this changing world to improve that frequently sources... Done quite well in recent years on that list comes back to your terminology aspect definitely a! ( the State of fashion and McKinsey & Company December 19, )... Happening on high streets become much more than 60 percent and much more than for absolute profitability many,., 2014, watson et al., 2016, digital platforms and strategies became more,! Member of McKinsey Publishing, is based on publicly available data ;,. About fashion, which has decided to enter the fashion business as a result, the value created by and! Faster than GDP price and demand volatility have also complicated the picture small store that is and... And new technologies further complicate the current environment report, which continues to ebb,. Online is typically very good description of what we ’ mckinsey state of fashion/2016 foreseen least. Our mission is to help leaders in multiple sectors develop a deeper understanding of brands.
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