by MIKE CHAIKEN
COVID-19 pushed forward more forcefully changes already underway in the fashion industry. The pandemic also has put the industry in a financial nose dive that will take years to resolve.
In a March webinar, Nick Blunden, CEO and president of The Business of Fashion, reviewed his organization’s fifth report on “The State of Fashion.” The lengthy report was prepared by BOF in cooperation with McKinsey and Co.
The pandemic “disrupted every aspect of the (fashion) industry,” said Blunden. Due to COVID-19, Blunden said the industry will have no choice but to accept there is a diminished consumer interest in fashion.
The report lists several “key takeaways” about the future of fashion, said Blunden.
First of all, Blunden said the pandemic has amplified the call by consumers to make fashion more sustainable.
Forced with a global health crisis, consumers also have become more aware of the environmental damage inflicted by fast fashion.
Additionally, Blunden said, consumers want the industry to be more ethical in how fashion is produced — another dimension of the move toward sustainability. Consumers want to see justice in the supply chain, said Blunden. Shoppers want to know how well companies treat their retail employees, suppliers and the employees of suppliers.
Consumers are looking to hold fashion companies accountable for their business practices, said Blunden. Consumers want to spend money with companies that share their values, he said.
“This is a good thing… and long overdue… (The pandemic) also represents an opportunity to take positive steps toward improving business practices,” said Blunden.
Consumers already had been shifting away from shopping at brick and mortar retail stores in favor of digital platforms, said Blunden. However, citing another key takeaway from “The State of Fashion” report, Blunden said the pandemic accelerated that move as consumers faced closed stores during the lockdown. Due to COVID, e-commerce became the only alternative for shoppers. Blunden called the change a “digital sprint.”
As more people work from home, Blunden said there also has been an increased demand for casualwear at the expense of formalwear. Again, he said, there already had been a shift in the marketplace but COVID “significantly accelerated” the change in preference.
For the fashion industry, Blunden said, “the crisis due to COVID is likely to continue for some time.”
Sales will not return to 2019 levels until late 2023 because of the slow pace of vaccination across the globe. “It’s still a significant challenge.”
Right now, Blunden said 57% of stock listed companies are losing money. Companies like Nieman Marcus and J.C. Penney have declared bankruptcy. “(The number of bankruptcies) will get worse.”
Profits have dropped 90% across the industry, compared to 2019, Blunden said. This is an “historic drop.”
Blunden said global sales in the fashion industry fell between 20 to 25%. “We’ve never seen anything like that.”
The United States’ fashion industry was hit hardest by the pandemic with a 23% drop in fashion sales; Europe dropped 20%, said Blunden. China, which was the first nation severely hampered by the virus, only saw a 7% drop in fashion sales.
Blunden said there will be sales growth in 2021, but it will be well below 2019 numbers.
The U.S. market is expected to perform significantly better in 2021 compared to 2020, with a 6 to 16% dip compared to 2019. Sales in Europe, however, will be significantly worse because it is still experiencing significant lockdowns and store closures.
China will be the source of “good news” in the fashion industry with sales expected to exceed 2019 numbers, said Blunden.
Of the segments in the industry, Blunden said luxury items, footwear and beauty care will recover their sales figures the quickest. The discount clothing market also will have a quick recovery.
The mid-market items will be slower to recover their sales levels because there is a large inventory due to the pandemic, said Blunden.