Fashion industry ahead of 2021, prospects, hopes and disappointments

Mc Kinsey analysts believe that in 21 years, the fashion industry will be defined by two trends:

1. - a total drop in production and sales;
2. - the growth of sales on the Internet.

Pandemic, falling production, going online tell manufacturers that you need to change or leave the market. What awaits Ukraine and the world, whether it is possible to survive and grow in crisis - read on the link

The state of the fashion industry 2021, looking for prospects in difficult times

According to Mc Kinsey analysts next year the fashion industry will be defined by two trends:

3. - A total drop in production and sales;
4. - the growth of sales on the Internet.

The pandemic dominates the minds, and with it, CEOs hope for a speedy global recovery, which is not easy under the circumstances. In 2020, the industry showed record low economic profits, business leaders were forced to change, because who did not have time to do it - leave the market.

In this article, we will look at the key trends that allow us to predict the situation for the next 2021.

The fall of the fashion industry and dumping

In 2019, Mc Kinsey index experts noted an increase of 4%.

This has led to a significant increase in the number of large companies that are dumping in the market in order to somehow keep the investment.

Pre-crisis levels of activity are unlikely to return until the third quarter of 2022. The situation is similar in the United States, where sales will fall by 7-12% next year, compared to 2019.

The main mechanism of implementation will continue to be sales on the Internet, which reflects the trend that developed before the crisis.

The latest data shows that in a few months we have moved five years ahead in the use of digital technologies!

The figure is expected to grow by more than 20 percent (30 percent in Europe and the US) in 2021 compared to 2020.

Other progressive trends include the growing influence of local-level campaigns and individualized customer attitudes.

Industry trends

When the world recovers from the COVID-19 pandemic, what ideas will be defining in the fashion business? Industry leaders show that the key forces are now:

Global economy;

2. Optimization and automation of production;
3. Growth in online sales;

Strengthening partnerships;

5. Decline in business investment and falling offline trading;
6. Falling in total volumes, the "less-better" principle.

As decision makers continue to manage uncertainty, those who capture business-shaping trends will be successful. This means modernizing production and focusing on multi-channel online sales. And also what has been said for several years - creating value for the client, building a brand, gathering a loyal audience.

For international companies, this is an increased focus on peripheral markets (for example, ours). They tend to earn income even where they have not previously been active. This is evidenced by dumping and the expansion of online sales.

In Ukraine, those who were able to modernize production will survive and develop, that is, to switch to modern automatic sewing equipment, which significantly reduces the cost of the product.

The quarantine is seeking out the duffel markets. People who master shopping on the Internet even after the pandemic will not want to return to the bazaars to look for clothes there.

The situation with the brand, loyal audience and customer orientation is also important. Let's take an example: the Internet sells 2 tracksuits at almost equal cost, plus or minus the same design and quality.

One of them is a real Nike,thesecond - "nonium." What suit will choose the average buyer?

World-class brands throw away discounted products online because warehouses are full and sales have fallen.

What should small firms do? Automate production and work on the image in the network. To survive you need to create your own brand, and everything related to it (audience, values, philosophy and strategy). There are good examples of Ukrainian brands, local markets are not yet overcrowded.

The second option is not to suffer and immediately close the case.

Let's return to world trends.

Retail is under physical pressure. In the United States alone, between 20,000 and 25,000 stores closed in 2020 alone, more than double the number in 2019. The pandemic exacerbated the segment's problems, and brands embarked on a strategic transformation planned for years, but now implemented in a short time, in just a few months.

For example, Nike has announced an acceleration of its digital strategy and investment in the most promising areas, which it says will lead to job losses in stores and in production.

It said it plans to cut 1,200 stores over two years and invest 2.7 billion euros in online stores.

We see brands rethinking store formats and using data and analytics to predict attendance, manage the range, and create customized, customer-focused offerings. The flagship will be designated as innovation zones to create emotional connections with customers.

Burberry and Nike, as well as digital ARIAS New York are investing in virtual spaces and introducing technologies such as apps and body scanning to create more attractive offerings.

At the same time, we will see a more nuanced estimate of the store's ROI based on a combination of digital and physical factors. Brands will interact even more with social networks to offer customers exclusive content and personalized experiences.

More on industry trends

Strategically, in 2021 there will be a need to actively manage commercial opportunities and clearly choose winning segments, markets and channel combinations. As tourism is in decline, domestic shops will become more important than ever. We also expect growth in mergers and acquisitions as companies take advantage of low valuations and take a stake in peripheral markets.

There is no doubt that 2021 will be a difficult year for many, as the COVID-19 pandemic is on an uncertain trajectory. The challenge for leaders is to find better strategies, knowing that times of change are inherently rich in opportunity. Companies that focus on key trends and reflect a changing consumer landscape are likely to emerge from the crisis stronger.

Let's move on to Ukraine

What we have happening in our country is quite consistent with the world situation, adjusted for domestic realities:

• Almost a complete sales stop;
• Total closure of productions;
• the rise of online commerce;

The situation is more complicated than that in Europe and the Usa, our entrepreneurs have a smaller financial airbag, the quality of products (often) lower, with almost equal, or even higher cost of products.

To survive, the garment companies of Ukraine are trying to frantically master the trade on the Internet and optimize production. Both are expensive and difficult. Manufacturing needs automatic sewing machines that greatly reduce costs and remove dependence on seamstresses. On the Internet, TOP brands yesterday invested millions in promotion, how to compete with them?

Despite the difficulties, there are options, now many entrepreneurs have already learned to work through marketplaces (Rozetka, Prom, Wildberries). With personal sites - a little more difficult, but there are also they.

The problem with our online stores is For example, the company can sew, but do sites, create content and promote goods onthe Internet.

Conclusions

Looking into the future, the basic scenario looks cautiously optimistic for the global fashion industry (and completely pessimistic for Ukrainian business).

Already, the projected sales growth in China is 5-10%, compared to 2019. On the other hand, Europe is recovering more slowly.

What should entrepreneurs of ukraine's garment industry do? First of all - to calculate and decide. If you plan to grow in this niche - to automate and urgently deal with sales on the Internet. Let there be mistakes at first, but all this is an experience that will bear fruit with perseverance.

Based on the analytical article https://www.mckinsey.com/