With the global pandemic still affecting many industries, economic growth, revenue and the job market within the fashion industry have taken a hit since the very beginning of this crisis. The State of Fashion 2020 by Business of Fashion addresses how our current global economic state has led to drastic changes in consumer shifts and the fashion system, and if they’ll be able to bounce back when the dust begins to settle.
Preparing For Recovery: What Companies Are Currently Doing
Global fashion leaders have been trying to adapt and reconfigure their plans in order to keep their businesses in shape. Consumer behavior caused a major shift in the demand for apparel and travel retail, which is a staple revenue-generator for many luxury brands. 2020 is already becoming “the worst year in the history of modern luxury,” as stated by Luca Solca, investment research analyst at Bernstein. The closure of stores and high reliance on pushing products online has not only affected the retail space instantly, but it is expected that businesses will not be “back to normal” when the pandemic slows down.
Business of Fashion states that companies will have to review and revise their operating models and figure out where to cut costs in line with the low state of consumer confidence. The only way through this crisis is speed and adaptability while taking the necessary precautions when stores begin to reopen.
Changes In International Consumer Behavior
The State of Fashion 2020 divides consumer shifts into two main themes: Discount Mindset and Digital Escalation. The global pandemic has caused many companies to double-down and provide deep, unplanned discounts caused by the rise in anti-consumerism, leading customers to turn their heads towards off-price channels in order to trade down retail goods. Around “65% of consumers expect to decrease their spending on apparel, while only 40% expect to decrease their household spending.” (17, The State of Fashion 2020).
The amount of fashion inventory from this season is most likely to spillover from lack of sales, which forces many companies to provide bargain deals in order to decrease their inventory. Along with this is the rampant escalation of online retail as consumers start to expect the same level of customer service from brands they used to once visit in-person. Consumers now expect a higher level of personalization during their online shopping experience, and brands have to keep up with this fast-paced demand. This especially isn't good news for luxury brands, as most of their customers purchase in-store for both the high-quality goods and high-quality shopping experience.
A Lasting Impression: What’s To Come Next?
Fashion brands must rely heavily on innovation to maintain a high level of productivity and keep up with the “new normal.” Covid-19 has pushed brands to think strategically about their current production systems and how to become more efficient. Tech platforms that provide invaluable services to these brands are now crucial to shifting brands into the digital age and helping speed up their innovation timelines to survive and thrive.
Consumer shifts will also serve as a lasting impression as buyers look for more “investment pieces” that allow them to feel more responsible and less wasteful. This new reality serves as a catalyst for the increasing migration to online shopping as consumers become used to this new way of purchasing products.
This global crisis has become a turning point in the fashion industry as many companies try to adjust internally and externally to re-establish their presence in the consumer market. With every notification of upcoming sales from stores people once physically visited, the radical shift in these behaviors illustrates the opportunities of online retail sales and the downfall of standing stores today. The fashion industry may never be the same again, and now is the time to innovate or perhaps fall behind for good.
The State of Fashion 2020, The Business of Fashion - McKinsey & Company