What levels of discounting will be required to get rid of this overstock? Reasons cited include the broad-based move from offline to online channels, where margins tend to be thinner and distribution costs are higher, partly driven by high returns. Business of Fashion has teamed up with McKinsey Global Fashion Index (MGFI) on The State of Fashion 2020, a report predicting industry challenges in the coming year. McKinsey Global Fashion Index (MGFI) forecasts growth of 3.5 to 4.5 percent for 2019, slightly below 2018 growth, predicted at 4 to 5 percent. TRENDING ON BoF. Prefacing the tough year ahead, the report notes that according to McKinsey Global Fashion Index analysis, the fashion industry is expected to … However, value and discount retailers are also predicted to see continued growth. Fashion is one of the past decade’s rare economic success stories. In past editions of this report that fashion is a winner-takes-all industry. 91 McKinsey Global Fashion Index The squeezed premium/bridge and mid-market players drove nearly 80 percent of the absolute decline in industry economic profit between 2010 and 2016. The West will no longer be the global stronghold for fashion sales. Transparency does not equal sustainability. Much will depend on their digital and analytics capabilities. It is useful to view the industry’s potential future through four separate lenses, each of which offer a perspective on the most important drivers of growth and key topics covered in this report. Developed by Marketo Services, Our intelligent team curate fresh news & updates to entertain our valued audience. And this was not just part of an overall stock market trend: between 2008 and 2017, fashion sector equity returns have beaten both the S&P 500 and MSCI world indices. Never miss an opportunity again. With value creation always our primary goal, we tailor the integration approach and pace to each client’s unique needs, assessing and aligning organizational compatibility to minimize any potential pain points along the way. The latest reading of the McKinsey Global Fashion Index (MGFI), meanwhile, reveals new insights into fashion-company performance by category, segment, and region. We expect margins in aggregate to remain steady through 2019, despite caution among industry players. We use a multiphased approach—from diagnosis to implementation—to help clients make their sourcing decisions, increase end-to-end productivity of value chains, build strategic supplier partnerships, and integrate sustainability into their practices. Outstanding performers included handbag and luggage makers and own-brand multi-category players. That’s why transparency is essential. Two of three new entrants to an exclusive club of 20 high performing fashion companies are Chinese, according to the 2020 edition of The State of Fashion report released today by BoF and McKinsey. 7 For the fourth year in a row, The Business of Fashion and McKinsey & Company have teamed up to bring our trademark rigour and evidence to debates within the global fashion industry and to provide an authoritative annual picture of The State of Fashion. Still, polarization has clearly not gone away and scale continues to matter. Together, we publish the annual State of Fashion report that offers an in-depth look at the leading global trends for the coming year, provides an update on industry sentiment based on the BoF–McKinsey Global Fashion Survey, and contains the McKinsey Global Fashion Index—a metric that estimates industry sales and tracks operating profit and economic-value creation. Over that period, the industry has grown at 5.5 percent annually, according to the McKinsey Global Fashion Index, to now be worth an estimated $2.4 trillion. 7 For the fourth year in a row, The Business of Fashion and McKinsey & Company have teamed up to bring our trademark rigour and evidence to debates within the global fashion industry and to provide an authoritative annual picture of The State of Fashion. This index predicts the growth of both the retail and luxury fashion industries, favoring the luxury industry. Source: McKinsey Global Fashion Index (MGFI); expert estimations; McKinsey & Company Consumer Pulse. Long-term leaders include, among others, Nike, LVMH and Inditex, which have more than doubled their economic profit over the past ten years — according to MGFI estimates each racked up more than $2 billion in economic profit in 2017. So what unites them? But the rebound is not being felt evenly across the globe. Companies big and small, successful and struggling, streamlined operations in order to account for the sudden dip in sales. The McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 to 4.5 percent. Insight on The Massive Growth of Textile Global... H&M Group and Renewcell expand partnership in... H&M HOME to collaborate with renowned fashion... Marks & Spencer Partners with Optitex and First... Levi’s aims to hit 70-80% of its pre-COVID... Levi Strauss & Co. Our pioneering expertise and global network enable our Apparel, Fashion & Luxury clients to drive change and flourish in a fast-moving and unpredictable industry. The McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 to 4.5 percent. Similar to last year, we expect sportswear to continue its recent winning performance, boosted by strong demand from younger cohorts. McKinsey: Participants in this virtual roundtable have asked us a lot about discounting. But the rebound is not being felt evenly across the globe. These are the facilities that do the cutting, sewing and finishing of garments in the final stages of production. Premium/bridge and mid-market players are most likely to struggle, in the face of strong competition from value/ discount players and increasing market saturation. Investors recognized this strong performance, driving share valuations to an all-time high. For fashion players, 2019 will be a year of awakening. The majority of executives in the remaining Their average top-line growth is four times higher than that of other fashion players, but this tends to translate only into valuation multiples (twice as high as average) while profitability still lags behind. Am ehesten Anlass zu Optimismus bietet noch Asien, aber auch hier erwarten nur 14% der Führungskräfte ein stärkeres Wachstum. We predict industry growth of 3.5 to 4.5 percent in 2019, slightly below our 4 to 5 percent estimate for 2018, when the industry was bouncing back from a relatively weak period. These “super winners” now account for 97 percent of economic profit, compared with 70 percent in 2010: this suggests they are increasingly dominating the global value pool. Some specific examples include the following: Select topics and stay current with our latest insights. Please click "Accept" to help us improve its usefulness with additional cookies. Flip the odds. In apparel, the rising sustainability movement may be a slowing factor in some markets, but the impact will probably be offset by growth in emerging markets. According to the report, the global fashion market is dominated by 20 companies which account for 97 per cent of global economic profit in the retail sector. These companies own some of the biggest and best-known brands in the business. The overall impact will be slightly less robust global industry growth than in 2018. Sorry, we couldn't find any results. The McKinsey Global Fashion Index (MGFI) forecasts that global fashion industry growth will slow further — down to 3 to 4 percent — slightly below predicted growth for 2019. This polarization has led to an even smaller group of “super winners.” In fact, over the long term taking the top 20 companies as a sub-group, there was a widening disparity with the remaining companies encompassed in the top 20 percent. Which fashion brands and retailers are the most shopped and visited and which attract the most positive sentiment among their customers? Combined with the McKinsey Global Fashion Index (MGFI) analysis, which found that 56 percent of global fashion companies were not earning their cost of capital in 2018, we expect a large number of global fashion companies to go bankrupt in the … This index predicts the growth of both the retail and luxury fashion industries, favoring the luxury industry. Unleash their potential. Looking ahead to 2019, we see many opportunities for the fashion industry — but also many risks. The interconnectedness of the industry is making it harder for businesses to plan ahead. This includes omnichannel readiness, inventory visibility, redesigning of the physical flow of goods from suppliers to consumers, demand forecasting, and order management. Since 2017, we have partnered with the media company. We see Latin America (in particular Brazil), Middle East and Africa and Russia experiencing more economic and political challenges that are likely to dampen their consumer spending. 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