10 key insights of 2021 global fashion

by Zhong Mengxia

At the beginning of the new year， McKinsey & Company and BoF Fashion Business Review jointly released the 2021 Global Fashion Report.

The report pointed out that in 2021， the fashion market is still not optimistic， and a large number of enterprises will go bankrupt， shops will be closed and people will lose their jobs. At the same time， the pandemic will accelerate some pre-crisis trends， such as shifting to digital shopping channels and consumers advocating fairness and justice. Low-priced products and luxury goods will have more opportunities in 2021. The former benefits from consumption degradation in uncertain environment， while the latter benefits from the strong recovery of China and other markets. No matter what the position is， powerful enterprises have the op- portunity to seize more market share， and even hope to take competitors under their command at a low price. In the turbulent and increasingly competitive market environment， all enterprises must be careful in thinking and quickly doing things.

The report is summarized according to 10 major themes：

Coexistence with viruses： 45 percent of fashion executives said that the pandemic will be the biggest challenge in 2021. Fashion enterprises will face an unprecedented turbulent environment in 2021， so they should adjust their operation mode， make decisions more flexibly and quickly， and balance speed and rules in the process of pursuing innovation.

Demands reduction： The sales volume of global fashion industry in 2021 may be 15 percent lower than that in 2019. Due to the rising unemployment rate and increasing inequality， the consumption capacity is reduced， and it is unlikely that the demand in the fashion field will rebound.

Full speed digitalization： 71 percent of fashion industry executives expect their online business to grow by at least 20 percent in 2021. The pandemic has prompted many brands to embrace various digital innovations， such as live broadcast， video service and social shopping. With the increase of online sales rate， fashion enterprises must improve online experience and channel combination.

Pursuing justice： 66 percent of consumers said that if they found that the brand failed to treat employees fairly， they would stop or significantly reduce their consumption of the brand. Consumers are more concerned about the plight of vulnerable workers in the value chain of fashion industry， and consumers hope that enterprises can give more dignity， safety and justice to workers in the fashion industry.

Travel is blocked： 66 percent of fashion industry executives predict that it will take two or three years for tourism retail sales to return to the growth level before the pandemic. In 2021， the international tourism industry is expected to remain at a low point， and tourism shopping will continue to be limited. Therefore， enterprises need to better cater to local consumers， and make strategic investments in some markets with strong recovery， so as to explore new opportunities that can maintain customers shopping desire.

Less is more： 40 percent of executives plan to march into seasonal fashion， joining the growing ranks of brands and designers calling for reshaping the fashion calendar. The pandemic situation proves that more products and series may not bring better performance. Fashion enterprises should focus on demand to formulate commodity mix and classification strategies， simplify the complexity， find ways to improve the full-price selling rate， reduce the inventory level， and introduce new products and replenish goods in the current season more flexibly.

Increased M&A investment： 45 percent of fashion industry executives predict that redistribution of market share will become the key word in 2021. The pandemic has accelerated the polarization of the fashion industry， and the gap between outstanding enterprises and other enterprises has further widened. Some enterprises have gone bankrupt， and it is expected that more enterprises will seize market share through mergers and acquisitions in 2021.

Deepening partnership： 35 percent of fashion industry executives predict that supply chain resilience and partnership will become key issues in 2021. In order to reduce the risk of supply chain breakage in the future， fashion enterprises should say goodbye to simple trading relationship and turn to deeper partnership to improve the agility and reliability of supply chain.

Retail Return on Investment （ROI）： About half of European consumers have reduced their consumption in physical stores since the outbreak blockade was launched. In the post-pandemic era， more shops will be permanently closed， which forces fashion enterprises to rethink their retail stores. Considering the potential power transfer from real estate developers to retailers and the need for seamless digital integration， enterprises need to make difficult choices to improve the return on investment of stores.

Office Revolution： 88 percent of fashion industry executives believe that the mixed office mode will become a new normal in the future. During the pandemic period， the office mode of enterprises has undergone fundamental changes， and with the demand for improving performance in the next few years， a long-term new office mode is expected to emerge. Therefore， enterprises should improve the mixed mode of remote office and local office， increase investment in skills training for employees， and give employees a stronger sense of mission and belonging.