Coronavirus: Global fashion industry set to contract 30 per cent this year
The global fashion industry is set to contract by up to 30 per cent this year due to the coronavirus outbreak, according to the latest research.
The luxury personal goods sector, including jewellery, watches and beauty products, is set to shrink by 35 to 39 per cent.
Eight out of 10 listed fashion companies in Europe and North America are predicted to be in financial distress if store closures continue beyond two months, which is likely to lead to bankruptcies over the next year.
The research by McKinsey & Company and the Business of Fashion found that 30 per cent of respondents to the survey thought their company’s planning for post-pandemic recovery is ineffective.
Meanwhile, the report forecast that the crisis could lead toa surge in consolidation and merger and acquisition activity.
“The coronavirus crisis has accelerated the wave of consolidation happening in the fashion industry in a major way,” said Achim Berg, global leader of the apparel, fashion and luxury at McKinsey and Company.
“Due to the interdependence of the industry and the severity of the crisis, we expect the impact on fashion companies to be long-term in nature.
“But the crisis also offers fashion the opportunity to redesign the industry’s value chain and to focus on the values by which we measure our actions.”