The interconnectedness of the industry is making it harder for businesses to plan ahead. With an estimated value in 2016 of $2400 billion by the McKinsey Global Fashion Index, the fashion industry is the second most polluting industry after the oil industry. The West will no longer be the global stronghold for fashion sales. By segment, we also continue to see polarization, with luxury and value advancing and mid-market players falling behind. 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. 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. The ones who will succeed will have to come to terms with the fact that in the new paradigm that is taking shape around them, some of the old rules simply don’t work. 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. Notably, online players have yet to break into the elite group, with only two players in the top 20 percent and none in the absolute top 20. Much will depend on their digital and analytics capabilities. Twelve of the top 20 have been a member of the group for the last decade. 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. Press enter to select and open the results on a new page. 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. Respondents to the BoF-McKinsey executive survey revealed that 55 percent of fashion executives foresee a slowdown in 2020 and only 9 percent believe conditions will improve. While a subset of companies continues to account for the majority of economic profit, the number of “value-destroying” companies (i.e., companies generating negative economic profit) has almost doubled between 2010 and 2017. “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 next 12 to 18 months,” McKinsey warned. Try removing some filters. 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. But the rebound is not being felt evenly across the globe. These companies own some of the biggest and best-known brands in the business. For fashion players, 2019 will be a year of awakening. distress. Nossa análise de “vencedores e perdedores” realizada no McKinsey Global Fashion Index pode servir como inspiração adicional para tomar medidas em relação à eficiência. ever before. 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. 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. Our partnerships with leading IT companies help to optimize and accelerate clients’ processes from planning through distribution to better manage costs and inventory along the way. Today, the Global Fashion Agenda (GFA), an industry-leading non-profit advocating for public-private cooperation on sustainability in fashion, released a … For many in the fashion industry, the glass is half empty. 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. To everyone in the … The interconnectedness of the industry is making it harder for businesses to plan ahead. Notably, the top 20 group of companies has remained stable over time. McKinsey Global Fashion Index. 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. cookies. So, what’s fuelling the fast fashion boom? The McKinsey Global Fashion Index forecasts that revenue growth throughout the industry will slow to 3 to 4 percent, which is slightly below the predicted growth for 2019. For the first time this year, they took a closer look at the drivers of economic success in the sector. Our survey of 290 global fashion executives and interviews with thought leaders and pioneers have helped us identify ten key themes that will set the agenda in the year ahead. In fact, 2017 signals the end of an era. People create and sustain change. Given the ongoing uncertainty, our predictions for industry performance next year are focused on two scenarios. A darkening mood. COVID-19 has sent shockwaves through the fashion industry’s global sourcing and production operations. For fashion players, 2019 will be a year of awakening. The report includes the third readout of our industry benchmark, the McKinsey Global Fashion Index. Similar to last year, we expect sportswear to continue its recent winning performance, boosted by strong demand from younger cohorts. What levels of discounting will be required to get rid of this overstock? 89 How a Group of High Performers Drive Value Creation in the Industry The McKinsey Global Fashion Index gives a birds-eye view of the fashion industry, uniquely tracking financial development and value creation through economic profit. Please click "Accept" to help us improve its usefulness with additional cookies. We cocreate digital strategies with clients through workshops—tapping into our proprietary solutions and tools—that help to identify where the value is, design pilots, and build a digital road map for implementation. This database of more than 500 companies allows us to analyze and compare the performance of individual companies with their peers, by category, … McKinsey Global Fashion Index. We assess international growth potential through initial market screening, creation and selection of a value proposition, development of a detailed market-entry plan, and design of the regional country organization. The interconnectedness of the industry is making it harder for businesses to plan ahead. Fashion retailing traffic and increase sales 1,000 retailers around the world as soon as it leaves the stage of! But it’s not as if shopping halted altogether. Home » Fashion Industry » Global Fashion Index. We then bolster this with our survey of over 290 global fashion executives (more than ever before) and interviews with thought leaders and pioneers. McKinsey: Participants in this virtual roundtable have asked us a lot about discounting. Announces Senior Leadership... TRANSFORM traditionally managed companies to... Distinguishing factors between traditionally managed... Face shields for COVID-19 infection control. The interconnectedness of the industry is Reliance on e-commerce platforms Even though prominent use of online platforms continues to increase within the mainstream fashion industry, smaller brands and retailers have remained sceptical about adopting such strategies. reveals their immediate response to the crisis and details strategies to reshape sourcing for a demand-driven, sustainable future. But we are now detecting glimmers of hope: executives report optimism (even amid uncertainty), and the McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 and 4.5 percent. Some specific examples include the following: Select topics and stay current with our latest insights. A darkening mood. 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, McKinsey expects a large number of global fashion companies to go bankrupt in the next 12 to 18 months. The most resilient winners included luxury, sportswear and fast fashion players, reinforcing the point that brand investment and operational efficiency are key drivers of sustainable business models. The government is planning to relax the rules on theRead more, Garments Manufacturers in Bangladesh again urged toRead more, BGMEA’s observations on the concerns of AccordRead more, 2nd wave of Covid: BGMEA President calls for policyRead more, Insight on The Massive Growth of Textile Global MarketRead more, BGMEA President calls for FDI in light engineeringRead more, Global apparel products slipped 7.92% in 2015, Korea – Next relocation ideal for Bangladesh. 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. It is a fascinating list; it’s also a diverse list—lots of different types of companies in there. Our pioneering expertise and global network enable our Apparel, Fashion & Luxury clients to drive change and flourish in a fast-moving and unpredictable industry. 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. The report speculates that to be successful in the new year, apparel retailers need to think ‘outside-the-clothes’ and create an online persona that is AI-driven and socially relevant. Unleash their potential. We use cookies essential for this site to function well. Since 2017, we have partnered with the media company. Our global network of experts works with proprietary solutions and tools, such as. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. A survey of fashion sourcing executives reveals their immediate response to the crisis, and details strategies to reshape sourcing for a demand-driven, sustainable future. The sector would be responsible for 10% of CO2 emissions, of the annual slaughter of 70 million trees for the production of artificial fibers such as viscose, rayon or lyocell. The global fashion market is dominated by 20 companies, according to new research from management consultancy firm McKinsey & Company. Most transformations fail. 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. But interestingly, it predicts the best-performing segment to be luxury, fuelled by fast-growing Asia-Pacific economies. We have done some analyses based on the MGFI (McKinsey Global Fashion Index) that show there will be around EUR 35 billion to 45 billion in overstock from the spring/summer 2020 season. The report also includes the fourth readout of our industry benchmark, the McKinsey Global Fashion Index (MGFI): its extensive database of companies allows us to analyse and compare the performance of individual companies against their peers, by category, segment or region. Through digitizing processes and consumer-data analysis, we apply insights to merchandising and right-sizing of assortments to ensure consumer centricity is top of mind. our use of cookies, and To do this, we tap into our network of global sourcing centers, We begin by setting the right strategy in place, targeting sources of commercial and operational value as well as nonfinancial drivers that serve as indicators of future performance. Consumers, stuck at home worrying about their Investors recognized this strong performance, driving share valuations to an all-time high. During this time, their EBITA margins have been eroded by rising selling, general & administrative expenses (SG&A). 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. Outstanding performers included handbag and luggage makers and own-brand multi-category players. Share Comment. Fashion is one of the past decade’s rare economic success stories. Our pricing approach is grounded in both our extensive apparel experience along with our application of repeatable analytics. However, value and discount retailers are also predicted to see continued growth. The overall impact will be slightly less robust global industry growth than in 2018. Fashion is one of the past decade’s rare economic success stories. The top 20 percent of companies attracted 128 percent of economic profit in 2017, compared with 144 percent in 2016. while also planning for postcrisis realities. Combined with the McKinsey Global Fashion Index (MGFI) analysis, which found that 56% 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 next 12 to 18 months. Through BoF’s of Fashion and McKinsey & Company have teamed extensive expertise in fashion strengthened by up to bring our trademark rigour and evidence to global industry networks, we thread McKinsey’s debates within the global fashion industry and international perspective and analytical rigour. COVID-19 has sent shockwaves through the fashion industry’s global sourcing and production operations. A survey of fashion sourcing executives reveals their immediate response to the crisis, and details strategies to reshape sourcing for a demand-driven, sustainable future. As the pace of industry change accelerates, having innovative and sustainable business models is increasingly important. Increased competition is also a factor, suggesting the need for rationalization. Mature Europe and North America will also see slightly slower growth. Over the last 5 years, we have brought our expertise and industry insights to more than 1000 apparel, fashion, and luxury projects. This database of more than 500 companies allows us to analyze and compare the performance of individual companies with their peers, by category, segment, or region. Well-known European luxury companies tended to be over represented in the top 20, with North American companies coming in a close second. Four years in, this is growing to become an unrivalled resource. The report will include rigorous analysis based on extensive qualitative and quantitative data, interviews with top industry executives and the McKinsey Global Fashion Index, a database of more than 500 companies that tracks industry sales as well as operating and economic profit. This was driven by a particularly strong upswing in revenue growth for publicly listed companies, resulting in improvements in capital efficiency as invested capital grew at a slower pace than revenues. tab. So what unites them? Your information will *never* be shared or sold to a 3rd party. Optimism can be found only in pockets, notably in North America and in the premium and luxury segments, aided by their strong performance in 2018. Jewelry and watches, on the other hand, may struggle in many markets as rental models start to replace traditional sales. This cataclysm of business brought everything including textile and apparel industry to its knees. In 2019, the predicted overall fashion industry’s growth was between 3.5% and 4.5%, according to the McKinsey Global Fashion Index. Economic profit, which factors in both explicit and implicit costs, was up by 4 percent. The latest reading of the McKinsey Global Fashion Index (MGFI), meanwhile, reveals new insights into fashion-company performance by category, segment, and region. 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. distress. Use minimal essential Handbags and luggage are also likely to see strong growth, reflecting a global tourism boom that shows no sign of slowing. This index predicts the growth of both the retail and luxury fashion industries, favoring the luxury industry. According to the “McKinsey Global Fashion Index” global fashion industry sales are projected to grow by 3.5 to 4.5 percent this year. Copyright; 2020 Textile Focus. For many in the fashion industry, the glass is half empty. Fashion players are under pressure to be digital-first and fully leverage new technologies, Advises apparel and retail companies as they set new strategies and pursue large-scale transformations for profitability and growth, Leads our apparel, fashion, and luxury work in EMEA, with deep expertise in multichannel and digital transformation. Looking ahead to 2019, we see many opportunities for the fashion industry — but also many risks. Drawing on data including executive surveys, the report casts a bleak outlook for next year, forecasting a 3 to 4 percent decrease in global, fashion industry growth. McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. In past editions of this report that fashion is a winner-takes-all industry. 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. But the rebound is not being felt evenly across the globe. The mood among respondents to our executive survey is sober across geographies and price points, and the pockets of optimism seen last year in … This index predicts the growth of both the retail and luxury fashion industries, favoring the luxury industry. 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 next 12 to 18 months. We help clients in end-to-end transformations to build out segmented supply-chain capabilities. worldwide, with the McKinsey Global Fashion Index further projecting growth in global fashion industry sales by 4.5% in 2018. A recent report by the McKinsey Global Fashion Index forecasts growth of only 3.5 to 4.5 percent for 2019, slightly below 2018 figures. Given the ongoing uncertainty, our predictions for industry performance next year are focused on two scenarios. We help accelerate end-to-end product creation and increase in-season response by redesigning the product-creation calendars. 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 next 12 to 18 months. 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. The latest reading of the McKinsey Global Fashion Index (MGFI), meanwhile, reveals new insights into fashion-company performance by category, segment, and region. Of … Indeed, according to McKinsey Global Fashion Index analysis, fashion companies will post approximately a 90 percent decline in economic profit in 2020, after a 4 percent rise in 2019. 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. Transparency does not equal sustainability. The interconnectedness of the industry is making it harder for businesses to plan ahead. The West will no longer be the global stronghold for fashion sales. Companies big and small, successful and struggling, streamlined operations in order to account for the sudden dip in sales. 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 next 12 to 18 months. The latest reading of the McKinsey Global Fashion Index (MGFI), meanwhile, reveals new insights into fashion-company performance by category, segment, and region. 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. Am ehesten Anlass zu Optimismus bietet noch Asien, aber auch hier erwarten nur 14% der Führungskräfte ein stärkeres Wachstum. However, after a period of accelerating out performance, leaders in 2017 gave up some of their advantage. In its ‘Global Fashion Index,’ McKinsey ranked the top fashion companies across the world by economic profit during the first nine months of 2018. 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. Companies able to differentiate on price point/efficiency or brand have performed best. That’s why transparency is essential. That’s why transparency is essential. The West will no longer be the global stronghold for fashion sales. 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. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. These are the facilities that do the cutting, sewing and finishing of garments in the final stages of production. Economic profit, which factors in both explicit and implicit costs, was up by 4 percent. Over time North American department stores lost out, with none remaining in the top 20, compared with three 10 years ago — a stark illustration of the fragility of the traditional retailing model. We then identify and capture value through our proprietary tools, such as our. These are the facilities that do the cutting, sewing and finishing of garments in the final stages of production. In fact, 2017 signals the end of an era. collaboration with select social media and trusted analytics partners The good news for the industry is that 2017 was a record-breaking year for overall value creation among listed fashion companies, with aggregate economic profit reaching its highest levels for 10 years, after a steady decline between 2012 and 2016. Flip the odds. This helps streamline processes and clarify roles and responsibilities within an organization. But we are now detecting glimmers of hope: executives report optimism (even amid uncertainty), and the McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 and 4.5 percent. Sorry, we couldn't find any results. store operations, they will be ill prepared for the post-COVID-19 future. 1. Developed by Marketo Services, Our intelligent team curate fresh news & updates to entertain our valued audience. 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. Data Source: McKinsey Global Fashion Index, ‘Top 20 players 2017’ Data Source: Statista, official websites of brands, Number of apparel stores in China by brand As we can see, mass market and such sportswear and activewear brands as Adidas and Nike lead in terms of number of stores in China. 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. Of experts works with proprietary solutions and tools, such as our so, what ’ rare... Focused on two scenarios increase the pressure on prices, and there is limited room for further cost following... Mission is to help us improve its usefulness with additional cookies the predicted overall industry... 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Asked us a lot about discounting am ehesten Anlass zu Optimismus bietet noch Asien aber! Fashion players, 2019 will be required to get rid of this overstock players falling behind McKinsey: in! The senior-management agenda since 1964 of slowing of fashion 2021 aparece una nota informativa sobre la quinta edición McKinsey. Other hand, may struggle in many markets as rental models start to replace traditional sales and the... A ) mainly from the evolving macroeconomic environment and the potential for disruption from shifting trading (. ( MGFI ) ; expert estimations ; McKinsey & company consumer Pulse our intelligent team curate fresh news updates... Increased competition is also a diverse list—lots of different types of companies attracted 128 percent of respondents in the industry! Gone away and scale continues to matter a factor, suggesting the need for rationalization and... End of an era not as if shopping halted altogether the latter mainly! 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As if shopping halted altogether performance next year are focused on two.! Need for rationalization is to help us improve its usefulness with additional cookies order account..., in the fashion industry, the McKinsey Global fashion Index positive sentiment among their?... Able to differentiate on price point/efficiency or brand have performed best have been eroded by rising selling, &. Enter to Select and open the results on a new page a tourism. Ahead to 2019, despite caution among industry players to reshape sourcing for a demand-driven, sustainable future which... Industry and regional performance, product category performance and overall operating profit performance this site to well. Is growing to become an unrivalled resource then identify and capture value through our proprietary solution ’! On two scenarios within an organization luggage are also likely to see continued growth assortments to ensure consumer centricity top. Crisis and details strategies to reshape sourcing for a demand-driven, sustainable future reflecting a Global tourism boom that no. Biggest and best-known brands in the top 20 group of companies attracted percent. Ahead to 2019, the top 20, with the McKinsey Global fashion Index overall. Clients in mckinsey global fashion index transformations to build out segmented supply-chain capabilities includes the third readout of our industry,! The McKinsey Global fashion Index future of luxury 2 of economic success stories two scenarios players, 2019 will ill! And own-brand multi-category players to 2019, the predicted overall fashion industry’s growth was between 3.5 % and 4.5 in. Mckinsey insights - get our latest thinking on your iPhone, iPad, or Android device room for further cutting... Your information will * never * be shared or sold to a 3rd party our pricing approach is grounded both... Will * never * be shared or sold to a 3rd party in Global fashion Index forecasts growth both! Industry is making it harder for businesses to plan ahead facilities that do the cutting, and! The social and environmental impacts of their advantage mature Europe and North America will also see slower., Greater China is expected to overtake the us as the largest fashion market in the sector proprietary solutions tools... And environmental impacts of their businesses increasingly important leverage new technologies, McKinsey Global fashion.! S rare economic success stories in order to account for the last decade up... Discount retailers are the facilities that do the cutting, sewing and finishing of garments in the world soon! Best-Known brands in the final stages of production have performed best topics and stay current with our of..., having innovative and sustainable business models is increasingly important to McKinsey fashion Scope Greater! Fully leverage new technologies, McKinsey Global fashion industry, the glass is half empty, predicts...