The global fashion industry is currently facing a dire situation, with experts projecting a significant decline in market value for the year 2020. According to GlobalData, a leading data and analytics firm, the sector is anticipated to experience a steep drop of more than 15%, amounting to a staggering loss of nearly $300 billion. This downturn will have a profound impact on the retail landscape, particularly affecting established markets like the US, Hong Kong, and key European countries.
The repercussions of this decline will be most deeply felt in the ten hardest-hit markets, with mature regions likely bearing the brunt of the impact. In the US alone, a substantial 40% of the projected decrease in spending is expected, potentially leading to more prominent retail chains resorting to filing for chapter 11 bankruptcy protection in the near future. Well-known brands such as J Crew and Neiman Marcus have already taken this step, while others like JC Penney are anticipated to follow suit.
Although certain markets have shown signs of revival as lockdown measures are easing and social-distancing norms are being relaxed, consumer confidence remains a pivotal factor in the journey towards recovery. Various aspects such as a nation’s reliance on tourism, economic stability, and unemployment rates will also shape the trajectory of rebound. Moreover, the emergence of “revenge buying”, characterized by a release of pent-up consumer demand, will influence how swiftly markets can bounce back.
Despite glimmers of hope like Chinese brands witnessing a return to pre-pandemic sales levels and German retailers experiencing a better-than-expected resurgence, challenges persist in locations heavily dependent on tourism such as Hong Kong. The recovery path for countries such as Italy, France, the US, and the UK is expected to be lengthy and arduous.
Although certain markets may see an initial surge in spending post-lockdown, GlobalData cautions that this may not be enough to compensate for the lost period in the first half of the year. Even if trading levels manage to reach those of pre-2019, meaningful growth is unlikely to materialize until at least 2022. The fashion industry is bracing itself for an extended period of recovery, with enduring challenges across various global markets.
To learn more about the current state of the global fashion industry and its projected recovery, check out these insightful articles: Global Fashion Spending Expected to Decline by $297 Billion in 2020 and A Bumpy Road Ahead for Fashion.
