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. 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. So what unites them? The mood among respondents to our executive survey is sober across geographies and price points, and the pockets of optimism seen last year in … We use cookies essential for this site to function well. COVID-19 has sent shockwaves through the fashion industry’s global sourcing and production operations. Try removing some filters. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Created in partnership with McKinsey & Company, the report anticipates that, due to the pandemic, companies will post a 90 percent drop in profit by the end of 2020 (in 2019, profits rose four percent). The lenses are industry and regional performance, market segment performance, product category performance and overall operating profit performance. As the pace of industry change accelerates, having innovative and sustainable business models is increasingly important. However, value and discount retailers are also predicted to see continued growth. The McKinsey Global Fashion Index (MGFI) was introduced two years ago in the State of Fashion 2017 report to fill a gap in the coverage and understanding of performance in the global fashion industry. 1. our use of cookies, and For many in the fashion industry, the glass is half empty. The overall impact will be slightly less robust global industry growth than in 2018. Companies big and small, successful and struggling, streamlined operations in order to account for the sudden dip in sales. 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 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. distress. 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. A darkening mood. This database of more than 500 companies allows us to analyze and compare the performance of individual companies with their peers, by category, … Since 2017, we have partnered with the media company. That’s why transparency is essential. These companies own some of the biggest and best-known brands in the business. For many in the fashion industry, the glass is half empty. 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. Please click "Accept" to help us improve its usefulness with additional cookies. Am ehesten Anlass zu Optimismus bietet noch Asien, aber auch hier erwarten nur 14% der Führungskräfte ein stärkeres Wachstum. McKinsey Global Fashion Index In this edition of the McKinsey Global Fashion Index, we deepen our exploration of economic profit — a measure of value creation that looks at a company’s profit less its cost of capital, thus taking into account how much each company invested to generate its performance. 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. Some 67 percent of respondents in the BoF-McKinsey State of Fashion survey are concerned that margins will decline. 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. On the other hand, there are several levers players are using to improve profitability, including efficiency drives, use of analytics to relieve markdown pressure and automation enabling faster speed to market. 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. Never miss an opportunity again. As in previous years, we expect the best-performing segments in 2019 to be luxury, fuelled by fast-growing Asia Pacific economies and the continuing boom in global travel, and value, fuelled by strong propositions globally. To everyone in the … 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. These are the facilities that do the cutting, sewing and finishing of garments in the final stages of production. Much will depend on their digital and analytics capabilities. Digital upends old models. To coincide with VOICES 2019, BoF and McKinsey will release The State of Fashion 2020, the fourth edition of an annual in-depth report providing a comprehensive business outlook for the fashion industry in the year ahead. 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. Home » Fashion Industry » Global Fashion Index. 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. However, after a period of accelerating out performance, leaders in 2017 gave up some of their advantage. Economic profit, which factors in both explicit and implicit costs, was up by 4 percent. According to McKinsey Fashion Scope, Greater China is expected to overtake the US as the largest fashion market in the world in 2019. 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. For the first time this year, they took a closer look at the drivers of economic success in the sector. A deeper analysis of the top fashion companies will help readers understand “what makes winners win” and how winners’ performance has evolved over the last ten years. 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. Reinvent your business. The McKinsey Global Fashion Index (MGFI) was introduced two years ago in the State of Fashion 2017 report to fill a gap in the coverage and understanding of performance in the global fashion industry. Just as China … 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. 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 would be challenging times. Outstanding performers included handbag and luggage makers and own-brand multi-category players. Al final del State of Fashion 2021 aparece una nota informativa sobre la quinta edición del McKinsey Global Fashion Index. McKinsey Global Fashion Index. 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. This is a global phenomenon that can be observed across industry sectors (beyond fashion), regions and cities, as outlined in McKinsey Global Institute’s recent “Superstars” study. This helps streamline processes and clarify roles and responsibilities within an organization. Sunny intervals but storms ahead . Economic profit, which factors in both explicit and implicit costs, was up by 4 percent. By segment, we also continue to see polarization, with luxury and value advancing and mid-market players falling behind. Companies able to differentiate on price point/efficiency or brand have performed best. 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. Given the ongoing uncertainty, our predictions for industry performance next year are focused on two scenarios. 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. reveals their immediate response to the crisis and details strategies to reshape sourcing for a demand-driven, sustainable future. 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. Mature Europe and North America will also see slightly slower growth. Fashion is one of the past decade’s rare economic success stories. The interconnectedness of the industry is making it harder for businesses to plan ahead. Transparency does not equal sustainability. 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. 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. The post-COVID-19 future McKinsey fashion Scope, Greater China is expected to overtake the us as the of... Please use up and DOWN arrow keys to review autocomplete results Führungskräfte ein Wachstum! Worrying about their distress right-sizing of assortments to ensure consumer centricity is top mind. As the pace of industry change accelerates, having innovative and sustainable business models is increasingly important of... Glass is half empty fuelled by fast-growing Asia-Pacific economies to struggle, in final... 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