COVID-19 has affected the global economy, including the fashion industry. The world is on the verge of a major financial crisis. The editors of Beautiful Lifestyle magazine, based on research by the BCG Group, make assumptions on what will happen to the fashion industry after the pandemic and offer scenarios for its recovery.
The COVID-19 pandemic spares no one: according to the assumptions made by the BCG Group, global sales of luxury goods in 2020 will drop by 25% -35% compared to last year. Several factors affect the drop in sales: a temporary pause in production and, as a result, the store closing, as well as people’s doubts on whether to make purchases during an unstable economic situation.
The short-term measures that many brands are currently using may not save the industry. The fashion industry works under seasonal planning: upcoming collections are determined in advance, fundamental supply-chain decisions are made.
The BCG Group prepared several scenarios for the recovery of the fashion industry in 2020, depending on the region, which may help brands in their future strategic planning.
With continuous pandemic, global sales will drop by $600 billion compared with 2019. However, the crisis will unevenly affect the economies of different states. Based on how countries and regions have responded to the pandemic today, and what measures they have taken to stabilize the economy, some regions will suffer more than others, while some countries will be damaged less.
Having examined the intensity of the crisis in each region, and analyzed several factors (the level of the economy of each region before the crisis, the market share of the fashion industry, and its dependence on the tourism industry), the BCG Group came to the following conclusions: global sales in March and April will decrease by 65% - 80%, but by December they will be able to climb back by 10% -15% compared to last year.
In their research, the BCG Group made forecasts for four areas – Southern and Northern Europe, China, and North America.
The BCG Group suggests that slow recovery is expected in Southern and Northern Europe. In these countries, there is a serious outbreak of the virus, while the economies of these countries had been weak even before the crisis and mainly depended on the tourism industry.
China’s economy, on the contrary, should recover quite quickly. The country has already overcome a critical point, and also had a strong economy even before the pandemic. Therefore, in China, we can expect an early stabilization of the fashion industry at the end of the year, with sales only 5% -10% less than in 2019.
The data for the United States is still uncertain since each state has taken its measures to prevent the spreading of COVID-19. Some states have imposed mandatory quarantine, while others have not yet taken severe measures, and people can freely move around the city.
At the moment, these are only assumptions and potential strategies to help the global fashion industry to recover. However, the global situation is changing every day, and, perhaps, soon, new scenarios will be required to stabilize the global economy.