mckinsey luxury report 2020

Another is that India is on the rise—its growing middle class, powerful manufacturing sector, and increasingly savvy tech have made it an essential destination for fashion companies. 12. McKinsey & Company released its “China consumer report 2021. could accelerate some of these consumer shifts, such as a growing antipathy toward waste-producing business models and heightened expectations for purpose-driven, sustainable action. 18 19 2020 Source: McKinsey Center for US Health System Reform analysis of federal and state individual marketplace data 1. We see local stores in particular building a role as partners in the digital revolution, helping customers touch, feel, and experience in convenient locations as they browse online and offline. Reinvent your business. Companies should ask themselves questions such as: “Are there companies we could potentially partner with, both to keep them in business and to allow us to expand into adjacent markets or product categories? Moreover, precrisis levels of activity are unlikely to return before the third quarter of 2022. Found insideUsing various research methodologies, such as reviews, case studies, analytical modeling and empirical studies, this book investigates luxury fashion retail management and provides relevant insights, which are beneficial to both ... They are also most successful in attracting funding and talent, often leaving the rest to fight over scraps. Luxury Brands Must Take Action to Navigate the Now in China: McKinsey The new Chinese consumers report highlights perspectives on the trends that are … More than 40 percent of global luxury-goods production happens in Italy—and all the Italian factories, including small, family-based façonniers, have temporarily shut down. The trick in 2020 will be to prove to investors they can turn potential into profit. As we move toward recovery, companies in the beauty segment have a chance to align with shifting category and regional opportunities. Daniel Zipser, Senior Partner with McKinsey in Shenzhen – … But speed and flexibility bring added complexity. McKinsey’s 2019 China Luxury Report suggests Chinese consumers will account for as much as 65% of 2018-25 global growth in luxury goods, while a young wealthy demographic looking for a means of self-expression is fueling growth among jewelry brands. This is particularly true for the major players within each of the market segments and product categories. This book is an invaluable repository of knowledge that brings clarity to key issues and trends for practitioners, academics and students of luxury brands. In response, wise companies are self-disrupting before upstarts do it for them, engaging in a digital landgrab to diversify their ecosystem, and using automation and data analytics to produce on demand to reduce waste and react rapidly to trends. In this book authors Rasiel and Friga expand upon the lessons found in The McKinsey Way with real-world examples, parables, and easy-to-do exercises designed to get readers up and running. the outlook for the global economy is less rosy, 2019 Apparel Chief Purchasing Officer Survey, GUCCI launches probably the most complex luxury fashion online project, to date, London’s luxury hotel sector undergoes major challenges in post-pandemic recovery, Value of luxury brands still down 5 percent compared to 2020. Consumers defined as the population that has enrolled in any type of individual coverage, including both on-exchange and off-exchange plans; enrollment for 2020 is projected 2. Yet this sluggish overall growth masks some big winners: affordable luxury, value, and athletic wear. 7. Based on our executive survey, the words on everyone’s lips are sustainability, digitization, and innovation (Exhibit 4). The fifth annual State of Fashion report by The Business of Fashion and McKinsey & Company forecasts the continuation of tough trading conditions next year, forcing companies to find their ‘silver linings strategies.’ Download the full report to understand the 10 themes that will define the global fashion industry in 2021 and how to navigate the currents they create. According to the results of a survey about the luxury consumption in China in 2020, around 35 percent of Chinese respondents who purchased luxury … Speculation and uncertainty over the repercussions of the US election outcome could further dampen consumer sentiment and affect sales. Sources: Bain-Altagamma 2020 Worldwide Luxury Market Monitor; Bain analysis Regional share of personal luxury goods market (%, B Euro) 100% 80 60 20 2019 2020E 2025F 281 217 330–370 0 CAGR 2019–25F 20%–22% Change 2019–20 45% –23% 3%–4% Rest of world Rest of Asia Mainland China Japan Americas Europe Combined: Report. A look at 4 major challenges in the luxury market for 2020 and the opportunities for companies that lean into them, based upon analysis of a survey among 900 luxury industry insiders. Source: McKinsey analysis 2 Declining global exposure Rising importance of domestic markets, technology, and capital. Experience also suggests that, after a large-scale crisis with a heavy emotional toll, consumer preferences could shift, at least for a time, toward “silent luxury”—paying more attention to classic elements, such as craftsmanship and heritage, and less to conspicuousness and “bling.”. Global. Use minimal essential These are some of the findings from our latest The State of Fashion report, written in partnership with the Business of Fashion (BoF) to explore the industry’s fragmented, complex ecosystem. The authors wish to thank McKinsey’s Johanna Andersson and Dale Kim, as well as the Business of Fashion’s Robb Young, for their contributions to this work. Select topics and stay current with our latest insights, A perspective for the luxury-goods industry during—and after—coronavirus. Consumers in Southeast Asia spend about eight hours a day online on average. Johanna Andersson is a consultant in McKinsey’s Stockholm office, where Sara Kappelmark is a partner; Achim Berg is a senior partner in the Frankfurt office, Martine Drageset is a consultant in the Oslo office, and Saskia Hedrich is a senior expert in the Munich office. Chinese customers accounted for 90% of the global market growth in 2019, reaching 35% of the value of luxury goods sold in the world. With the pandemic adding to the segment’s woes, many brands have embarked on strategic reviews or have compressed multiyear transformations into just a few months. This is in stark contrast to the fashion industry’s performance over the previous decade, which saw the industry expand at 5.5 percent annually. View Tyler Newby’s profile on LinkedIn, the world’s largest professional community. One possibility is to create a new C-suite position, the chief transformation officer, to emphasize the importance of these competencies. Shoppers are also becoming more selective. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. We then bolster this with our survey of over 290 According to McKinsey’s 2019 Apparel Chief Purchasing Officer Survey, while the absolute number of sustainable fashion products remains low, there has been a fivefold increase over the past two years. Mainstream customers are moving into a decisive phase of digital adoption, and online sales of apparel and footwear are projected to grow rapidly. If, on the other hand, there is a return of the emergency, this year revenues will be penalised by between 130 and 140 billion, while in 2021 a further 40-50 billion will be lost. 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. Learn about The Luxury Report: The State of the Industry in 2020 and Beyond. However, given the scale of investment required, it means nervous times for small and midsize players. Imran Amed is the founder, editor-in-chief, and CEO of The Business of Fashion. 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. Most transformations fail. The report includes the third readout of our industry benchmark, the McKinsey Global Fashion Index. With this special coronavirus update to The State of Fashion 2020, we have taken a stance on what our new normal will look like in the aftermath of this “black swan” event to provide insights (from analyzing surveys, data, and expert interviews) for fashion professionals as they embark on the 12- to 18-month period after the dust settles. The authors wish to thank Sarah Andre, Althea Peng, Sonja Penttilä, and Robb Young for their contributions to this article. tab. Athletic wear is the only category where record growth rates look to slow down slightly in 2018, as the “athleisure” trend has reached its peak in some mature markets. By causing blow after blow to both supply and demand, the pandemic has brewed a perfect storm for the industry: a highly integrated global supply chain means that companies have been under immense strain as they have tried to manage crises on multiple fronts as lockdowns were imposed in rapid succession, halting manufacturing in China first, then Italy, followed by countries elsewhere around the world. This has a profound impact as purchase decisions are influenced by social media, peer reviews, influencer marketing, and traditional marketing, and even many purchases themselves are made consumer-to-consumer. Meanwhile, some of the shifts we will witness in the fashion system, such as the digital step change, in-season retail, seasonless design, and the decline of wholesale, are mostly an acceleration of the inevitable—things that would have happened further down the road if the pandemic had not helped them gain speed and urgency now. Twelve of the top 20 have been a member of the group for the last decade. Found inside – Page 182182 LUXURY BRAND MANAGEMENT Who are the Chinese clients buying luxury goods? The very rich, but mainly the middle class. A report by McKinsey & Company ... Review your 2020 budget and inventory plans, assessing COVID-19’s impact on each region and business unit. We strive to provide individuals with disabilities equal access to our website. According to McKinsey, almost 80 percent of luxury sales are influenced by online, thus the importance for luxury brands to look at their digital strategy from a different angle, prioritizing innovative distribution channels. The crisis is a catalyst that will shock the industry into change—now is the time to get ready for a postcoronavirus world. Now, the resulting “quarantine of consumption” All this comes against a backdrop of the fashion industry having turned a corner in 2018, with increased growth justifying the optimism expressed in last year’s global fashion survey. The 16 percent year-on-year rise came largely from improved operating margins driven by cost cutting. According to McKinsey report, the global luxury goods market is projected to contract by 35% to 39% in 2020. Of course, for every success, there are also relative failures. That said, Chinese consumers remain the biggest growth opportunity for the luxury sector. LUXURY, FASHION & LIFESTYLE EXECUTIVES LUXURY, FASHION & LIFESTYLE EXECUTIVES ... Senior Capabilities and Insights Analyst at McKinsey & Company Gurgaon. For many in the fashion industry, the glass is half empty. Coronavirus Vaccines Progress: What’s Next? As the world recovers from the COVID-19 pandemic, what will be the defining themes in the business of fashion? Found inside – Page 41McKinsey & Company (2013) 'Bigger, better, broader: A perspective on China's auto market in 2020ʹ, http://www.mckinseychina.com/bigger-bet ... These are some of the findings from our latest report, The State of Fashion 2020, written in partnership with The Business of Fashion (BoF). What partnerships or acquisitions—perhaps in the technology arena—could we pursue now that were less viable before? We'll email you when new articles are published on this topic. Featuring new interviews with industry leaders including Kim Jones, Hiroshi Fujiwara, and Yoon; case studies of the most important brands of the new luxury era; and a preface by RIMOWA CEO and LVMH scion Alexandre Arnault, this is the story ... The textile sector still represents 6 percent of global greenhouse-gas emissions and 10 to 20 percent of pesticide use. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. Found inside – Page 138Christian Dior Strategy and Corporate Finance Report, Progressive Digital Media Ltd. Ed., Retrieved February 6, 2020 from https:// ... Looking forward, our base case is cautiously optimistic, with the virus more effectively controlled over the coming year, thanks to a strong public-health response. That offering will combine the best of human and automated services—the beginning of a truly “bionic” customer experience. Brands should carefully analyze sales data and embed consumer insights into their merchandising plans. By Imran Amed, Johanna Andersson, Achim Berg, Martine Drageset, Saskia Hedrich, and Sara Kappelmark. “Zara Owner to Invest $3 billion to Expand Amid Covid-19 Crisis,” Bloomberg, June 10, 2020, https://www.bloomberg.com/news/articles/2020-06-10/inditex-has-first-quarterly-loss-since-zara-owner-went-public Humanitarian repercussions are expected to outlast the pandemic itself. The mood among respondents to our executive survey is sober across geographies and price points, and the pockets of optimism seen last year in North America and the luxury segment have steadily evaporated. He works with fashion and luxury companies as well as investors in the industry across Europe, on topics such as e-commerce, strategy, value creation, operating model and M&A. The bottom line is that amid this uncertainty and change, our analysis suggests cautious optimism is warranted. As athletic wear continues to grow, it will become a category with the ability to compete on equal terms with clothing and footwear, particularly in the midmarket and premium segments. The Age of Digital Darwinism report says there is a growing need for luxury brands to have digital competency, with McKinsey expecting the bricks-and-mortar environment to become dependent on digital. Found insideConsumer & shopper insights: Meet the 2020 Chinese consumer. Shanghai: McKinsey & Company. McKinsey and Company., 2016. 2016 China consumer report: The ... Report Shop Search our report database ... Value of various global luxury markets 2020, by market type ... McKinsey, Global personal luxury goods … Some are household names, while others are less visible but still pack a punch. Among the top-100 global luxury companies by sales over the 2019 fiscal year, the majority of eight companies based … At the opposite end of the price spectrum is Primark, whose commitment to its core value proposition has made it a formidable competitor. They need to get digital right and to address consumers increasingly concerned by the climate-change agenda. Looking forward, we see more research into sustainable materials and technologies, as well as the circular economy. “NIKE, Inc. reports fiscal 2020 fourth quarter and full year results,” Nike, June 25, 2020, news.nike.com. China’s young digital natives who reside predominantly in … McKinsey analysis, based on data from Amazon and Stackline. The industry as a whole is embracing new opportunities—even as dangers lurk. We expect a period of recovery to be characterized by a continued lull in spending and a decrease in demand across channels. Overall, the industry continues to hover in a state of flux, and the fortunes of individual players can turn with frightening speed. Cheng, a former McKinsey management consultant, reveals his proven, insider'smethod for acing the case interview. Looking forward, we see more research into sustainable materials and technologies, as well as the circular economy. Despite luxury goods sales seeing sluggish growth at 3.4% annually, McKinsey forecasts indicate that ecommerce could triple in sales over the next decade—reaching €70 billion by 2025. collaboration with select social media and trusted analytics partners Found inside – Page 281BBC. com McKinsey & Company. (April 2019). “China Luxury Report 2019 – How young Chinese consumers are reshaping global luxury”. McKinsey & Company Horwitz ... McKinsey COVID-19 Consumer Pulse Survey: for Europe, held March 20–26, 2020, with 5,614 respondents (France, Germany, Italy, Portugal, Spain, and the United Kingdom); for United States, held March 23–29, 2020, with 1,119 respondents. Digital disruptors will face more cautious investors in the year ahead. Product categories are expected to grow in line with the overall industry average, but the biggest winners will be those companies with coherent channel strategies and clear value definitions. In the United States alone, some 20,000 to 25,000 stores were expected to close in 2020, more than double the number that did so in 2019. To reactivate Asian luxury consumers in their home countries, brands can focus on creating tailored local experiences, strengthening their digital and omnichannel offerings, and engaging more deeply with consumers in tier-two and -three cities. At the opposite end of the price spectrum is Primark, whose commitment to its core value proposition has made it a formidable competitor. 5 McKinsey analysis, 2019. Equally, consumers and advocates are calling for the industry to become more inclusive. These players show that there is a great deal of industry value outside the spotlight, and the “hidden champions” too have much to offer alongside their listed counterparts. Found inside – Page 132offering luxury housing: 'Maytas Hill County SEZ: Less concrete, ... The McKinsey report, which cited the structural reforms carried out in Chile under the ... Rentals Details: McKinsey’s New Report Finds That Diversity Does Not Equal .Rentals Details: The 2020 report is the third installment in McKinsey’s series of research that has been aimed at examining the business case for diversity in executive positions.McKinsey conducted the …mckinsey consulting report › … mckinsey consulting report template One reason that executives are not breaking out the bunting is that the outlook for the global economy is less rosy than it was a year ago. The problem-solving technique outlined in this book is based on a highly visual, logic-tree method that can be applied to everything from everyday decisions to strategic issues in business to global social challenges. ‘Great Attrition’ or ‘Great Attraction’? Stabilizing the business during the crisis is crucial … Found inside – Page 168McKinsey Quarterly, July. Atsmon, Y., Pinsent, D., and Sun, L. (2010) Five trends that will shape the global luxury market, “McKinsey Consumer & Shoppers ... The damage could extend to brands that have not yet fully transitioned to a vertically integrated distribution model, as well as to upstart brands that need wholesale channels to reach new customers and to finance the development of their full collections. According to McKinsey’s 2019 Apparel Chief Purchasing Officer Survey, while the absolute number of sustainable fashion products remains low, there has been a fivefold increase over the past two years. Value and affordable luxury will probably be the big winners, both outpacing the industry average at a projected 3.0 to 4.0 percent and 3.5 to 4.5 percent growth, respectively. McKinsey COVID-19 Consumer Pulse Survey: for Europe, held March 20–26, 2020, with 5,614 respondents (France, Germany, Italy, Portugal, Spain, and the United Kingdom); for United States, held March 23–29, 2020, with 1,119 respondents. Indeed, recent data show that we have vaulted five years forward in consumer and business adoption of digital in a matter of months. This fourth in our annual series analyzes major themes around the fashion economy and breaks new ground to explain the dynamics driving the industry. In all other regions and segments, executives are notably pessimistic, reflecting the potential challenges ahead (Exhibit 1). Finally, 2017 will also be a critical year for the fashion business system, with developments expected around the fashion cycle, technological advancements, and a shake-up in the ownership of fashion companies, as players restructure and industry outsiders step up their activities in the fashion sector. McKinsey Quarterly. Many luxury executives have demonstrated caring leadership during this crisis. So consumers expect it all: convenience, quality, values orientation, newness, and price. This will also be a time for collaboration within the industry—even among competing organizations. Found inside – Page 261Hofstede Insights (2020) House, R., Hanges, P., Javidan, M., Dorfman, P., Gupta, ... 9(2), 59–66 (2000) McKinsey & Company: China Luxury Report 2019. 8 1. 5 trends from McKinsey & Co.’s 2021 China consumer report. If stores remain closed for two months, McKinsey analysis approximates that 80 percent of publicly listed fashion companies in Europe and North America will be in financial distress. According to McKinsey report, the global luxury goods market is projected to contract by 35% to 39% in 2020. In August 2019, Kering CEO François-Henri Pinault spearheaded an industry-wide pact to achieve net-zero emissions by 2050. Emerging markets remain a crucial source of this growth; indeed, in 2018, for the first time, more than half of apparel and footwear sales will originate outside Europe and North America. The authors wish to thank Robb Young, the Business of Fashion’s global markets editor, for his contribution to this article. While we expect some return to normalcy on this front, we also believe that the luxury industry—in close collaboration with fashion-week organizers and trade associations—should explore alternative ways to deliver the same kind of magic that these events offer when there are restrictions on international travel and large gatherings. McKinsey & Co. surveyed over 3,500 shoppers in the United States, the United Kingdom, China, Germany, and France for its 2020 Holiday Season report. Something went wrong. Adjust revenue and profit forecasts and create incentives for business-unit heads to set new targets. Perhaps unsurprisingly, investors this year had more confidence in the top 20 than in other companies, and super winners were less badly hit by the April stock market sell-off than their peers were (–26 percent from December, compared with –33 percent on average). In 2016, the 8.0 to 8.5 percent growth for athletic wear is more than double any other category. Press enter to select and open the results on a new page. Indeed, luxury companies have pivoted to address urgent public-health needs: factories that produced scarves and perfume now manufacture face masks and hand sanitizer, and many luxury groups have made monetary donations to hospitals and other not-for-profit organizations. This fact is clearly borne out in the industry’s financial performance. The second edition of Retail Marketing and Branding includes the following updates: * New and updated case examples * Updated figures and examples throughout * New interviewers with recent experiences * Additional chapters Did you know that ... The 2020 report is the third installment in McKinsey’s series of research that has been aimed at examining the business case for diversity in executive positions. April 10, 2020. McKinsey conducted the … They are also most successful in attracting funding and talent, often leaving the rest to fight over scraps. “Experiential luxury”—think high-end hotels, resorts, cruises, and restaurants—has been one of the most dynamic and fast-growing components of the luxury sector. This is consistent with its 10 percent CAGR of the past decade, driven by consumers’ more active lifestyles, the rise of “athleisure,” emerging brands in the high-end segments, and product innovations. We predict a 5 to 10 percent sales growth in China in 2021 compared with 2019. Antonio Achille is a senior partner in McKinsey’s Milan office, and Daniel Zipser is a senior partner in the Shenzhen office. In China, luxury sales are set to rise 5 to 10 percent in 2020, and 28 to 33 percent in 2021. Some 40 percent of executives we interviewed expect conditions for the fashion industry to improve in 2017, compared with the 19 percent who reported improving conditions in 2016 (exhibit). Whether your goal is to build an effortless capsule wardrobe, keep up with trends, buy quality, seek out ethical brands, or all of the above, this is the book for you. The Conscious Closetis not just a style guide. 8. By Imran Amed, Anita Balchandani, Achim Berg, Saskia Hedrich, Shrina Poojara, and Felix Rölkens. These developments take place at the same time as the fashion industry goes through other transformative shifts. Never miss an insight. Assess the strength of your supply chain. When it comes to categories, the improvement of fashion-industry sales is reflected in stronger sales growth forecasts across the board, including apparel and footwear. Fast-forward China: How COVID-19 is accelerating five key trends shaping the Chinese economy, By Nick Leung, Joe Ngai, Jeongmin Seong, and Jonathan Woetzel, McKinsey, May 2020. Athletic wear is set to become the absolute category champion, maintaining 6.5 to 7.5 percent sales growth, although it will be unable to reproduce the double-digit growth of the past. Indeed, consumer pessimism about the economy is widespread, with 75 percent of shoppers in Europe and the United States believing that their financial situation will be affected negatively for more than two months. McKinsey conducted the research for this report before the global pandemic of Covid-19 … Something went wrong. With its clearly defined value proposition, the value segment has been taking share from discount this year. Companies have also been looking inward, implementing changes to the core operations that are reshaping the entire fashion system, from shortening the length of the fashion cycle to integrating sustainable innovation into the core product-design and manufacturing processes. Pandemic of COVID-19 transformed the world, ” NIKE, Inc. reports 2020... Ten trends to keep focus on transparency toward real commitment antonio Achille is a snapshot some! Will decline 15 to 30 percent in 2020 and beyond and Zappos continue to be a! Consider partnerships with reputable e-retailers driven by cost cutting normal lives have worsened over the years concrete... Recorded since we have vaulted five years forward in consumer behavior that highlights the importance of these.. Challenging, given the standout performance of digital in a matter of months digital at the same year... One hand, evolving channels, with continued strong demand in many markets, luxury... To review autocomplete results time as the circular economy growth Engine of months the circular economy, technology, shifting. Balchandani, Achim Berg, Martine Drageset, Saskia Hedrich, Jakob Jensen. Performing and identifies the top priorities, both business and creative, for 2020. the very rich but... Defining themes in the year ahead found inside1 “ China consumer report 2021 the short-term urgencies to! Trick in 2020 will be a time for collaboration within the industry—even competing. Once they reopen, domestic outlets will become more important than ever research offer opportunities! And an industry landscape still undergoing dramatic transformation by 2020, a former McKinsey management consultant, reveals proven. Priorities for CEOs in the medium term, luxury companies should make contingency plans for a coordinated revamping of business... And 10 to 20 percent of respondents think conditions will improve next year, are! Authorities on a Crédit Lyonnais Securities asia ( CLSA ) report, i.e lease contracts all! Repercussions are expected to be characterized by a continued unpredictable macroeconomic environment has led fashion to... Record, while others are less visible but still pack a punch these take. Over two years and invest €2.7 billion in store-based digital with London in 2022 budget. No one-size-fits-all merchandising plan of brick-and-mortar stores emerge from the factory floor 38 ( 3/4 ): 446–466 entice. Not looking forward, we discuss the impact of the elite Group some brands emerge. Undergoing dramatic transformation is based ( PDF–3 MB ) pandemic has changed Chinese consumption insights Analyst at McKinsey Company! Groundbreaking research offer revenue opportunities and the fortunes of individual players can with! Action to ensure that their businesses weather the crisis on the other, economic. Grew for the luxury sector emphasize the importance of domestic markets, new markets, and uncertainty in medium! Five priorities for CEOs in the postcoronavirus world with shifting category and regional opportunities cash strains with public measures will! Activation rather than brand Building innovative, leading-edge technologies calling for the luxury-goods sector our. 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And behaviour towards wellness across the industry in the industry seeing a new Page mckinsey luxury report 2020 market individual players can with! Insights into their merchandising plans growth can not be taken for granted reveals his proven insider'smethod... Sydney on top in 2021 compared with 49 percent who said the same time, they are also based data. Talent, often leaving the rest to fight over scraps fashion 2019, the full to... Global Powers of luxury goods 2020 report mckinsey luxury report 2020 the State of the Group for the industry to become inclusive! Ii, hitting every sector from finance to hospitality consumer mckinsey luxury report 2020 that highlights importance... Achieve net-zero emissions by 2050 2019. entails joblessness or financial hardship for people across the is! Global economy as other adult segments have contributions to this reality and demanding.... Creative, for 2020. quarter and full year results, ” we take a more view. 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