Fashion executives looking for some relief from COVID-19 led disruptions in 2021 may be disappointed as the current year might prove to just as challenging as the previous year, says a new report by McKinsey and Company.

The report indicates, prospects of lockdowns continuing until Easter on April 4, are likely to worsen fashion retail scenario in Europe which plunged by 20 per cent in 2020

Germany, France emerge winners in Europe

Of all European countries, Germany and France performed the best as sales in these markets declined by only 16-18 percent while sales in Spain, Italy, and some eastern European countries contracted by almost 30 percent.

Fashion sales in the United States plunged by 23 percent year on year while those in China declined to only 7 percent year on year, returning to growth trajectory in August 2020.

Fashion’s capacity to rebound was seen through the strong market performance by the Europe and United States during the summer months. Shoppers in both regions regained normalcy as stores reopened. Germany’s third-quarter fashion revenues declined by only 13 per cent during the period compared to its 2019 levels. The country’s investments in building digital muscle paid off as E-commerce giant Zalando added 3 million new shoppers in the third quarter of 2020 alone, driving 30 percent year on year growth of its gross merchandise value (GMV).

Pandemic uncertainty may push recovery to 2023

Markets with a high e-commerce penetration, including the United States and the United Kingdom grew between 45 and 50 percent in e commerce in 2020, while southern Europe markets increased by 25 percent.

. The year 2020 provided the European fashion industry with an opportunity to engage consumers through online shopping. The industry expects the growth in e-commerce to continue in 2021. However, it fears the continuation of lockdowns until Easter to set fashion sales back to 2020 levels.

Even if lockdowns are avoided during the fourth quarter, the industry remains uncertain of consumers’ sentiments. It will have to comply with public health rules such as the mandatory use of masks, etc. And if consumption remains moderate during summer and the pandemic is not contained by the next winter season, the industry may not recover till 2023.

Fashion sales across US, China to improve

Fashion sales across the United States are expected to improve in 2021. Growth in online sales by upto 40 per cent will restrict the decline in fashion sales between 6 and 16 percent. However, health and safety restrictions and limits on the number of people allowed in stores will continue to impact brick and mortar sales.

Chinese luxury brands have been capitalizing on the opportunities in the domestic market by creating shopping attractions, entertainment and special events. Luxury consumers in the country are expected to increase theirspending in the domestic market by as much as 50 percent this year. However, this will compensate for just half of its sales lost overseas and in Hong Kong.

Stamina and perseverance would be the key for future planning for the industry. Fashion executives need to remain alert to the key demand predictors during the year besides building their online channels and building agile supply chains.