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Apparel sales in North America to decline by 30%: McKinsey report


As per McKinsey & Company, despite e-commerce boost, apparel sales in North America are poised to decline by 30 per cent in 2020 and by 25 per cent in 2021 from the 2019 levels. According to Althea Peng, Head, McKinsey’s-Americas, the earliest apparel sales might return to pre-pandemic levels is by the first quarter of 2023. If dire conditions persist through next year, retailers can expect to languish till the second quarter of 2025.

Though online sales will continue to gain market share, they won’t be able to compensate for the decline in brick and mortar sales. In 2020, online sales will constitute over one-third of total apparel sales. In 2021, e-commerce penetration may decline a bit as stores may reopen for the entire year. The absolute increase in e-commerce sales from 2019 to 2021 will be mostly offset by lower brick-and-mortar sales. Digital-first brands and retailers are projected to grow by 25 percent from 2019 levels in 2021.

However, Emma Spagnuolo, a McKinsey Associate Partner, does not view customers’ use of online channels even after the contagion to being a threat as according to a poll, consumers’ willingness to buy clothing and footwear online post-pandemic has jumped by just percent.

Spgnuolo also sees 35 to 40 per cent growth in users of omnichannel-type services—such as buy online, pick up in store and purchasing through social media or apps—post-COVID-19. According to her, successful retailers approach e-commerce from two angles: capturing a greater share of traffic by boosting conversion and retaining customers, and supercharging profitability by thinking outside the traditional legacy model to find ways to reduce costs across the system, increase data transparency and promote the proper attribution of costs to create clarity and accountability.