Cost pressures, the accelerated shift to e-commerce, 2įor more, see “ How e-commerce share of retail soared across the globe: A look at eight countries,” McKinsey, March 5, 2021. Please email us at: the overall market has been strong, individual AF&L players have (predictably) experienced mixed results (Exhibit 2). If you would like information about this content we will be happy to work with you. We strive to provide individuals with disabilities equal access to our website. As of our analysis in December 2021, the global apparel market was faring favorably compared with most other sectors, with AF&L shareholder returns exceeding those of the S&P 500, technology sector, retail sector, and MSCI World Index (Exhibit 1). The AF&L industry has delivered a strong performance over the past decade, with 70 percent of the world’s largest AF&L companies generating returns upward of 10 percent since 2016. State of TSR in the global fashion market In this category, entry price points are less than $20, all discounted. This category includes entry price points from $10 to $100. Entry price points range from $100 to $500. This category is dominated by traditional large wholesale players-notably sportswear, with a focus on ready-to-wear products. These are traditional luxury brands and conglomerates that focus on accessories, ready-to-wear products, and fine watches and jewelry. The definitions below are provided for reference and are based on pricing in women’s footwear. By fostering innovation and making smart cost control decisions to align with revenue shifts, brands that are currently performing only moderately-or losing ground-can bolster their performance in the global apparel market.įashion categories can be divided into four price points. This article examines the success of the luxury and sportswear segments since 2020 and compares the shared characteristics of companies in nonluxury fashion segments that-despite all odds-have delivered strong returns to shareholders. While the luxury segment has been the longest-standing winner within the industry, a recent surge in sportswear has gained momentum as a preferred choice among premium customers. “ Patterns for value creation in apparel, fashion, and luxury,” McKinsey, March 25, 2020.Īt the time, premium and luxury segments were significant outperformers in the AF&L market-a trend that endured throughout the pandemic. In 2020, we examined the industry’s TSR and recommended that companies take decisive action in the face of ambiguity. This article is a collaborative effort by Kelsea Alderman, Sandrine Devillard, Susan Nolen Foushee, Joëlle Grunberg, Himangi Gupta, Elizabeth Hunter, and Jennifer Schmidt, representing views from McKinsey’s Retail Practice.
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