In the meantime, domestic markets are set to continue their recent strong performance.ĭespite a dip in margins, discount and luxury outperformed the wider market in 2020, while the midmarket continued to be squeezed. In 2022, the industry’s growth will likely be driven by both China and the United States, while Europe lags behind and will need the return of international tourism to recover fully (Exhibit 1). About 7 percent of companies left the market entirely, either due to financial distress or because they were bought by rivals.įrom a geographic perspective, China was the standout performer over 2021, as its economy recovered much faster than those of other countries. A record 69 percent of companies were value destroyers in 2020, according to the latest reading of the McKinsey Global Fashion Index (MGFI), compared with 61 percent in 2019 and just 28 percent in 2011. As the pandemic continued to run its course, the performance inequalities that have become a challenge over recent years were more in evidence than ever. The fashion industry posted a 20 percent decline in revenues in 2019–20, as earnings before interest, taxes, and amortization (EBITA) margins declined by 3.4 percentage points to 6.8 percent.

This article is a collaborative effort by Imran Amed, Anita Balchandani, Achim Berg, Saskia Hedrich, Jakob Ekeløf Jensen, Leila Le Merle, and Felix Rölkens, representing views from McKinsey’s Retail Practice.

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