The COVID-19 crisis has only widened the gap between industry leaders and laggards. Even before the crisis, companies that were digitally and analytically mature outperformed competitors that hadn’t built robust digital and analytics capabilities (Exhibit 1). This all portends a deepening digital divide. The fundamental enabler to all this will be data-the transparency, governance, and accuracy of which have never been more important. For example, digitization can enable new logistics and sales-fulfillment options (such as click-and-collect and drive-through), fuel innovative ways of customer acquisition, and help predict and manage inventory to create a more resilient supply chain. This suggests that some percentage of offline sales could permanently migrate to e-commerce.ĭigital is not only an increasingly important sales channel it can also help companies adapt cost structures and make each step of the value chain better, faster, and cheaper. McKinsey Chinese COVID-19 consumer-sentiment survey with field work March 21–23, 2020. In China, the return of offline traffic has been gradual, with 74 percent of Chinese consumers saying they avoided shopping malls in the two weeks after stores reopened. Nevertheless, it has been a lifeline for fashion brands as stores have been shuttered-and it will continue to be critical during and after the recovery period. E-commerce is clearly not offsetting the sales declines in stores. Our consumer-sentiment surveys, conducted in April, show declines in purchase intent of 70 toĨ0 percent in offline and 30 to 40 percent in online in Europe and North America, even in countries that haven’t been under full lockdown. We then propose a set of actions that AF&L companies can take to build their digital and analytics capabilities-not just to ensure business continuity and minimize the downside of COVID-19, but also to emerge from the crisis in a position of strength.
In this article, we touch on COVID-19’s impact on the AF&L industry to date.
At the same time, AF&L companies are grappling with COVID-19’s business ramifications, including widespread job losses in an industry that provides livelihoods for millions of people worldwide.Īlthough no one in the industry foresaw the intensity of this crisis, some fashion companies are finding that they are better equipped than others-largely because of their digital know-how. Amid the pandemic, the apparel, fashion, and luxury (AF&L) industry has moved quickly to address urgent public-health needs-closing stores, manufacturing much-needed items such as face masks and hand sanitizer, and making donations to healthcare and community organizations. The COVID-19 pandemic is simultaneously an unprecedented health crisis and a global economic shock.
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