Few could have predicted the full impact of Covid on the apparel industry, as closure of physical retailers, reduced demand for workwear and “going out” clothes, and for many, reduced disposable income, converged to thwart, or at least diminish, fashion companies’ 2020/2021 plans.
One of the industries considered to be most severely affected by the pandemic, recent research highlights that 86% of clothing firms saw a drop in orders. But while this might represent pretty bleak reading for fashion brands, there is cause for optimism, assuming the industry can show sufficient agility to adapt, evolve and embrace new opportunities.
According to the latest figures, the global apparel industry is set to recover and will be worth $672.71 billion by 2023, against a total of $531.25 billion in 2019. But by 2023 the sector is likely to look different to the one we knew pre-pandemic. The is largely because, while the pandemic itself is unlikely to have changed the industry permanently, it has accelerated a number of positive trends which were already starting to gain traction.
Shifting consumer behaviour
The most obvious of these trends, is the dominance of multi-channel, specifically ecommerce and click and collect models. More than 60% of consumers reported spending less on fashion during the pandemic, with around half anticipating the trend to continue post-crisis. However online retail has undoubtedly been the saving grace of the industry, with 43% of consumers who hadn’t purchased fashion online before the crisis having converted throughout. And while luxury fashion took a dip, brands such as Boohoo in the UK reported a 45% increase in revenue across all of its fashion brands in the same period. Similarly, those apparel businesses with strong athleisure offerings, such as Nike and Lululemon, reported incredible growth over the course of the pandemic with the category predicted to be worth $257.1 billion by 2026.
Sustainability
This growth, however, cannot be achieved at the expense of environmental credentials. Fashion waste is costing the global economy more than $400 billion every year, according to a recent World Economic Forum report, and a recent report estimated that in 2020, 18.6 million tonnes of clothing ended up in landfill.
In response to these kinds of numbers, strides towards the creation of a greener, more sustainable industry were being taken pre-pandemic. 2020/2021 has sought to consolidate this agenda, as consumers have a greater appreciation of need versus want, and have become more considered in the way in which they consume fashion. This in turn could reverse the fast fashion movement, driving less, rather than more seasonality in the industry.
The circular economy
Globally, the clothing industry is worth around USD $1.3 trillion, and employs more than 300 million people across the supply chain. In parallel, largely due to the fast fashion phenomenon, clothing use has declined by almost 40%, highlighting a need to bridge this gap.
For many, more time and less income has boosted a mindset shift focused on reducing, re-using, recycling and recalibrating attitudes to apparel. As a growing number of consumers step back from the continuous fashion cycle, we could see less seasonality to help eliminate the high volumes of fashion waste currently being seen.
Another possible trend is subscription rental models, which are already emerging in certain areas. These fulfil a demand for fast fashion but increase usage and minimise the throwaway aspect, representing a win-win for responsible fashion.
Innovation
The only certainty in the post Covid world is uncertainty, as companies adjust, instil agility and spin up new business models to capitalise on shifting demand. Innovation, that is the process of creating new products, channels or ways of working, is absolutely fundamental for survival in this new normal.
As companies continue to pursue digital as a means to fostering agility and the automation from which to embrace innovation, more and more will be able to take advantage of new opportunities. For some this might mean the creation new products, models and channels, while some might go as far as to develop new categories and markets.
Thriving in a post Covid world
The trend towards multi-channel, with ecommerce dominating, seems set to increase therefore online and social channels will continue to gather momentum beyond the Covid crisis. Faced with this, it is absolutely paramount that apparel businesses prioritise the review and evaluation of systems and digital capabilities. Speak to one of our experts and find out how our ERP solutions for the apparel and footwear industry will help you better pursue opportunities and drive all-important collaboration from which to thrive.
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