Dark fashion for the clothing industry

On the raw screen of the videoconference, Sandrine Devillard drops her predictions without a fuss, but without any tongues wagging either.

In general, in North America and Europe, the apparel sector has not been doing well for a while, explains the senior associate director at McKinsey in Montreal. It was just getting its strength back before the virus hit.

Of course, some companies did well in 2020, despite everything, and are generating profits. Notably the strongest ones in online commerce. But together they represent only 20% of the sector.

The rest?

The other 80%?

It pulls all the profit statistics down.

McKinsey calls these companies ‘value destroyers’.

According to a report entitled The State of Fashion 2021, published by the consultancy firm and The Business of Fashion magazine, profits for the industry as a whole will fall by 93% in 2020 because of these struggling players, whereas they had risen by 4% in 2019.

So, from a general perspective, 2020 has been a catastrophic year in apparel. And the bankruptcies, closures and other recourse to the law protecting against creditors that we have seen while the pandemic refused to lose its breath are only the beginning of a downward spiral that will continue.

In addition, according to McKinsey’s consumer research, Canadians are not in spending mode when it comes to clothing. No outings, no restaurants, no parties with friends or family, telecommuting… The ball gown and the suit and tie are on pause.

The word gloom barely begins to describe the state of affairs.

But the picture painted by the analyst is not entirely bleak.

Apparel, unlike electronics in particular, is not controlled by the web giants or even the giants at all. Between them, Amazon, Target and Walmart have barely 20% of the market, although there was 6% growth during the early 2020 lock-in.

So there is room for other companies. Smaller, nimble companies that will be able to use digital technology to compete with the big guys and will be ready to move into the future, head first, to meet the many challenges that mark this sector in transition.

Made in Canada Jackets

The pandemic has created a surge of solidarity within the industry,” she says, “to ask for help and support together. It also accelerated the digitisation of sales and the organisation of delivery structures. Companies have been forced to fast-track the development of their online business. A lot of things have been shaken up. And this was not necessarily bad.

But if the crisis has awakened a certain economic nationalism and, above all, the realisation among the population that a certain self-sufficiency is important in terms of both food and clothing production – for the health sector in particular – the battle for local purchasing and for the health of this sector is not won in advance. Yet it employs 83,000 people, more than the aeronautics industry.