Home / Knowledge / News / Fashion / Fashion key value-creating industry in 2016: Report
Fashion key value-creating industry in 2016: Report
22
Dec '16
Despite the wider economic slowdown in 2016, fashion has been a key value-creating industry for the world economy, says a recent report. Most of the industry value is captured by a small percentage of players, with the top 20 per cent creating 100 per cent of total economic profit and the bottom 20 per cent contributing an economic loss of 18 per cent.

Among the top 20 per cent are Adidas, Burberry, Chow Tai Fook, Richemont, Fast Retailing, Hermès, H&M, Inditex, L Brands, Luxottica, LVMH, M&S, Michael Kors, Next, Nike, Nordstrom, Pandora, Prada, Ralph Lauren and TJX. Fashion is essentially a winner-takes-all industry and a handful of companies that make the right decisions and execute flawlessly are the ones that reap the lion’s share of the rewards, says the State of Fashion 2017 report by McKinsey & Company.

After years of stable growth rates, the industry is expected to face a major slowdown in 2016, dipping from 5 per cent growth in 2015 to 2–2.5 per cent in 2016. As the McKinsey Global Fashion Index (MGFI) shows, this is the slowest growth fashion has seen in the past decade, a period during which the industry has consistently outpaced global GDP growth, having recorded 5.5 per cent between 2005 and 2015.

The negative impact on sales across all segments is the result of a volatile global environment, reduced tourism, and the economic slowdown in China. The lack of significant differences in performance of product categories for the most part suggests that the main driver of sales and profit is the positioning of each brand and the value proposition it communicates to consumers.

In terms of market segments, the biggest winners in 2016 have been affordable luxury and value, which outperformed all of the other segments by 1–1.5 percentage points, says the report. This is consistent with their growth over the past three years, which has seen a 6 per cent compound annual growth rate (CAGR) for value and 9 per cent for affordable luxury, the highest rate for any of the segments since 2013.

Profit margins of affordable luxury players are expected to continue to decline, especially after 2016, due to a pricing arbitrage disadvantage across geographies and fluctuating foreign exchange rates.

As indicated by the MGFI, the only segments that have seen sales and profit margins increase are discount and value players, which have increased their economic profit over the past 5 years and created significant value for the industry. The biggest losers, however, have been the luxury and mid-market segments, according to the report.

In 2016, athletic wear is projected to grow at 8.0–8.5 percent—more than twice as fast as any other category, states the report. This is consistent with its 10 percent CAGR of the past decade, driven by consumers’ more active lifestyles, the rise of ‘athleisure’, emerging brands in the high-end segments, and product innovations. (KD)

Fibre2Fashion News Desk – India


Must ReadView All

Uzbekistan wants joint ventures with Hungarian textile firms

Textiles | On 20th Feb 2018

Uzbekistan wants joint ventures with Hungarian textile firms

Uzbekistan has offered Hungary to create joint ventures in the two...

Vietnam’s textile & garment exports up 10.68% in 2017

Textiles | On 20th Feb 2018

Vietnam’s textile & garment exports up 10.68% in 2017

Vietnam came very close to achieving its 2017 textile and garment...

Maharashtra’s new textile policy to privatise cooperatives

Textiles | On 20th Feb 2018

Maharashtra’s new textile policy to privatise cooperatives

The state government in India’s western state of Maharashtra, under...

Interviews View All

Top executives
Textile industry, India

Such fairs are a must for industry to showcase new innovations

Neel Sawhney
One Friday

‘The share of kidswear segment in the online sector is still small in...

Milind Khandwe
Hindoostan Innovation Centre

‘Modern technical textile is an indispensable tool for science and...

Hardik Sanghvi

Idealin Fogging Systems has been engaged in designing and manufacturing...

Harsh Shah

Fynd is the central online shopping destination for fashion, offering...

Harsh Shah

Established in 1956 with a small beginning, Embee today manufactures a...

Johan Berlin
InvestKonsult Sweden AB

Investkonsult Sweden AB has been buying and selling second-hand textile...

Kerem Durdag
Biovation II LLC

Kerem Durdag, CEO, Biovation II LLC, provides an insight into future...

Steve Cole
Xerium Technologies

Steve Cole of Xerium Technologies discusses the industry. Xerium is the...

Igor Chapurin
Chapurin

"Now we can see the Russian trend in international fashion. And Russian...

Anisha Chaudhari
Threads & Shirts

Threads & Shirts is a freshly-tailored concept providing men/women a...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

February 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
70.6%
No
12.7%
Skip
16.7%

Total Votes: 102

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
63.7%
No
29.4%
Skip
6.9%

Total Votes: 102

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
88.2%
No
8.8%
Skip
2.9%

Total Votes: 102

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
83.3%
No
7.8%
Skip
8.8%

Total Votes: 102


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search