Fashion sector recovering in 2022, main supply chain challenges: Report

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According to a report from The State of Fashion 2022, the global fashion industry is ready for recovery next year, with fashion sales 3-8% above 2019 levels. Recovery is strongest in China and the United States as a whole, with Europe lagging behind. Supply chain pressure is a major challenge, putting risks at the pace of recovery, and 67% of companies are expected to raise prices.

Eighty-seven percent of the fashion executives surveyed expect supply chain disruptions to impact profit margins next year. Material shortages, transportation bottlenecks, and rising transportation costs combine to further increase input costs and create an imbalance between supply and demand.

The sixth report in the series was released today by McKinsey & Company and The Business of Fashion (BoF).

The global fashion industry is ready for recovery in 2022, with sales exceeding 2019 levels by 3-8%, says The State of Fashion 2022. Recovery is strongest in China and the United States as a whole, with Europe lagging behind. Supply chain pressure is a major challenge and poses a risk. 67% of companies are expected to raise prices.

Sustainability remains high on the fashion agenda, with 60% of businesses increasing their investment in closed-loop recycling solutions to reduce their environmental impact.

32% of industry executives identified digital as the greatest opportunity for growth, followed by sustainability (12%).

This report is based on exclusive interviews with the industry’s top executives and a survey of more than 220 international fashion executives and professionals.

According to the McKinsey Global Fashion Index (MGFI), the fashion industry recorded negative economic benefits for the first time in 2020 for at least 10 years, triggering the highest level of industry integration in history in 2020 and 2021.

The overall outlook is optimistic for 2022 companies, but many of the potential benefits will be offset by issues in the supply chain, which are the biggest concerns, pandemics and global economic challenges. Says.

A record 69% of fashion companies destroyed value in 2021. This means they faced losses, reached new depths and reduced the performance of the industry as a whole. However, MGFI has shown that the fashion recovery appears to be V-shaped, as the first half of 2021 results show the potential to return to positive economic gains by 2022. increase.

In China, the fashion industry in all value segments has already returned to pre-COVID sales levels, with the luxury sector in particular set to exceed 2019 sales by 70-90% by the end of 2021.

According to the McKinsey & Company COVID-19 US Consumer Pulse Survey, consumer sentiment is on a positive path in the United States, with 43% of US consumers saying they will increase fashion spending in 2021.

Despite the slow return to pre-pandemic sales levels in Europe, 67% of European fashion executives expect better trading conditions in 2022 than in 2021.

Metaverse will increase viewership and revenue for fashion brands that can monetize digital products, including creating and selling non-fungible tokens (NFTs) and allowing gamers to buy, maintain and trade virtual fashion products. We provide opportunities for creation.

In social shopping, brand engagement is skyrocketing. In a press release, McKinsey cited social commerce as one of the top three themes that will impact business in 2022 by 37% of fashion executives.

Sustainability, especially the issue of circulation and closed-loop recycling within the global fashion system, is another important area for businesses to focus on next year.

According to the Textile Exchange, less than 10% of the global textile market is currently made up of recycled materials.

68% of fashion executives cite the maturity of technology solutions as the most important factor in enabling expansion of closed-loop recycling solutions. 60% of such respondents say they have invested in or plan to invest in closed-loop recycling next year, but if this becomes available on a large scale, significant progress will be made.

Fiber2Fashion News Desk (DS)

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Fashion sector recovering in 2022, main supply chain challenges: Report

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