Fashion’s digital transformation: Now or never – McKinsey & Company – Feld Center | Questrom School of Business

Written by Antonio Gonzalo, Holger Harreis, Carlos Sanchez Altable, and Cyrielle Villepelet

The COVID-19 pandemic is simultaneously an unprecedented health crisis and a global economic shock. 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. 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.

Although 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. In this article, we touch on COVID-19’s impact on the AF&L industry to date. 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.

A deepening digital divide

Our consumer-sentiment surveys, conducted in April, show declines in purchase intent of 70 to 80 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. E-commerce is clearly not offsetting the sales declines in stores. 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. 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.¹ This suggests that some percentage of offline sales could permanently migrate to e-commerce.