The war in Ukraine, rising inflation, disrupted supply chains and high energy prices: This mixed situation means that the industry is heading for a global downturn. This is the forecast by management consultants McKinsey & Company and the industry information service “Business of Fashion” in a study published today, Wednesday.
Around 56 percent of those responsible in the fashion industry expect the conditions for the fashion industry to deteriorate in the coming year. The background: the fashion industry initially recovered quickly after the slump caused by the corona pandemic. Global sales grew by 21 percent in 2021 compared to the previous year and rose again by 13 percent in the first half of 2022. However, the Ukraine war and its consequences slowed down the upswing in the second half of the year.
For 2023, the authors of the study therefore expect growth of five to ten percent in the luxury segment. But only there. “For the rest of the industry, growth is likely to stagnate or even be negative in 2023,” the study says.
However, there are likely to be large regional differences. Companies in the fashion industry still see the greatest potential for growth in 2023 in the Middle East and North America, where the energy price explosion is nowhere near as noticeable as in other parts of the world.
According to the study, however, the prospects for the fashion industry in Europe are particularly bleak, where experts believe that sales outside the luxury market may decline by up to four percent. Here, too, the luxury market will prove to be significantly more resilient than the rest of the industry – also because wealthy consumers and tourists from the USA and the Middle East, who suffered less from high inflation, supported demand for luxury products.
H&M is starting to save money
H&M is clearly feeling the effects of the crises. The Swedish fashion chain wants to part ways with employees in order to reduce costs. The company will cut around 1,500 jobs and post a restructuring charge of 800 million Swedish kronor (around 73 million euros) in the fourth quarter. H&M made the announcement today, Wednesday. Around 150,000 people work in the group.
“The cost and efficiency program we have initiated includes the review of our organization and we are aware that colleagues will be affected,” said CEO Helena Helmersson. “We will support our colleagues in finding the best possible solution for their next step to find.”
In September, H&M announced a plan to save 2 billion Swedish kronor a year without giving details of the savings package. Inflation, hesitant customers and one-off costs in connection with the processing of the Russian business had led to a slump in profits for the fashion retailer in the third quarter.
Source: Nachrichten
