Luxury and fashion companies to be hard hit by economic lockdown – McKinsey


Share post:

As consumers sober up, due to the ongoing lockdown, spend on non-food and non-health products are expected to take a hit. Fashion and luxury businesses will feel the impact more, according to giant consulting firm, McKinsey & Co.

A survey released by the consulting firm on Wednesday said sales at fashion retail stores will dip by as much as 40%. Hence employees in the sector may face “hardship and destitution”.

Weaker economic activities have seen businesses placing workers on temporary redundancy or full layoff consequently affecting family incomes and spending power across the globe.

Cancelled orders due to thin discretionary budget and store closure will hammer the $754 billion fashion and apparel market. McKinsey reported that 80% of the luxury and fashion companies surveyed will see financial hardship and bankruptcy within the next 18 months if the lockdown is extended excessively.

However, the consulting giant said retailing and fashion firms that survive will need quick intervention such as the proposed stimulus package by government, and a tweak to previous operating models, to survive possible recession.

Some of the survival strategies for players will include deep discounting. Low priced extensions will also soothe the market. Next is bold digital efforts to build value around virtual shops including home delivery, as social distancing is expected to be a norm for a long time.

Toyin Afilaka
Toyin Afilaka
Toyin Afilaka writes with simplicity and insight. He aims to enrich the Nigerian small business landscape. Through Hustle24 he connects entrepreneurs with information about new policies, enterprise solutions and opportunities that will aid their 'hustle'. He has written extensively for CobraReview, a product review portal, and served as a lead project manager for MarketingMix where he consulted as PR consultant for MTN Project Fame and Business Next Titan etc.


Please enter your comment!
Please enter your name here
Captcha verification failed!
CAPTCHA user score failed. Please contact us!

Related articles

HBR: Four (4) Approach to Diversifying Your Business – Graham Kenny

Summary: Although conventional wisdom suggests that companies should look for growth opportunities close to their core businesses and...

HBR: How to Become a Super Communicator at Work

by Charles Duhigg Summary.    We’re not born knowing how to communicate effectively. Rather, great communication is a skill that nearly anyone...

Opportunities: Orangle Corner Nigeria dangles 40,000 Euros funding before young entrepreneurs

Applications are now open for the 10th cohort of the Orange Corners Nigeria Incubation Programme. The Orange Corners...

Demography key factor in Nigeria’s real estate sector’s evolution – Bartholomew Egbochie

Despite the challenges in the operating environment, experts are projecting growth in the real estate sector. Mr Bartholomew...