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.
