Pulse Survey on the development of the fashion industry: retailers, manufacturers and financiers disagree on their outlook
Frankfurt/Main, 20.04.2021. Within the next 24 months, stationary fashion sales will return to pre-Corona levels. Only 53 percent of the fashion manufacturers and 21 percent of the financiers and trade credit insurers assume that this will be the case. The assessment of fashion retailers is different: 72 percent are optimistic that they will achieve this goal again. More than one in three (35 percent) fashion retailers see the pre-Corona level never coming back. On the financiers' side, more than half (53 percent) see it that way. This is the result of the Pulse Survey 'Fashion 2021' conducted by the consultancy FTI-Andersch.
- Conversion of retail into a 'place of experience' and 'Casualisation‘ of fashion named as the most important challenges
- 88 percent of retailers see social media platforms as an important new sales channel - but only a quarter of them for themselves
- Overcapacities are to be reduced primarily by means of discount campaigns
"We see a clear discrepancy here in the individual assessment of the respective groups," says Mike Zöller, partner and retail expert at FTI-Andersch. “The impression arises: the more your own business model depends on brick-and-mortar retail, the more optimistic the situation is. This is psychologically understandable, but very dangerous in terms of realistic medium to long-term business planning. Retailers in particular tend not to be sufficiently realistic about business developments. The result can be serious management mistakes that are now being made. The biggest one would be just waiting.“
Strategic challenges and initiatives are assessed similarly by the respondent groups
Asked about the biggest challenges of the next 36 months, fashion retailers and manufacturers in the Pulse Survey were unanimous: In first place was voted the development of stationary trade into a 'place of experience'; followed by the ‘casualization’ of fashion – a preference on leisure and casual clothes, away from business and occasion clothes. The financiers consider this development in the fashion industry to be the most important. They have named as the second biggest problem the fact that no increase in returns can be expected in the medium term either. The conditioning of the consumer to a continuous sale ('permanent discount’), decreasing visitor frequencies and increased ecological awareness were given lower priority, although they were classified as relevant.
Asked what must follow from this, all the groups surveyed stated that increasing the digital and e-commerce expertise must be the most important strategic initiative in the near future. Reducing the product range also made it into the top three of all groups. Manufacturers and retailers also want to increase quality and raise prices in order to compensate lower turnover levels. Financiers see thinning out the existing store network as the second most important point.
Example ‚Social Media as a sales channel‘: Respondent groups draw different conclusions
Dorothée Fritsch is director and expert for the fashion industry at FTI-Andersch. "In contrast to the assessment of market trends we see in the designated strategic challenges and initiatives comparatively large unanimity," says Dorothée Fritsch.
This observation underpins, for example, an assessment of the role social media platforms will play as sales channels in the future. Only 25 percent of retailers say that this could 'definitely' overtake their own online shop as a sales channel. 63 percent see it as possible on (‘not for us, but for others' ). In the case of fashion manufacturers, this is balanced: 47 percent each rate it as important for themselves and/or for others. “Many manufacturers have often long since taken up this trend,” says Dorothée Fritsch. “For them, it is another way of selling directly to the end-customer and strengthening brand awareness.” Well over half (54 percent) of the financiers are convinced that social media platforms denote individual online shops.
Dorothée Fritsch says: “These figures make it clear that the devil is in the details: Everyone agrees that they need to improve their digital and e-commerce skills. But the degree of this increase is defined very differently. Given the preference of retailers for this form of sales, it can already be estimated that a minority will create the necessary prerequisites today to be competitive in this area in the future."
Surplus stock to be reduced mainly by means of discount
Over the course of the Corona crisis, the excess inventory of goods at retailers and manufacturers has once again increased significantly. "What to do with this excess inventory is a largely unsolved problem in the fashion industry," says Mike Zöller. Financiers and manufacturers show a preference for large-scale discounts, and this currently seems the most likely option for retailers as well. Nevertheless, they assume that sales will be slow and that storage costs will be high. Financiers would give sales via third-party recyclers such as Schusterman & Borenstein ('Best Secret') a higher preference – manufacturers and dealers are more hesitant. The retailers try to shift the surplus goods into the next collections. Thermal recycling and donations were classified as less relevant.
"The overall picture is in which the financiers in particular want to sound out all possible options, while manufacturers and retailers act more cautiously and with clearer preferences," says Mike Zöller. “Realistically, you have to say that the individual situation of the individual company is very important here. Every board member, every management must now decide individually how the damage can be minimized. In addition, I advise not to take options off the table early on, but to discuss together with financiers and stakeholders in which form the individual mix can be designed in the best possible way. "
About the investigation:
In April 2021, the consultancy FTI-Andersch surveyed 82 fashion manufacturers, retailers and financiers/insurers in a Pulse Survey on current assessments regarding the market and business development in the fashion industry in Germany. The results cannot be regarded as representative, but rather reflect an ad-hoc impression to be classified in terms of time. From the point of view of the fashion and retail experts at FTI-Andersch, the impressions gathered here quantitatively are basically in line with what they currently observe in their day-to-day business at both fashion retailers and manufacturers. You can download the entire Pulse Survey 'Fashion 2021' below.
FTI-Andersch is a management consultancy that supports its clients in the development and implementation of sustainable future/performance and restructuring concepts. FTI-Andersch actively supports companies that have to deal with operational or financial challenges – or that want to align their business model, organization and processes for the future at an early stage.
Clients include, in particular, medium-sized companies and corporations that operate internationally. FTI-Andersch is part of the internationally active FTI Consulting Group (NYSE: FCN) with more than 5,500 employees.