Fashion Agreements

This joint report by Business of Fashion and McKinsey is an attempt to advance the debate on crisis management and immediate emergency planning by outlining areas where the fashion industry needs to focus once the dust has subsided on the current crisis. It is impossible to know for sure when this will happen, except that, in all likelihood, it will be associated with the discovery of a workable antiviral treatment and the administration of a proven vaccine that some experts say is at least 12 to 18 months away. In the face of all these changes, the performance gap between leaders and lagouts continues to widen: from 2005 to 2015, the top 20% of fashion companies contributed 100 percent to the sector`s total economic benefits; By 2016, the contribution of the top 20% had increased to 144%. Here are some of the results of our latest report The State of Fashion 2021, written in collaboration with the Business of Fashion (BoF). The report, the fifth in our annual series, addresses the main themes of the fashion economy and assesses a number of possible reactions. In line with our discussions with industry leaders over the past few months, the top ten trends expected to mark the business next year will be examined. Our latest reading of our Global Fashion Index shows new insights into the company`s performance by category, segment and region. Our first report The State of Fashion (PDF-8MB) finds that it`s not just external shock waves that have shaken the industry. Companies also looked inward and made changes to core operations that would revamp the entire fashion system, from reducing the length of the fashion cycle to integrating sustainable innovations into commodities, design and manufacturing processes. It`s perhaps no surprise that 67% of executives believe that conditions in the fashion industry have deteriorated in the last 12 months. The benchmarking study was conducted between March 2016 and April 2016, based on a survey of 30 executives from leading U.S. fashion and apparel brands, retailers, importers and wholesalers. When it comes to company size, 92 percent of respondents say they have more than 500 employees at their companies, while 84 percent of respondents employ more than 1,000 people, indicating that the results reflect the views of the most influential players in the U.S.

fashion industry. The sobriety of the fashion managers surveyed in last year`s report has become in recent months a strong determination to get the sector through the COVID 19 pandemic. Our calculations, based on changes in market capitalization over time in our Global Fashion Index, indicate that the sector`s economic profit will decline by 93% in 2020, after increasing by 4% in 2019 (Figure 1). The result is a significant increase in the number of companies that are „value destroyers,“ which we expect to take over 73 percent of the companies in the index in 2020, up from 60 percent in 2019. What distinguishes these agreements from normal collective agreements for work management or in the workplace is that they are negotiated with brands and retailers. They are not the direct employers of textile workers, but as buyers of garment factories, they have a responsibility for working conditions and workers` rights in their supply chains – and they are the ones who hold the vast majority of profits in this multi-billion dollar industry. . . .