What: BoF and McKinsey & Company published an update to The State of Fashion 2021

Why is it important: recovery could be slower than expected in Europe, with bright spots in the US and China

Recent developments around more virulent mutations of Covid-19 and delayed vaccination programmes could further delay our path to herd immunity. But there are evolving ideas such as the “roaring twenties” recovery scenario for 2022.

2020 results in a nutshell

-European fashion sales were down roughly 20% on 2019 levels with Germany and France performing the best (down only 16-18% compared with 2019), while fashion sales in Spain and Italy contracted by 30%,

-In the United States, sales plummeted 23% year on year,

-Strong market performance in the summer in both Europe and the United States,

-China returned to a growth trajectory in August compared with 2019, with full year results only down 7% year on year,

-Markets with a high e-commerce penetration, including the United States and the United Kingdom, reported growth of between 45 and 50% in e‑commerce,

-China, where fashion e-commerce already has more than 50% market share, continues to grow.

2021 in Europe, down and out

Our outlook for 2021 is particularly downbeat in Europe, where it is conceivable that lost sales might range between 12 and 24% compared with 2019.

Two key uncertainties remain. First, how bad will the first quarter really be? The extension of European lockdowns until Easter alone would be sufficient to set 2021 sales back to 2020 levels, or worse if there are further setbacks in the second half of the year. Second, while it is still possible to avoid lockdowns in the fourth quarter, consumer sentiment remains highly uncertain.

2021 in the United States, improvements expected

The United States is expected to perform significantly better in 2021 than in 2020. Fashion sales will be down between 6 and 16% compared with 2019, but this is still a welcome improvement on 2020. This partial recovery will largely be driven by the continued surge of e-commerce, with online fashion sales set to outgrow pre-crises levels by as much as 40%.

2021 in China, a full recovery

Life in mainland China has largely returned to normal, so the most pressing question is really around the future of Chinese tourists. One important consideration is the Chinese vaccination strategy: given the relatively low case numbers in China, some observers have argued that China will not distribute the vaccine at a high speed, which means Chinese travellers are unlikely to return in significant numbers before 2022. In the meantime, Chinese luxury consumers are expected to increase their spending at home by as much as 50% this year.

The State of fashion 2021 reality check