Competitor Strategies in Apparel and Footwear

January 2023

Apparel and footwear was hit hard by the COVID-19 pandemic, and while recovery gathered steam quicker than initially expected, high inflation, the war in Ukraine and China’s COVID situation further disrupted the global economy, forcing market players to reassess their priorities. Those banking on personalisation, experiential shopping and sustainability, while diversifying their supplier base and investing in automation and big data, will be best positioned in such a volatile environment.

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Key Findings

A shadow lies over recovery

While global sales of apparel and footwear bounced back quicker than previously expected, the war in Ukraine, all time high inflation and China’s strict COVID policies have further disrupted the global economy, forcing market players to reassess their priorities and operating procedures – from which markets to expand, to distribution channels and where to produce.

Diversifying retail markets

Strict COVID-19 policies and the “guochao” trend in China (Chinese consumers increasingly embracing domestic brands), combined with the poor economic outlook and political instability in Europe, have led international fashion players to diversify their retail markets in a bid to drive their global growth.

Rethinking supply chains

Already heavily disrupted by the global pandemic, supply chains are now challenged by the current market volatility. This is reshaping the global production landscape, as market players invest in AI and automation, vertical integration and diversification of suppliers to mitigate their risks and predict demand.

Investing in DEI and sustainability

Following the pandemic and Black Lives Matter (BLM) protests, social justice and climate change have come to the fore for a growing number of consumers and fashion players need to reprioritise their ESG and DEI commitments as part of their core values, all the more since regulation in that regard is evolving, for example the EU Green Deal.

Banking on brand experiences and personalisation

Consumers increasingly demand a personal and seamless experience from the brands they buy, and the option to engage with them on or offline as and when it suits them best. Hence companies continue to invest in their omnichannel transformation, from digitally-enhanced stores to NFTs, as they need to achieve greater efficiency, improve the customer experience and stay relevant for new generations.

Scope
Executive summary
Recovery will be uneven and remains uncertain
The ongoing uncertainty in Europe and high inflation rates disrupt the global economy
Apparel and footwear continues to see high fragmentation
M&A activity is reshaping the corporate landscape
Nike has maintained its world’s leading position since the pandemic
Apparel and retailing industries to increasingly overlap as key players focus on DTC
Seeking new retail markets to boost sales
India, Mexico, Saudi Arabia and the US set to benefit from international players’ investments
Spanish company Mango unveils USD100 million plan for retail expansion across the US
Galeries Lafayette signs a partnership with ABFRL to expand in India
H&M is developing its presence in Latin America
adidas and Nike have their eyes set on the Middle East
Dealing with excess inventory after struggling to stock shelves
Market volatily forces apparel and footwear players to lead in production automation
New Balance has inaugurated a 60,000 sq m warehouse facility in the Netherlands
American Eagle Outfitters acquired Quiet Logistics and opened a shared service to rivals
Diversification of supply chains accelerate to combat inflation and instability
Benetton is moving its production hubs from Asia, closer to Europe
Gap Inc committed USD150 million investment to boost Sourcing in Central America
Brands to fuel manufacturing shifts within Asia and build a network of preferred vendors
Fitflop is looking for manufacturing locations in India and Thailand
COVID and BLM have brought DEI and sustainability to the fore in luxury and fashion
Fashion brands are in a prime position to influence positive social change
Argentinian footwear brand TOMS has partnered with Save the Children since 2011
Australian brand Bonds releases a gender-fluid collection developed with LGBTQIA+ activists
Puma is running “REFORM the Workplace” strategy to promote DEI internally
Green commitments step up as pressure from consumers grows
The upcoming EU environmental regulation could reverberate through global value chains
Environmental action from the world’s top fashion players
Mango drops its Committed label and will replace it with a QR code to comply with EU laws
Golden Goose and Coronet open a joint R&D lab for eco-leather trainers in Italy
Klarna is incorporating CO2 footprint tracking into online shopping
The pandemic has caused a surge in e-commerce sales globally…
…but consumers still crave the physical aspect of in-store shopping
Shein opens a permanent store in Harajuku, Tokyo’s popular shopping district
Nike banks on both its direct applications and localised digitally-enhanced retail strategy
Urban Revivo uses location-based service on WeChat to target users around physical stores
The rise of omnichannel shopping and supply chain woes drive greater personalisation
Levi’s Tailor Shops offer customisation via digitally-enhanced tailoring services
Moncler has started its “Moncler by Me” customisation service
NFTs and the Metaverse could lead to fashion’s next phase of hyper-personalisation
Second Life provides a precursor of a Metaverse that can be financially viable
Clarks has launched the “CICAVERSE” to engage with Gen Z in Roblox
Hogan banks on digital twins by releasing a series of physical products as redeemable NFTs
Key strategies in the apparel and footwear industry

Apparel and Footwear

Apparel is the aggregation of clothing and footwear. This dataset covers retail sales of apparel through both store-based retailers and non-store retailers. Excludes black market sales (i.e. untaxed, generated within informal retailing)and duty free sales (travel retail). Items must be new when sold to the consumer; second-hand/used items are excluded. Antique and/or vintage clothing and footwear is also excluded.

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