Competitor Strategies in Apparel and Footwear

November 2020

In the very fragmented apparel and footwear industry, top competitors either shape or embrace the key trends driving sales growth. COVID-19 exposed the vulnerability of the industry across the supply chain. The world post-pandemic is one where consumers’ habits and needs have changed, and this challenges companies to respond quickly and adapt their strategies to survive. Three trends have gained relevance: digitalisation, price and value for money, and sustainable and ethical.

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Key findings

Apparel and footwear companies challenged to adapt to a “new normal”

Companies are being forced to rethink their strategies after COVID-19 exposed the fragility of the industry across the supply chain. The narrative in fashion is also changing to reflect newly emerging priorities and consumer spending patterns through the lens of COVID-19. Digitalisation, price and value for money, and a redefined view of sustainability are expected to shape the industry moving forward.

Digitalisation takes centre stage

The pandemic has generated further momentum for the already rapidly growing e-commerce channel. Brands and retailers alike are being forced to develop or strengthen their digital strategies to respond to the new environment. From subscription services to curated products to digital engagement, companies are focused on create a unique shopping experience both in stores and online.

Price and value for money back to consumers’ top of mind

The widespread global recession and rising unemployment rates will make price and value for money much more important for consumers. Unbranded products and private label could benefit from offering basic items at low prices amid the depressed economic environment. Discounts and promotions were already a common marketing strategy in the industry, but the pandemic has pushed the limits further as companies aim to get rid of inventory. Brands across the price spectrum have used discounting despite the risk of harming margins and brand equity.

Sustainability goes beyond environmental responsibility

Consumers prioritise brands holding sustainability as a purpose. From adjustments to their supply chain to launching upcycled garments, companies are stepping up their eco-friendly commitments. Sustainability is no longer an option but a must, and consumers expect ever more from their brands. Consumers will choose brands that commit to the greater good, brands that take a stand on social issues, brands with purpose, and brands with values aligned to theirs.

Introduction

Scope
Key findings
Apparel and footwear and COVID-19

State of Play

Fragmentation creates intense competition globally
Companies at a glance
A wider portfolio brings growth only for certain companies
Divestments and acquisitions cause minor moves in rankings
COVID-19 leads to a rethink of internationalisation strategies
Focus of Nike Inc and adidas Group on specific categories pays off
Focusing efforts on a few brands is a common strategy among leaders
COVID-19 to determine future movements in top 10 company rankings
Corporate response to COVID-19
COVID-19 brings challenges but also opportunities

Digitalisation

Rethinking consumer touchpoints with declining retail footfall
Nike leverages the power of digital to drive growth
Fast Retailing aims to channel a big portion of its sales through digital
VF Corp’s priority is to engage with consumers through digitalisation

Price and Value for Money

Economic conditions push consumers to search value for money
When e-commerce is not enough, there is the “old discount”
Opportunities lay ahead for off-price retailers and private label
Amazon increases efforts to gain shares with its private label brands

Sustainable and Ethical

The new sought-after credentials: Ethical, inclusive, sustainable
The change started with the response to COVID-19
adidas strengthens its position as a sustainability leader
Levi Strauss & Co aims to build an environmentally resilient business
The Gap Inc bets on sustainability to engage with consumers
H&M and Inditex show that fast fashion brands accept the challenge
Outdoor brands take more of a holistic approach to sustainability
The greater good takes many shapes, of which inclusivity is one

Appendix

Treemap
Overlap matrices
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