Given its exposure to the ebbs and flows of Covid-19, the fashion industry has been a useful bellwether for the wider retail landscape. 

Maria Sharapova for Nike

Maria Sharapova for Nike

The initial impact of the pandemic was devastating, with 2020 being one of the toughest years on record. However, 2021 has seen light at the end of the tunnel, with an uneven recovery underway. 

Moreover, our analysis of ‘super winners’ in fashion shows that a group of leading players offer potential recipes for growth in the year ahead.

In State of Fashion 2022, we present our latest roster of super winners— the 20 companies that most successfully navigated recent disruption and which are set to enter 2022 on a strong footing. 

Who makes the top five?

Burberry fashion show

Burberry fashion show

The top five, based on average economic profit over a combined 2019 and 2020, were Nike, Inditex, Kering, LVMH and Hermes. The luxury names in the group benefited from the continued rise in global wealth fuelling demand for investible bags, jewellery and watches. 

Meanwhile, as millions of people worked from home, sportswear had a breakout performance, with 42% of positive economic profit in the McKinsey Global Fashion Index coming from sportswear companies—the largest single contribution by far.

Among the top 20 companies, the most prominent segments outside luxury and sports were the global fashion players – Inditex and Fast Retailing, as well as North American weighted-off-price players such as TJX and Ross. 

We also saw three new entrants this year – Deckers, Moncler and JD Sports. Of the 20 super winners, six managed to generate economic profit in 2020 that was above that of 2018 (we did not run the analysis in 2019 because of distortions created by the pandemic). These were Nike, Hermes, Anta, L Brands, and the two UK companies – Burberry and JD Sports.

A common theme across the best-performing companies over the past year was their ability to align with the most important themes across the industry. From catering to renewed interest in healthier lifestyles to better understanding changing customer needs, the leading companies were able to find operational solutions that enabled them to respond faster and more accurately to a shifting demand landscape.

Fashion trends graph

Looking to the coming year, we see five key themes that will drive success in the fashion and retail sectors; 

  • The first will be to secure the recovery, which will be uneven in the most probable scenario. Companies that thrive will align themselves with sources of growth and the major trends playing out across the industry. 

They are getting a grip on supply chain disruption and putting in place pricing strategies that balance still-tepid demand with rising costs – 66% of industry executives expect an increase in retail prices for 2022, with the median price increase in the range of 4%-9%. 

  • The importance of following the new shape of demand: with international travel still in the doldrums, domestic markets will be important. As some geographies emerge faster from the pandemic than others, consumers are likely to focus on styles that reflect their renewed freedoms. Data-driven analysis will help companies align their products with shifting demand. 
  • Another driver of performance in the coming year will be the continuing expansion of digital frontiers. The emerging metaverse will present companies with opportunities to create new virtual worlds and NFTs, while social commerce will continue to expand fast outside its Chinese heartland.
  • Sustainability is an urgent priority for both companies and consumers. We expect to see circular business models becoming more established in 2022, and increased use of product passports to encourage reuse, resale, and recycling. With many companies having made their sustainability pledges, 2022 will be the year to start delivering against them
  • Finally, the war for talent is an imperative. As companies increasingly invest in capturing digital and advanced data analytics to target consumers, so will the demand for the talent that can unlock these opportunities.