“Darwinian shakeout”

"McKinsey estimates that up to a third of global fashion players, such as brands and department stores, will not survive the crisis.
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Shuttered stores on London's Oxford Street very quickly transmit to closed factories in Bangladesh and Vietnam and stockpiles at the cotton farms of Central India.
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The damage caused by the lockdowns in markets such as the UK raises the question of whether those supply chains can be stitched back together again — even in the unlikely event of a quick rebound in demand from consumers able to freely visit shops.
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Despite the torrid experience of bricks-and-mortar retailers in recent times, McKinsey last year labelled the global fashion industry one of the “rare economic success stories” of the past decade.
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But behind that headline is a story of extreme consolidation. In 2019, 97 per cent of profits in the industry were generated by just 20 companies, including Inditex, the world’s largest clothing retailer, and sportswear retailer Nike — a dominance that is only likely to be tightened in a recession, says Achim Berg, who leads McKinsey’s consulting work on fashion.
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He says that both fashion retailers and suppliers need to brace themselves for a “Darwinian shakeout”.
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Supply chains will be different in the future, Mr Berg believes. His clients are already trying to shorten the time it takes for an ordered shirt to arrive in shops, boosting their flexibility in the face of demand shocks. “The last couple of weeks have shown the vulnerability of the supply chain . . . and accelerated the realisation that you need to be closer to the source,” he says."

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