The global apparel industry is likely to continue to
feel the knock-on effects of the Ukraine-Russia war into 2023 and beyond,
expert analysts believe, as we mark one year since the beginning of the
on from the start of the Ukraine-Russia crisis and the global apparel industry
has suffered both directly and indirectly as many brands closed their store
networks in Russia and battled rising energy prices and raw material costs.
Along with macroeconomic
volatility, the industry has had to deal with inflation and predictions of a
looming recession, with supply chain challenges continuously unfolding.
This ever-changing situation
has made it difficult for many operating within the apparel sector to predict
how the year will unfold, but Louise Deglise-Favre, an associate analyst for
apparel at GlobalData tells Just Style the impact of the war on brand
performance is likely to be felt beyond 2023.
She explains: “The exit from
Russia has had an undeniable impact on sales and profits for some apparel
companies, such as Inditex, H&M and LPP as the country was an area of fast
growth and high margin due to relatively low wages.
“While the impact of the exit
was heavily felt for some in 2022, it will lessen in 2023 and beyond as these
major apparel players have the resources to focus their efforts on building
growth in other regions of the world such as the Middle East and Latin
“However, the underlying impact of the conflict on consumer confidence and
energy prices in Europe has been an insidious detrimental side effect to
brands’ performances throughout 2022 and is forecasted to continue in 2023.”
At the close of 2022, Deepika
Rana, chief operating officer at Li & Fung, told Just Style the
tsunamis of overlapping economic and geo-political disasters, have made it
“impossible to predict and react, and have shaken not only the foundations of
retail profitability but also the foundations of the supply chain and are
forcing us to rethink how we will rebuild for a sustainable future”.
McKinsey & Company’s annual The State of Fashion 2023 report published
with The Business of Fashion,
warned the global fashion industry is headed for a global slowdown in 2023. It
pointed to geopolitical tensions, specifically around the ongoing war in
Ukraine, having disrupted supply chains and creating an energy crisis that 58%
of executives believe will weaken the fashion market this year.
It added: “The war in Ukraine
forced the re-routing of trade and triggered an energy crisis, while ageing
port systems across the globe are creating transport bottlenecks. Global
inflation has pushed up input costs — cotton and cashmere prices have increased
45% and 30% year on year in 2021 respectively — and extreme weather is hitting
developing economies like Pakistan where, alongside the tragic loss of human
life, as much as 45% of the country’s cotton crops were wiped out by floods in
By Just Style