SHANGHAI — COVID-19 will help propel China’s apparel market into the top spot globally, overtaking the U.S. in the next three years, according to a new forecast by the research firm Global Data.
While the pandemic has dragged on markets all around the world — COVID-19 will wipe off 15 percent, or $297 billion, from the global apparel market compared to last year — it is mature markets that will be hit hardest.
“We expect the developing APAC markets including China, India and South Korea to increase their position in the top 10 global apparel markets by 2023, as mature Western markets lose out,” the firm said.
The U.S., as the world’s largest currently, will account for 42 percent of all lost spend, which will contribute to more major chains filing for Chapter 11 over the next few months, Global Data said. APAC markets, on the other hand, are expected to be in a better position to counter the COVID-19 impact compared to their American and European counterparts driven by the growth in domestic demand.
“Though the recovery has already started across the APAC markets, apparel sales will take some time to rebound amid dampened consumer confidence, the slump in tourism, the threat of an impending global recession and high unemployment rates,” said Vijay Bhupathiraju, retail analyst at GlobalData.
“Some of the lost sales will be compensated by the level of ‘revenge buying’ (sudden release of pent up demand from those willing and able to spend). Some brands across China for instance are seeing store sales return to 80 to 100 percent of pre-COVID-19 trading levels as the country relaxes lockdown measures.”
In 2019, the top 10 markets were the U.S., China, Japan, Germany, India, Italy, U.K., Russia, France and South Korea.
By 2023, Global Data expects the order will shift to China, U.S., Japan, India, Germany, U.K., Italy, Russia, South Korea and France.
While this data attests to China’s ascent in the medium-term, the country is not without its economic challenges. A separate Oliver Wyman survey last week said China’s apparel market this year would see a $60 billion contraction from COVID-19.