- 20 major companies lead the global fashion industry right now, according to the McKinsey Global Fashion Index. These companies account for 97% of global economic profit in the sector.
- Nike, Adidas, and H&M are among the well-known names on the list.
- According to the report, mid-market players are increasingly losing out to luxury and value brands.
The global fashion market is dominated by 20 companies, according to new research from management consultancy firm McKinsey & Company.
In its “Global Fashion Index,” released last week, McKinsey ranked the top fashion companies across the world by economic profit, which it defines as “a measure for value-add created by businesses, whereby opportunity costs are deducted from revenues earned.”
Dubbed the “super winners,” these companies currently account for 97% of global economic profit in the retail sector and own some of the biggest and best-known brands in the business, including Nike, H&M, and Zara.
“The lesson from 2017 is that size continues to matter,” the report said. “There is a demonstrable advantage to scale. The one caveat is that if you can’t be big, be nimble.”
Noticeably absent from this list are online players and US department stores – the latter dominated the list 10 years ago, according to the report. The companies are ranked by economic profit, which is net operating profit, less adjusted taxes minus capital charge.
Find out which companies made the top 10 list below:
10. Kering — Gucci, Alexander McQueen, Balenciaga
Economic profit: $US943 million
Luxury conglomerate Kering has some of the best-known high-end labels in its empire. They include Gucci, Alexander McQueen, and Balenciaga, among others.
Gucci has exploded in popularity in recent months, especially among millennial and teen shoppers. It was ranked the second-hottest brand on a recent survey by Lyst and was ranked as the 10th most popular apparel brand in a survey of teen spending in April. Sales grew 46.6% in the first quarter of 2018 at Gucci and were up 35.1% in its most recent quarter, according to Kering.
Economic profit: $US1.06 billion
German athletics brand Adidas continues to be one of the leading global fashion companies.
In recent years, it has been doubling down on the US market and has seen positive results because of this, capturing more market share and reporting 30-40% gains.
8. Ross Stores
Economic profit: $1.06 billion
Off-price retailer Ross Stores is known for offering a wide selection of well-known brands at discounted prices and providing customers with a treasure-hunt shopping experience that’s hard to replicate online. It has been hailed as a “retail treasure” by analysts.
7. Richemont — Cartier, Chloé, Net-a-Porter
Economic profit: $1.07 billion
Richemont is the parent company of a host of jewellery and watches brands such as Vacheron Constantin, Cartier, and IWC Schaffhausen.
It also owns Net-a-Porter, the online fashion store selling a wide mix of designer brands.
6. H&M Group
Economic profit: $1.28 billion
H&M is best known for its cheap namesake brand but also runs more expensive stores such as & Other Stories and Cos.
H&M was considered one of the pioneers of the fast-fashion movement and continues to be one of the leading apparel companies in the world. However, in recent years, it has come under pressure as more nimble online brands have sped up supply-chain times.
Economic profit: $1.35 billion
Luxury French brand Hermès is best known for its silk scarves and hand-stitched $US10,000 Birkin handbags.
4. TJX Companies — TJ Maxx, Marshalls
Economic profit: $1.97 billion
TJX Companies, the parent company of several off-price chains in the US, including TJ Maxx and Marshalls, is leading the American off-price market.
TJ Maxx offers discounts of between 20-60% on well-known brands and has reported strong same-store sales numbers for several years.
3. LVMH — Louis Vuitton, Givenchy, Dior, Marc Jacobs
Economic profit: $US2.33 billion
Headquartered in Paris, LVMH is a luxury goods conglomerate that owns a wide range of designer brands including Louis Vuitton, Loewe, Céline, and Givenchy.
In the first nine months of 2018, revenues were up 10% at the company. Fashion and leather goods make up the largest portion of its business.
Economic profit: $US3 billion
1. Inditex — Zara, Massimo Dutti, Pull & Bear
Economic profit: $US4 billion
Spanish-headquartered Inditex is the retail powerhouse behind brands such as Zara, Massimo Dutti, and Pull & Bear.
The company was founded by billionaire Amancio Ortega, who opened the first Zara store in northern Spain in 1975. Zara has since grown to become an enormous, 2,000-store chain, with a presence in 96 countries around the world.
Here is the full top 20 list, ranked:
- Inditex – Zara, Massimo Dutti – $US4 billion
- Nike – $US3 billion
- LVMH – Louis Vuitton, Givenchy, Dior, Marc Jacobs – $US2.33 billion
- TJXCompanies – TJ Maxx, Marshalls – $US1.97 billion
- Hermès – $US1.35 billion
- H&M – $US1.28 billion
- Richemont – Cartier, Chloé, Net-a-Porter – $US1.07 billion
- Ross Stores – $US1.06 billion
- Adidas – $US1.06 billion
- Kering – Gucci, Alexander McQueen, Balenciaga – $US943 million
- L Brands – Victoria’s Secret, Pink – $US876 million
- Pandora – $US871 million
- FastRetailing – Uniqlo, Theory – $US783 million
- Next (British clothing company) – $US713 million
- VFCorporation – The North Face, Vans, Lee – $US646 million
- Luxottica – $US626 million
- MichaelKors – $US597 million
- Gap – $US537 million
- HanesBrands – $US495 million
- Burberry – $US446 million