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Growth, Interrupted: 3 Coronavirus Scenarios for Investors

Can the global economy, which began the year on the path to recovery, get past the coronavirus outbreak and back on the road to growth? A look at three potential outcomes for 2020.

With economic activity disrupted and capital markets dislocated, investors have been debating if Covid-19, known colloquially as the coronavirus, could derail the global cycle. Given the sharp drops in global asset markets recently, pessimistic prognoses are easy to make. However, during times like these, some clear perspective is warranted.

Below I will walk through what my colleagues and I on the firm’s economics team see as the three most likely outcomes for the impact of the coronavirus outbreak on global growth. In our most likely scenario, new cases and disruption may continue near-term, but global policymakers will likely use easing measures and rate cuts to help mitigate the impact. Assuming new cases peak by mid-May, global growth could pick up in the third quarter.

Recovery Delayed

To set the backdrop: Coming into the year, my colleagues and I saw a growing evidence of a global economy on the mend after a tough 18 months. Headline Purchasing Manager Indices (PMIs) had bottomed out, and new-order survey data showed improvement as of October. Global trade was growing again in December, after contracting for six months. Despite lingering skepticism, we thought these data points supported our thesis of a global recovery taking hold in the first quarter of 2020.

The outbreak of Covid-19 has certainly changed that near-term narrative. Considering the weak starting point for global growth and still nascent recovery, this untimely disruption to economic activity will likely slow global growth this quarter.

The key question now: Could this exogenous, transitory shock fundamentally challenge the growth cycle? For now, we don’t think so. Indeed, throughout this expansion cycle, the global economy has weathered a series of shocks, each in turn giving way to a minicycle in global growth that has helped to extend the greater expansion by interrupting a stage of over exuberance that may have led to overheated growth and an end to the expansion.


Scenario #1 – Containment by March: The virus outbreak is contained by end-March and production disruption is limited to the first quarter. Policymakers in China and Asia move to provide meaningful fiscal and monetary support, with China expanding its fiscal deficit by 1.2 percentage points, keeping it high for the second year running. Global growth dips to an annualized rate of 2.5% in the first quarter, down from 2.9% in the fourth quarter, 2019, but recovers meaningfully from the second quarter onward.


Scenario #2 – Escalation in new geographies, disruption extends into the second quarter: In this scenario, new cases continue to rise in other parts of the world, before peaking by the end of May. The disruption extends into the second quarter, affecting corporate profitability in select sectors, risking the emergence of corporate credit risks. If the dislocations in asset markets also persist into the second quarter, a sharp tightening in financial conditions may mark a tipping point, exacerbating the impact on growth via weaker corporate confidence, falling capital expenditures and cutbacks in hiring.

In response, policymakers around the world would step up easing measures, with fiscal policy in Asia and Europe and monetary policy in the U.S. doing the heavy lifting. Today, the Fed announced an unexpected half-point rate cut and our Chief U.S. Economist, Ellen Zentner, expects the Fed to cut rates again by a quarter-point at its April meeting, with the risk of an earlier action given the “fluidity” of the situation. In this scenario, global growth averages just 2.4% in the first half of 2020, but starts to pick up in the third quarter.

Scenario #3 – Persisting into third quarter, escalating recession risks: The outbreak’s global disruption continues to spread into the third quarter, encompassing all the large economies. China faces a renewed rise in new cases as it restarts production. The extended disruption to economic activity damages corporate profitability and brings about a rise in corporate credit risks and significant tightening in financial conditions, which exacerbate the slowdown in global growth.

Central banks will embark on a renewed easing cycle, with the potential for a coordinated response. In this scenario, we expect the global weighted average monetary policy rate to dip to its lowest level since 2012. The Fed would extend its cuts from March-June and could become more aggressive and take rates to close to the lower bound by the third quarter.

The fiscal response across key developed and emerging economies also becomes more aggressive, with China taking up two percentage points of fiscal expansion. The cyclically adjusted primary fiscal deficit for China and the G4 nations (Brazil, Germany, India and Japan) widens to 5.1% of GDP in 2020, from 4.1% in 2019. Global growth stays weak (i.e., below 2.5%) between the first and third quarters.


Key Signposts

Developments related to the outbreak remain key, and we are monitoring the following signposts:

1.    The ability to bring control outbreaks in affected areas and the scope of the spread across Europe and into the U.S.;

2.    Whether China faces a rise in new cases, as it continues to restart production; and

3.    Updated data from the therapeutics in development.

The situation with the Covid-19 coronavirus is evolving rapidly and markets have begun to price in a larger and more widespread hit to global growth, which we believe will likely last well past the first quarter. Here we outline our four forecast scenarios for the next 12 months, three out of four of which look at the economic impact of the coronavirus.


The situation with the Covid-19 coronavirus is evolving rapidly and markets have begun to price in a larger and more widespread hit to global growth, which we believe will likely last well past the first quarter. Here we outline our four forecast scenarios for the next 12 months, three out of four of which look at the economic impact of the coronavirus.


In our single most likely (but odds against) scenario (40% probability) we see a sharp fall in Chinese GDP for one to two quarters, followed by a V-shaped recovery, with relatively small economic impact outside Asia. Our two downside scenarios highlight different channels through which the virus could impact the world economy more meaningfully: the first (25%), through trade and real economic activity; the second (25%) primarily through financial markets.


In our view, the first scenario remains the single most likely outcome, but the risks of the second and third are rising rapidly and should be taken into account in portfolios. We believe these downside scenarios are not unreasonable given the lack of information, rapid contagion, some panic by governments and supply chain disruptions. From an economic point of view, the virus’ initial impact comes through the supply side of the economy – as fewer working hours feed through to lower output and supply chains are disrupted. But demand will likely be impacted too – particularly for services – though some final demand for goods/parts can be met through inventories for a short period of time. At a minimum, we would expect repercussions to persist for the first half of the year. This event is also likely to add pressure on companies to diversify supply chains over the longer term and it could accelerate underlying de-globalization trends.


Market concerns over the coronavirus have resulted in risk-off trades, which have slashed stock prices and Treasury yields over the past week. In a richly-priced environment, the market is fearful the hit to the global economy will not be a V-shaped one—but a U-shaped one (i.e. a period of lackluster growth before the eventual bounce back from the hit to economies due to contagion from the virus). Remember, economic uncertainty due to the exogenous virus shock comes at a time when the unsettled race between the Democrats for the 2020 presidential election is still top of mind.


At minimum, earnings estimates for 2020 will likely go lower as a result of the impact to the businesses. If the risk-off period lasts for more than a few days, we should see the US dollar assets as a safe haven trade.


Scenario #1: Virus contained (40% Probability)

Spread of Covid-19 is limited. Big hit on China for one or two quarters but minimal impact on the rest of the world. Strong China bounce back in H2 as inventories are rebuilt and services production/consumption resumes. Monetary and fiscal policy unchanged outside Asia. US/China trade agreement provides boost to global manufacturing. Growth picks up gradually, inflation subdued, interest rates low, risk assets progress. Same as our previous ‘Turning a Corner’ scenario, but with lower growth in Q1/Q2, faster in H2.


Scenario #2: Globalisation flatlines (25% Probability)

The containment efforts in China prove to be ineffective and the virus spreads within and outside China. Quarantine restrictions in China are left in place for several months as contagion continues with the active labor force measuring a fraction of its size in January. As contagion spreads outside China, developed countries are affected and economic activity in affected regions draws to an effective halt. Millions are infected although the mortality rate decreases. With hits to demand and supply chains, the impact on Chinese GDP is massive–close to 10%–over the course of 2020, much of it concentrated in the first half of the year. Ultimately, this is likely to add pressure on firms to diversify supply chains over the longer term and accelerates underlying de-globalization trends.


The huge disruptions to supply chains affect output in a number of countries importing parts (intermediate goods) from China and also exporting parts to China. The impact on global GDP is large, but is predominantly felt through the supply side. As a result, global costs rise during the time alternatives to Chinese production can’t be found. Even when they are eventually found, they are likely to be higher cost. Rising costs hit global output and demand over a period of years. Supply side shocks exacerbate de-globalization as US and EU respond to increased costs with protectionist moves, especially if China attempts to devalue the Yuan. Central banks can accommodate to some degree. Fiscal policy is loosened globally, but insufficiently to offset global shock. Asset prices fall despite loose monetary policy stance, since policy is still tighter than previously expected and confidence is hit hard by duration and spread of disease. In the longer term, the liberal international trading/investment order is crippled and a new narrative takes hold: the virus has accelerated an underlying trend in which re-shoring and nationalism means higher costs and lower growth for years (whether true or not). Risk markets sell off, global yields dive further into negative territory.


Scenario #3: Financial market shake-out (25% Probability)

Virus spread is more persistent and widespread than under scenario #1, though perhaps not as severe as scenario #2 and largely confined to China/Asia. Nevertheless, this is the trigger for widespread flight from risky assets in the face of an uncertain future. Risk premia rise sharply, equity and credit prices fall, bond prices rise – the US 10y yield rallies sharply. Sell-off is exacerbated by elevated initial valuations, a huge tightening of credit conditions and a sharp turn in animal spirits. Sell-off is global and tighter financial conditions trigger a slowdown not unlike that seen after the tech bust of 2000-1. Risk of full-blown financial crisis risk is greatest in China, where tighter financial conditions, falling capital productivity and lower property prices could initiate a collapse of shadow banking and a big rise in bad loans. Liquidity squeeze on Chinese banks morphs into solvency crisis and a need for widespread recapitalization, mitigating any recovery even if the disease is brought under control. China loosens policy, both fiscal and monetary, but reinforces capital controls in an attempt to put a floor under the Yuan.


The Fed refuses to come to the rescue, perhaps cutting rates a little but refusing to extend dollar swap lines, exacerbating crisis as global dollar shortage intensifies. Unlike scenario #2, this is primarily a hit to global aggregate demand (rather than supply). Fall in global growth and inflation, global rates fall to zero, even larger share of global bonds starts to yield negative, dollar rises sharply. Big fall in global equity and credit prices, risky assets everywhere (e.g. peripheral EZ bonds) sell off too as ‘search for yield’ turns into ‘flight for safety’.


Scenario #4: Inflation returns (10% Probability)

As above but with an added international twist. Source of the shock is US inflation, not China. US tightens as China/others are weakening – Fed does not act as ‘world’s central bank’ but on basis of ‘America first’. Implications for global financial stability similar to second half of scenario #3 above, but main transmission mechanism is international financial markets rather than Chinese banking. Replay of 2015-16, but bigger. Dollar shortage reappears and capital flight from EMs, particularly Asian EMs. Dollar reserves are depleted much faster than expected and a number of dollar pegs (including yuan) come under severe pressure. Collapse in short-term dollar financing affects investment and output in key dollar-exposed EMs, which domestic monetary policy can only ameliorate slightly. China, Asia and other EMs hit hardest, but knock-on effects to developed economies, notably euro zone.


NB: None of the scenarios above take into account all kinds of idiosyncratic ‘black swan’ or geopolitical risks, which have the potential to vastly alter any of the outcomes.

COVID-19: Implications for business

The coronavirus outbreak is a human tragedy, with growing impact on the global economy.


Fashion’s digital transformation: Now or never

Some apparel, fashion, and luxury companies won’t survive the current crisis; others will emerge better positioned for the future. Much will depend on their digital and analytics capabilities.

The COVID-19 pandemic is simultaneously an unprecedented health crisis and a global economic shock. Amid the pandemic, the apparel, fashion, and luxury (AF&L) industry has moved quickly to address urgent public-health needs—closing stores, manufacturing much-needed items such as face masks and hand sanitizer, and making donations to healthcare and community organizations. At the same time, AF&L companies are grappling with COVID-19’s business ramifications, including widespread job losses in an industry that provides livelihoods for millions of people worldwide.

Although no one in the industry foresaw the intensity of this crisis, some fashion companies are finding that they are better equipped than others—largely because of their digital know-how. In this article, we touch on COVID-19’s impact on the AF&L industry to date. We then propose a set of actions that AF&L companies can take to build their digital and analytics capabilities—not just to ensure business continuity and minimize the downside of COVID-19, but also to emerge from the crisis in a position of strength.

A deepening digital divide

Our consumer-sentiment surveys, conducted in April, show declines in purchase intent of 70 to 80 percent in offline and 30 to 40 percent in online in Europe and North America, even in countries that haven’t been under full lockdown. E-commerce is clearly not offsetting the sales declines in stores. Nevertheless, it has been a lifeline for fashion brands as stores have been shuttered—and it will continue to be critical during and after the recovery period. In China, the return of offline traffic has been gradual, with 74 percent of Chinese consumers saying they avoided shopping malls in the two weeks after stores reopened.1 This suggests that some percentage of offline sales could permanently migrate to e-commerce.

Digital is not only an increasingly important sales channel; it can also help companies adapt cost structures and make each step of the value chain better, faster, and cheaper. For example, digitization can enable new logistics and sales-fulfillment options (such as click-and-collect and drive-through), fuel innovative ways of customer acquisition, and help predict and manage inventory to create a more resilient supply chain. The fundamental enabler to all this will be data—the transparency, governance, and accuracy of which have never been more important.

This all portends a deepening digital divide. Even before the crisis, companies that were digitally and analytically mature outperformed competitors that hadn’t built robust digital and analytics capabilities (Exhibit 1). The COVID-19 crisis has only widened the gap between industry leaders and laggards. For leaders with the ability and willingness to invest, the pandemic has clearly been an accelerator. As a top executive of a leading apparel player recently declared, “We’ve accomplished two years of digital transformation in two months.”

Thus, for executives in the AF&L sector and all related subsectors (such as beauty products and sporting goods), the imperative is clear: make digital and analytics a core element of your company’s strategy.

A number of trends in the post-COVID-19 world—the “next normal”—could make digital and analytics play an even more important role. Physical distancing could continue, making consumers less likely to visit brick-and-mortar stores, and a contact-free economy could emerge—raising e-commerce and automation to a new level.

The implications of these trends will differ for each company, depending on its digital starting point and strategic orientation. Digital and analytics leaders (companies in which online sales account for 30 to 40 percent of total sales, parts of the value chain are significantly digitized, and online and offline channels are integrated to some degree) have an advantage today but could quickly lose it if other players accelerate their transformation. On the other hand, laggards (companies with less than 20 percent of total sales coming from the online channel, low digitization levels across the value chain, and siloed online and offline operating models) have an opportunity to make an “all in” bet on digital and analytics—and perhaps gain market share with smaller capital-expenditure investments, which used to be a limiting factor for many brands.

That said, digitization won’t be a panacea. Companies should direct investments to areas in which the highest business value lies—which might not be in sales but rather elsewhere in the value chain. Equally important, companies should avoid “gold plating,” aiming instead for the fastest minimum viable digital solution that will achieve the business goal. Finally, the sequencing of initiatives will play a big role in making a company’s digital transformation as self-funding as possible.

Navigate the now: Immediate priorities

The health and safety of employees and customers, of course, has been—and remains—the absolute priority. By now, AF&L companies have closed stores, introduced new hygiene and safety processes in warehouses and distribution centers, and set up digital tools for remote working and collaboration. Although the situation remains uncertain and is evolving daily, there is a clear set of actions involving digital and analytics that AF&L players should implement now to keep the business going, stem sales losses, and plan the comeback.

Engage with customers in an authentic way

Email, social media, and other digital channels have seen significant spikes in usage during the crisis (Exhibit 2). AF&L brands must therefore continue to communicate frequently with consumers, even if most consumers aren’t currently spending. Use digital channels to launch genuine, purpose-driven communications regarding health, safety, business continuity, and community building. If you decide to send consumers relevant content, be sure to do so in an appropriate and empathetic tone (for example, a global sports-apparel player now offers yoga lessons on Instagram).

Whether it’s a personalized offer or outreach from a personal stylist, the best brands are maintaining customer relationships even while stores are closed. Staying in touch with your most loyal customers doesn’t just keep your brand on top of mind but also helps to boost sales. On a leading Chinese e-commerce platform, transaction volume for fashion-brand miniprograms (brand-powered apps embedded within the platform’s interface) more than doubled between January 2020 and February 2020, during the peak of China’s outbreak.

Refine and scale up your online operation

We expect the online share of fashion and apparel in Europe and North America to increase by 20 to 40 percent during the next 6 to 12 months. In April, traffic to the top 100 fashion brands’ owned websites rose by 45 percent in Europe.2 Some of the larger players have even reduced their promotion intensity to be able to handle the volume of orders.

Delivering an excellent customer experience online is crucial, so reallocate your resources and shift management attention from offline to online. Also, scale up capabilities in both demand generation and fulfillment (Exhibit 3). Seek to eliminate points of friction in every part of the online customer journey—for example, by improving your website’s search function and expanding your online assortment. Some retailers have redeployed store personnel from closed stores to support online fulfillment or to assist consumers via digital call centers.

While most AF&L players already have an e-commerce presence, some still don’t. Companies without one can launch a basic online platform in 10 to 15 weeks. A private-equity-backed retailer did it in 13 weeks (Exhibit 4).

Prioritize digital-marketing levers as demand rebounds

In anticipation of a shift toward online sales, allocate more of your marketing budget to digital channels. Establish or improve your digital-marketing “war room” and increase its visibility in the organization—for instance, by establishing a C-level digital-performance dashboard that provides a cross-channel view of e-commerce, customer relationship management, and social media, thus enabling rapid identification of opportunities for efficiency optimization or growth.

Retrain your look-alike models to capture value from the new consumer segments and behaviors that have emerged during the crisis. Upgrade your digital-marketing activity to be best-in-class—for example, by adding sophisticated imagery to your social-media posts and conducting “social listening” to inform the development of new services and offers.

Use granular data and advanced analytical tools to manage stock

The value of excess inventory from spring/summer 2020 collections is estimated at €140 billion to €160 billion worldwide (between €45 billion and €60 billion in Europe alone)—more than double the normal levels for the sector. Clearing this excess stock, both to ensure liquidity and to make room for new collections, will become a top priority.

At the best-performing companies, an “inventory war room” uses big data and advanced analytics to first simulate dynamic demand scenarios specific to locations (channel, country, store) and SKUs, then to synthesize the resulting inventory risk—thus enhancing decision making. The war room decides, for example, whether to redistribute SKUs, transfer inventory to future seasons, or accelerate markdowns (Exhibit 5). A company’s investments in developing advanced analytical tools to steer markdowns during the crisis will pay off almost immediately.

Optimize costs using a zero-based approach

In light of crisis-related sales decreases, cutting costs is an obvious imperative for most companies. However, reducing all budget lines across the board is risky. We recommend a zero-based budgeting approach instead.

Identify two categories of projects: critical projects linked to core digital and analytics priorities that must proceed as planned or at a slightly lower speed (for example, building a new data lake to enable personalized marketing) and core projects that can be delayed (such as those that don’t enable emergency response). Continue only the projects that fall into those two categories; stop all others. A range of savings levers—such as vendor renegotiations and tactical moves to the cloud—can help dramatically reduce your operating costs. Reset your digital and analytics priorities and budget and adapt them to a post-coronavirus world.

Shape the next normal: Longer-term strategic actions

Although time frames remain uncertain for now, AF&L players should start planning how they’ll compete in—and perhaps even influence—the industry’s next normal. Consumer habits, companies’ interactions with consumers, and the number and types of touchpoints will all change. The requirements for supply-chain speed and flexibility will continue to increase. Digital and analytics will play a critical role in helping companies emerge stronger from the crisis.

Set an ambitious aspiration and define a clear road map

A digital and analytics transformation is typically an 18- to 24-month journey, requiring an ambitious aspiration, a clear plan, and concrete milestones. In our experience, successful digital and analytics transformations have the following elements in common:

  • Strong support (or even direct sponsorship) from the CEO during the entire journey.

  • A pragmatic approach that starts with an understanding of the consumer and the drivers of value creation; digital for digital’s sake will not deliver results.

  • A clear road map and prioritization of initiatives, combining actions that help set up the enablers for the organization with the implementation of use cases that generate quick wins.

  • A focus on getting to a minimum viable product (MVP) within two to three months—a rapid timeline that allows the company to iterate while generating value, avoiding large up-front investments.

  • A central team to monitor value capture. This team also helps build the road map by scanning opportunities, allocating budgets, and coordinating implementation, ensuring that all efforts are focused on delivering tangible impact rather than gold plating.

  • Well-defined key performance indicators (KPIs) to measure success.


The first step in the transformation program should be the definition of digital priorities, which will differ based on each company’s business model and digital starting point. Digitization is much more than just selling online; a quick diagnostic may be required to select and align on key value areas.

Typically, digital and analytics priorities can be categorized according to their place in the value chain: customer experience (front), distribution and supply chain (middle), and product development and support functions (back). Exhibit 6 shows high-impact use cases in each of these three areas.

Provide an excellent omnichannel experience

The pandemic has elevated digital channels as a must-have for AF&L players. Therefore, take this opportunity to leapfrog into the digital arena by making it the center of your operating model: move your traffic- and engagement-generation engine to digital, and leverage digital channels to drive store traffic and vice versa.

Besides scaling up digital sales efforts, reconfigure your store footprint accordingly—for example, by reducing presence in “B” areas (markets with lower population density and lower profitability per square meter), devoting less store space to product categories with high online penetration, experimenting with innovative formats (such as drive-through windows or pop-up stores), and making it easy for customers to perform any omnichannel operation, including complex ones (such as buying online from a store if the product isn’t in stock there, and then picking it up from another physical store in the next 12 hours). Use data and analytics to tailor the assortment in each store and to streamline and optimize assortments overall.

In our experience, fully integrated management of stock in stores and warehouses is core to any omnichannel operation. Making all stock (even stock shortly arriving to warehouses) visible to customers in any channel has proved to boost sales.

Bet on personalization

Personalization has helped several industry players achieve 20 to 30 percent increases in customer lifetime value across high-priority customer segments. It has proved even more valuable in subsectors with more stable and predictable purchasing patterns, such as beauty products.

Use cases for personalization have mostly centered on personalized offers, personalized promotions and benefits (such as access to new products), and reductions in generic traffic-generation costs. To go further, add personalization capabilities to your digital war room—for example, by collecting and analyzing all the available data to generate detailed insights about your customers. Build actionable microclusters based on customer behavior. For instance, entice the highest spenders with special incentives (such as triple loyalty points for purchases of at least $1,000), target customers who tend to buy in the categories where you have the largest inventory buildup, and give online customers coupons to redeem in-store once physical stores reopen.

Prioritize use cases based on your business context, advanced-analytics capabilities, and customer segments. Create a prioritized use-case road map and a technology-investment plan. Integrate personalization into all delivery channels to ensure consistency in your customer communications.

Leverage big data and analytics to manage the supply chain

Digital and analytics can not only drive top-line growth but also significantly improve speed, cost, flexibility, and sustainability across the supply chain. For instance, some leading companies are using radio-frequency identification (RFID) to track products more precisely and reduce in-store merchandising manipulation. Companies’ RFID investments typically yield operations simplifications and service-level improvements.

In addition, automating logistics through digital warehouse design and predictive exception management can significantly increase efficiency. The benefits will flow to consumers as well—in the form of better product availability and faster, cheaper, and more accurate deliveries. Leading online players, for example, are using models powered by artificial intelligence (AI) to predict sales of specific products in certain neighborhoods and cities, then stocking the predicted amount of inventory in nearby warehouses.

Digitize product development and support functions

During the COVID-19 crisis, the digitization of product development has proved to be a competitive advantage. Companies that were already using cutting-edge tools such as 3-D product design, virtual sampling, digital material libraries, and AI-supported planning have fared better than their peers during the crisis. Their designers and merchandisers can react faster to market trends, significantly reduce both sample costs and time-to-market, and collaborate remotely across teams. The past several weeks have shown that it’s possible to do much more on this front than some in the industry initially thought. Indeed, the pandemic may have shattered historical preconceptions and biases against digitization in core product-development processes.

Digitization of support functions is another key lever for improving efficiency. By automating repetitive tasks in back-office functions such as indirect purchasing, finance, legal, and HR, you can simultaneously reduce costs and free up time and resources to reinvest in more valuable activities. Companies that have automated their finance processes—such as claims collection and financial reconciliation—have found that they’ve also increased the agility and accuracy of these processes while capturing significant synergies. Speed up the digitization of all support functions through robotic process automation and other leading-edge technologies.

Build data and tech enablers to support your transformation

Technical enablers play a key role in powering digital and analytics growth. In our experience, three core principles are the most relevant:

  • Use cloud infrastructures to sustain scaling and to access best-in-class services, particularly for use cases that best benefit from the cloud’s features (for instance, data consumption across the globe, very high storage and processing needs).

  • Think data from the start. Build solid data foundations as part of every digital and analytics initiative in a way that allows rapid scaling and forward compatibility. Design and build out pragmatic data governance focused on enabling business value by helping to ensure data breadth, depth, and quality. Establish a strong data culture and ethics.

  • Design your technology stack for faster integration and development, with applications broken down into microservices and isolated through the use of application programming interfaces; use unified DevOps toolchains to enable automation and reduce time-to-market to a matter of hours instead of weeks.


These enablers shouldn’t become causes for delay. Rather, they should follow the same agile timelines and sprints as the core initiatives. Implementation should be pragmatic and clearly linked to value generation.


Attract and retain top digital talent

After the crisis, financially stable companies may be able to attract top-notch digital talent, including in-demand profiles such as digital-marketing specialists, data scientists, data engineers, user-experience and user-interface designers, and software and data architects. Retaining these kinds of employees will require AF&L companies to develop new talent processes—with tailored initiatives in recruiting, career growth, learning and development, and performance management—specifically for engineering and digital talent, similar to what many fashion players already do for designers and creative directors.

In addition, AF&L players should adopt agile ways of working to speed up development of digital and analytics products and projects. Agile techniques enable companies to release MVPs into the marketplace quickly and refine them iteratively based on consumer feedback.

There’s no denying that the COVID-19 pandemic will make for a difficult 2020. For some AF&L companies, even survival may be a struggle. However, if they lead with empathy and undertake bold actions in digital and analytics—particularly around e-commerce, data-driven stock management, and digitization of key functions—we believe they can not only endure the crisis but also build competitive advantage and strengthen their business for an omnichannel, digital-centered next normal.

Special Market Update: Our Perspective on the Coronavirus and Market Volatility


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