1 december 2022
The State of Fashion 2023
In 2023, the global fashion industry will need to weather inflation while finding opportunities in shifting consumer patterns, channel and digital marketing strategies, and manufacturing approaches.
After experiencing 18 months of robust growth (early 2021 through mid-2022), the fashion industry is again facing a challenging climate. Hyperinflation and depressed customer sentiments have already resulted in declining growth rates in the second half of 2022. We expect that the slowdown is likely to continue through 2023.
Many industry players are in a stronger position than they were a year ago, however. The fashion industry delivered a 21 percent increase in revenues in 2020–21, and EBITA margins doubled by 6 percentage points to 12.3 percent.
Global fragility. Amid the highest inflation in a generation, rising geopolitical tensions, climate crises, and sinking consumer confidence in anticipation of an economic downturn, the global economy is in a volatile state. Fashion brands will need careful planning to navigate the many uncertainties and recessionary risks that lie ahead in 2023.
Regional realities. Understanding where to invest around the world has never been easy, but rising geopolitical uncertainty and uneven economic recoveries related to the COVID-19 pandemic, among other factors, will likely make it even more challenging in 2023. Brands can reevaluate regional growth priorities and hone their strategies so that they are more tailored to the geographies in which they operate.
Two-track spending. Consumers may be affected differently by the potential economic turbulence in 2023. Depending on factors such as disposable income level, some will postpone or curtail discretionary purchases; others will seek out bargains, increasing the demand for resale, rental, and off-price products. Fashion executives should adapt their business models to protect customer loyalty and avoid diluting their brands.
Fluid fashion. Gender-fluid fashion is gaining greater traction amid changing consumer attitudes toward gender identity and expression. For many brands and retailers, the blurring of the lines between men’s wear and women’s wear will require rethinking their product design, marketing, and in-store and digital shopping experiences.
Formal wear reinvented. Formal attire is taking on new definitions as shoppers rethink how they dress for work, weddings, and other occasions. While offices and events will likely become more casual, special occasions may be dominated by statement-making outfits that consumers rent or buy to stand out when they do decide to dress up.
In 2023, consumers will be unpredictable and fickle. Brands will need to consider carefully the factors that affect shopping behaviors and respond accordingly. Even as many customers reduce spending, brands have an opportunity to keep customers engaged through, for example, rental channels and off-price retailers. But these strategies will require careful execution to ensure that margins and brand reputations are protected. At the same time, brands will need to update their merchandising and design approaches to reflect shifting ideas around gender lines in fashion and dress codes. Daily office attire will become more casual, and special-occasion dress will become bolder.
Read the full report made by McKinsey:
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