Business of Fashion and McKinsey & Company released the eighth annual State of Fashion report last Wednesday, which reveals an industry navigating deep uncertainty. “Fashion companies will face economic headwinds, technology shifts, and an evolving competitive landscape in 2024. However, shifting consumer priorities will continue to offer opportunities.”
According to the report, “in 2023, the industry faced challenges that were both persistent and deepening. On a regional basis, Europe and the United States saw slow growth throughout the year, while China’s initially strong performance faded in the second half. Though the luxury segment initially fared well, it too began to feel the effects of weaker demand in the latter part of the year, leading to slowing sales and uneven performance.”
The report reveals that the fashion industry is predicted to achieve year-on-year retail sales growth between 2% and 4% in the upcoming year. Once again, the luxury segment is expected to generate the biggest share of economic profit. However, even there, companies will be challenged by the tough economic environment. According to the report, “the segment is forecast to grow globally by 3 to 5 percent, compared with 5 to 7 percent in 2023, as consumers rein in spending after a postpandemic surge. European and Chinese growth is set to slow, while US growth is expected to pick up after a relatively weak 2023, reflecting the slightly more optimistic outlook there.”
It also examines issues around supply chains, fast-fashion competition, the changing marketing landscape and the future of generative AI’s role in fashion. Reflecting in-depth research and many conversations with industry leaders, it reveals the key trends that could shape the fashion landscape in the year ahead.
Read the full report here.
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