Judging by revenue alone, the fashion industry's outlook for 2025 appears to be a continuation of the sluggishness seen in 2024: revenue growth is expected to plateau in the low single digits.
Fashion leaders surveyed in the annual BoF-McKinsey State of Fashion Executive Survey were as pessimistic as last year. Only a fifth expect improvements in consumer confidence in 2025, while 39 percent see industry conditions worsening.
The global fashion industry faces a particularly tumultuous and uncertain 2025, and brands will turn their attention to Asian markets beyond China, particularly Japan, South Korea and India, as China is hit by macroeconomic winds in against, according to a McKinsey report. A long-feared cyclical slowdown has arrived and consumers, hit by high inflation, are increasingly price sensitive, he said.
The report, titled “The State of Fashion 2025: Challenges at Every Step,” says a long-feared cyclical slowdown has arrived and consumers, hit by the recent period of high inflation, are increasingly price-sensitive.
“In short, the negative environment that many in the fashion industry predicted a year ago has materialized,” he notes.
“There is still growth to be found, but economic uncertainty, geographic disparities, as well as changes in customer behavior and preferences mean that taking advantage of it will require navigating a maze of complex challenges at every turn. Consequently, 2025 is likely to be a moment of reckoning for many brands,” the report observes.
The fashion industry will benefit from falling inflation and rising tourism in Europe, the resilience of high net worth individuals in the United States and new growth engines in Asia.
Next year, retailers will accelerate the reconfiguration of their supply chains to prioritize offshoring and manufacturing in geopolitically aligned countries.
These supply chains will need to become more agile and companies will need to strive to reduce excess inventory and minimize the risk of shortfalls, according to the report.
Pressures on margins, as well as pressures from governments around the world to reduce fashion emissions and waste, will drive advances in inventory management, while new technologies will aid these efforts, he says.
Finally, the climate crisis will continue to be a potent force in fashion supply chains and consumer behavior.
Although shoppers have been less willing than expected to pay more for planet-friendly products, making the business case for sustainability less obvious to executives among other competing priorities, the rising cost of change Climate change and government measures to combat it mean that sustainability must remain at the top of the agenda.
“Those who choose to approach sustainability with a long-term mindset, even while fighting short-term problems, will be rewarded with more efficient business operations and a competitive advantage,” the report adds.
Fiber2Fashion News Desk (DS)
