McKinsey wrote in its The State of Fashion 2018 study that the industry has survived the harshest, even though nothing will ever be as it used to be. Growth will come from southern and eastern regions; fast-fashion will become even faster and the large companies will become even larger.
Growth in the East
Good news: the fashion industry is growing again. According to the McKinsey Global Fashion Index, the industry’s turnover growth between 2016 and 2018 will jump two to three times: from 1.5 to 3.5 – 4.5 %. That is, if we can accept that Europe and North America’s reign is over, according to McKinsey’s study in collaboration with trade paper Business of Fashion.
The West will no longer be fashion’s largest market starting next year: more than half of all clothing and shoe sales will be outside of Europe and North America. The largest growth will come from emerging countries in the APAC region (Asia and Oceania) and Latin America: turnover growth will rise to 5 – 7.5 % in 2018.
“Asia is not sitting idly by until Western companies pick up the pace”, the report states. Particularly when it comes to digital and mobile sales, the East is a pioneer: Southeast Asian consumers spend an average of eight hours online, which turns the customer journey into a complex path of online and offline contacts.
Online shoe and clothing sales are an area that will grow rapidly, McKinsey said: platforms will become the prime location for consumers to search. “Brands will no longer have to wonder whether they should collaborate but in which capacity”, it claims.
Positive vibe for fashion again
The gap between winners and losers continues to grow, but customers will not stick to brands as loyally as before. Two thirds of the young ‘millennials’ generation says it will switch to another brand if it can get a 30 % discount at least. It also clearly shows the polarization between the fashion sections: the middle will continue to suffer, while discount and the luxury brands (as of late) are picking up speed.
Speed can be interpreted literally: the best-selling fashion brands are pushing the manufacturing limits for manufacturing and how rapidly they can bring products to market. Fast fashion turnover grew 20 % in the past three years, mostly thanks to companies that connect innovative business models to details customer data and a incredibly fast supply chain.
The new State of Fashion report also points out ten major fashion retail trends, such as renewed globalization and predictable unpredictability. Read the entire report here.