state of fashion 2023 mckinsey

Meanwhile, shoppers for luxury items will likely continue to spend largely as they have been, insulated from the impact of the economic slowdown. This is consistent with their compound annual growth rate (CAGR) over the past three years, which has been 9 percent for affordable luxury and 6 percent for value, the highest of any segment since 2013. Europe, on the other hand, is under high pressure from currency rates and a growing energy crisis, which are likely to result in modest sales growth for the luxury sector (projected to grow between 3 and 8 percent). An industry veteran of 15 years, she serves as the fashion strategy director at Infor, a global leader in business cloud software.And, as Behrenfeldt says, many companies have found it challenging to translate their fashion knowledge into more . A growing number of publicly traded and private companies have become value destroyers. The midmarket in particular is in the doldrums, generating negative returns for shareholders. Around the globe, we expect more than 20 percent annual digital growth in 2021 (with 30 percent in Europe and the United States) compared with 2020.3McKinsey analysis. With information and the ease of comparison at their fingertips, consumers are becoming less brand loyalamong millennials, two-thirds say they are willing to switch brands for a discount of 30 percent or more. All this comes against a backdrop of the fashion industry having turned a corner in 2018, with increased growth justifying the optimism expressed in last years global fashion survey. The beauty segment, covered for the first time this year in our The State of Fashion 2021 report, has remained relatively insulated from the pandemic, offering consumers a comforting pick-me-up in challenging times. McKinsey analysis, based on data from S&P Capital IQ. While the crisis has visited a devastating impacton businesses and jobs, it may also have accelerated responses that can lead to positive outcomes. The MGFI forecasts that growth will slow to 3 to 4 percent in 2020, slightly below the predicted rate for 2019. In 2021, the COVID-19 pandemic will accelerate industry trends, with shopping shifting to digital channels and consumers continuing to champion fairness and social justice. We also highlight the ten trends that will define the fashion agenda in 2019 (interactive). Industry players are coming to accept unpredictability as the new norm, and fashion executives will in 2018 respond by focusing their energy on improving what is within their control. The interconnectedness of the industry is making it harder for businesses to plan ahead. Imran Amed is the founder, editor-in-chief, and CEO of the Business of Fashion. South Africa's government has announced plans to tighten legislation to ensure government procurement favours local suppliers. In the meantime, domestic markets are set to continue their recent strong performance. March 17, 2023 at 03:00 AM EDT. However, their profit margins are expected to decline, especially after 2016, because of a pricing-arbitrage disadvantage across geographies and fluctuating foreign-exchange rates. The Super Winners include three new entrantsAnta Sports, Heilan Home (HLA Corporation), and Lululemonreflecting the strength of sportswear and the growing influence of Chinese players. However, as they pivot toward growth, a significant challenge is potential shortages of products and resources, as chocked supply chains and rising shipping costs undermine operations. What will define the industry in the coming year? These can be embedded in items to support after-use activities such as resale and recycling. We expect in 2022 that companies will seek fresh approaches to online creativity and commerce, with nonfungible tokens, gaming skins, and virtual fashion edging closer to the mainstream. Handbags and luggage, and to some extent watches and jewelry, are returning slowly to their historic highs, driven by demand in AsiaPacific. Still, there are silver linings among the clouds. Laggards face increased fashion risk and excess inventory if they fail to match customer demand. Among investment banks, Goldman Sachs was the largest recruiter, making eight offers, closely followed by o3 Capital with three offers. A return to the riches of the previous decade appears unlikely. Yet fashion, because of its discretionary nature, is particularly vulnerable. The report, the fifth in our annual series, drills down into the major themes affecting the fashion economy and assesses a range of possible responses. Humanitarian repercussions are expected to outlast the pandemic itself. With this special coronavirus update to The State of Fashion 2020, we have taken a stance on what our new normal will look like in the aftermath of this black swan event to provide insights (from analyzing surveys, data, and expert interviews) for fashion professionals as they embark on the 12- to 18-month period after the dust settles. Mckinsey Fashion Report: Predictions for 2023 05 December 2022 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. It is a long and arduous transformation many organisations won't see tangible results from for years to come. The bottom line is that amid this uncertainty and change, our analysis suggests cautious optimism is warranted. In China, further COVID-19 outbreaks and the real estate crisis have undermined the regions growth trajectory, as well as disrupted supply chains. For some, the abyss beckons. After nearly two years of disruption, the global fashion industry is once again finding its feet. Emerging markets remain a crucial source of this growth; indeed, in 2018, for the first time, more than half of apparel and footwear sales will originate outside Europe and North America. The authors wish to thank Robb Young, the Business of Fashions global markets editor, for his contribution to this article. Inflation is at the top of executives minds for the coming year, according to results from the annual Business of Fashion and McKinsey State of Fashion Survey. They expect that inflation will undercut consumer demand, pushing shoppers to curtail fashion spending or trade down for less expensive products as their energy and grocery bills spike. The State of Fashion 2022 from the Business of Fashion and McKinsey & Company, found some brands were already surpassing their pre-Covid performance, benefitting from a burst of pent-up consumer demand that was expected to continue. In the light of all this change, the performance gap between frontrunners and laggards continues to widen: from 2005 to 2015, the top 20 percent of fashion companies contributed 100 percent of the industrys entire economic profit; in 2016, the top 20 percents contribution had increased to 144 percent. Imran Amed is the founder, editor-in-chief, and CEO of the Business of Fashion. This caution is one of our ten trends to watch in 2019. When it comes to sustainability, the industrys track record remains a source of concern. could accelerate some of these consumer shifts, such as a growing antipathy toward waste-producing business models and heightened expectations for purpose-driven, sustainable action. Indeed, consumer pessimism about the economyis widespread, with 75 percent of shoppers in Europe and the United States believing that their financial situation will be affected negatively for more than two months.10McKinsey COVID-19 Consumer Pulse Survey: for Europe, held March 2026, 2020, with 5,614 respondents (France, Germany, Italy, Portugal, Spain, and the United Kingdom); for United States, held March 2329, 2020, with 1,119 respondents. Against this background, fashion-industry fortunes are highly polarized. Achim Bergis a senior partner in McKinseys Frankfurt office,Leonie Brantbergis an associate partner in the London office, andSaskia Hedrichis a senior expert in the Munich office. Just as China inched through recovery, outbreaks worsened in Europe and the United States. While the report doesn't explicitly state the fact, it . By segment, the most positive are executives from luxury brands, reflecting their strong growth trajectory in 2018. Equally, consumers and advocates are calling for the industry to become more inclusive. Download The State of Fashion 2022, the full report on which this article is based (PDF14MB). That offering will combine the best of human and automated servicesthe beginning of a truly bionic customer experience. Meanwhile, the economic outlook in the mature part of Europe is stable, and fashion-industry sales growth is likewise expected to remain at a modest but steady 2 to 3 percent. . While eCommerce and Sustainability Top Key Trends, Only 23% in Fashion and Apparel Industry Have High Confidence in Supply Chain. China and the United States are expected to fare better, growing between 2 and 7 percent and between 1 and 6 percent, respectively. For an exclusive group of Super Winners, the sun is shining (Exhibit 3);17To view exhibit, refer to The State of Fashion 2020. by economic profit, these 20 companies added more to the industry bottom line in 2018 than all others combined. The conglomerate cohort witnessed as high as a 135 per cent increase in the number of net offers. Fashion companies that double down on strategy, align with key trends, and reflect an evolving consumer landscape are likely to emerge from the crisis stronger, leaner, and ready to thrive in the next normal. Yet this sluggish overall growth masks some big winners: affordable luxury, value, and athletic wear. This article is a collaborative effort by Imran Amed, Anita Balchandani, Achim Berg, Saskia Hedrich, Jakob Ekelf Jensen, Leila Le Merle, and Felix Rlkens, representing views from McKinseys Retail Practice. State of Fashion 2022 Report by McKinsey & Co & BOF - FASH455 Global Apparel & Textile Trade and Sourcing State of Fashion 2022 Report by McKinsey & Co & BOF In December 2021, McKinsey & Co' and Business of Fashion (BOF) released its annual State of Fashion report. But fast-forward a few months, and fashions outlook has gotten dramatically and suddenly bleaker. It's partly the increasing number of people at elite schools going into tech or recruiting directly into the buyside, but the much larger force at play is that McKinsey, Bain, and BCG are growing 10-15% per year and enrollment at the top schools has barely increased, if it all. This fourth in our annual series analyzes major themes around the fashion economy and breaks new ground to explain the dynamics driving the industry. But it is in the developing world, where healthcare systems are often inadequate and poverty is rife, that people will be hit the hardest. After a year in which the fashion industry posted record-low economic profits, business leaders are on the front foot, seeking to innovate while continuing to engage their core constituencies. The authors wish to thank Pamela Brown, Emma Bruni, Dunja Matanovic, Michael Straub, and Robb Young for their contributions to this article. Nonetheless, this is still expected to be the fastest-growing category, with continued strong demand in many markets. With tourism in the doldrums, domestic outlets will become more important than ever. Achieving circularity in fashion is similar to the 10-year overnight success story. About 97 percent of fashion executives expect their cost of goods sold as well as selling, general, and administrative expenses to rise in 2023, spurring appetite across the industry to simplify assortments and manage costs. Our discussions with industry executives suggest that the key drivers will include shifting consumer behaviors (in relation to digital channels, social-justice concerns, and a reluctance to travel), opportunistic investment, and the need to build more efficient, simple, and demand-focused operating models (Exhibit 3). At the same time, they must adapt to evolving consumer demand and ensure they take the opportunities offered by new digital frontiers. To respond more effectively to risk, fashion companies will need to rethink their operations, update their organizational structures, and introduce new roles or elevate existing ones. Indeed, recovery is at the top of executives minds for the coming year, with 75 percent of luxury-segment executives, 61 percent of midmarket executives, and 50 percent of value executives expecting better trading conditions. a much steeper decline than that of the overall stock market. They need to get digital right and to address consumers increasingly concerned by the climate-change agenda. The State of the Ecommerce Fashion Industry: Statistics, Trends & Strategies to Use in 2023 by Michael Keenan 2PM reports that 13 of the top 20 direct-to-consumer (DTC) brands are in the fashion and apparel industry. In response, leading fashion players are offering innovative business models, using granular customer insights as a source of differentiation, and pushing the limits of go-to-market times. Our survey of 290 global fashion executives and interviews with thought leaders and pioneers have helped us identify ten key themes that will set the agenda in the year ahead. Looking forward, we see more research into sustainable materials and technologies, as well as the circular economy. Shoppers are also becoming more selective. A quarter of respondents to a 2021 survey by McKinsey in the U.K. said their purchase decisions were driven by sustainability, while 80% of consumers in a U.S. survey said sustainability was an important factor when selecting a brand to shop, according to the 2023 State of Fashion report from McKinsey and The Business of Fashion. We predict that 2019 will be a year shaped by consumer shifts linked to technology, social causes, and trust issues, alongside the potential disruption from geopolitical and macroeconomic events. In all other regions and segments, executives are notably pessimistic, reflecting the potential challenges ahead (Exhibit 1).19To view exhibit, refer to The State of Fashion 2019. The coming year will be tough, as the digital shakeout gathers pace, customers demand more on sustainability, and slower growth puts pressure on margins. Imran Amed is the founder, editor-in-chief, and CEO of The Business of Fashion. Companies have also been looking inward, implementing changes to the core operations that are reshaping the entire fashion system, from shortening the length of the fashion cycle to integrating sustainable innovation into the core product-design and manufacturing processes. For more information, please visit www.cgsinc.com and follow us on LinkedIn. However, amid increasing pressure on performance, shifting consumer behaviors, and accelerating demand for digital, there is an imperative to act decisively to prepare for the next normal. Imran Amed, the founder, editor-in-chief, and CEO of the Business of Fashion, is an alumnus of McKinseys London office, where Anita Balchandani is a partner and Jakob Ekelf Jensen is a consultant; Achim Berg is a senior partner in the Frankfurt office; Saskia Hedrich is a senior expert in the Munich office; and Felix Rlkens is an associate partner in the Berlin office. But equally, there is no call for rags just yet. In North America, while overall consumer confidence is strong, the impact of policy changes is uncertain, and markdown pressures, market corrections, and store closures continue. These are some of the findings from our latest report on The State of Fashion, written in partnership with the Business of Fashion (BoF), which explores the industrys fragmented, complex ecosystem. Many consumers today expect perfect functionality and immediate support at all times, coupled with rapid delivery times as players constantly compete to expedite products. This result may be critical for NYS dual meet tournament considerations later in January 2023. Another is that Indiais on the riseits growing middle class, powerful manufacturing sector, and increasingly savvy tech have made it an essential destination for fashion companies. Elon Musk says he will honour the results of a Twitter poll asking whether the should resign as head of the social media platform Even online sales have declined 15 to 25 percent in China, 5 to 20 percent across Europe, and 30 to 40 percent in the United States.11McKinsey analysis, based on data from Amazon and Stackline. Over that period, the top five performers by economic profit were Nike, Inditex, Kering, LVMH (including Tiffany), and Hermes. That said, the past years experience shows that consumers are resilient and that as economies recover, demand will follow suit. Here's how to keep it that way: https://mck.co/3kACM6X McKinsey & Company on LinkedIn: The State of Fashion 2023 When expanded it provides a list of search options that will switch the search inputs to match the current selection. Lifestyle Innovation Day 2023 - photo courtesy Dagor Renewed optimism for the fashion industry, Sporting goods 2021: The next normal for an industry in flux, Revamping fashion sourcing: Speed and flexibility to the fore, Oliver Guyot, Caught between inflation and rising costs, fashion seeks to strike new balance,, State of Fashion 2022: An uneven recovery and new frontiers, The State of Fashion 2021: In search of promise in perilous times, Its time to rewire the fashion system: State of Fashion coronavirus update, The State of Fashion 2020: Navigating uncertainty, The State of Fashion 2019: A year of awakening, The State of Fashion 2018: Renewed optimism for the fashion industry. Many have had a strong AsiaPacific focus, reflecting the economic strength of the region and the relatively lower impact of the pandemic there, and many have offered a compelling digital proposition. Today, The Business of Fashion (BoF) and McKinsey & Company released The State of Fashion 2023 on day two of BoF VOICES, BoF's annual gathering for industry big thinkers. Given the standout performance of digital channels in the current environment, we expect digital to remain kingin 2021. Indeed, some 22 percent of executives say it will be the key momentum driver in the coming yeara percentage point less than the proportion that cites uncertainty and slightly more than the 20 percent that pick challenging.4McKinsey State of Fashion 2021 Survey; McKinsey analysis. During the 49 weeks students in the state learned remotely, they only absorbed the equivalent of 19 weeks of schooling marking a 30 week loss of classroom time that was twice the national. Looking forward, our base case is cautiously optimistic, with the virus more effectively controlled over the coming year, thanks to a strong public-health response.2McKinsey analysis. Zara Owner to Invest $3 billion to Expand Amid Covid-19 Crisis,. The report, the sixth in our series, discusses the major themes shaping the fashion economy and assesses a range of possible responses. Enlit Africa Launches 2023 Programme Headlines / March 17, 2023 / By Editor Enlit Africa (formerly known as African Utility Week and POWERGEN Africa) proudly presents its 2023 programme, which will run from 16 to 18 May at the CTICC in Cape Town. Three roadblocks to making circular fashion work - and how to navigate them. The authors wish to thank McKinseys Johanna Andersson and Dale Kim, as well as the Business of Fashions Robb Young, for their contributions to this work. Our first The State of Fashion report (PDF8MB) finds that its not only external shock waves that have roiled the industry. The modern shoppers comfort with digital channels and content has created a complex customer journey across online and offline touchpoints. Top Recruiters at IIM Ahmedabad Placement 2023. McKinsey: The State of Fashion 2023 Meer informatie Volg deze organisator en blijf op de hoogte van komende evenementen Door Flanders DC Evenementen die je mogelijk leuk vindt Fashion & Beauty Congress Fashion & Beauty Congress Thu, May 11, 10:00 AM Shopping Stadsfeestzaal Antwerpen 556,98 Nidem Dito Fashion show Nidem Dito Fashion show The authors wish to thank Sandrine Devillard, Jolle Grunberg, and Michael Straub for their contributions to this article. Instead, from the wreckage of 2020, a sleeker, more focused offeringwill emerge. McKinsey State of Fashion 2021 Survey; McKinsey analysis. In today's Daily Kickoff, we report on the opening of the Manara Center in Abu Dhabi, a collaboration between the United Arab Emirates and the Anti-Defamation League, and talk to actor Joshua Malina about his return to Broadway as the lead of "Leopoldstadt.". McKinsey, the doyen of strategy consultants, published a report on cloud computing last week featuring a disguised real-world case study. Download The State of Fashion 2018 to view the exhibit and read the full report on which this article is based (PDF3 MB). Dire consequences for fashion, one of the biggest industries in the world, generating $2.5 trillion in global annual revenues before the pandemic,9McKinsey analysis, 2019. entails joblessness or financial hardship for people across the value chain. The 16 percent year-on-year rise came largely from improved operating margins driven by cost cutting. Still, the industry faces significant challenges amid supply-chain disruption, patchy demand, and persistent pressure on the bottom line. The bottom line going into 2022 is that the fashion industry faces a complex mix of challenges and opportunities, in which there is little room for missteps. At the same time, consumers have become more demanding, more discerning, and less predictable in their purchasing behavior, which is being radically reshaped by new technologies. About the event: Performances by popular music bands and artists like Nucleya, The Yellow Diary, Prateek Kuhad, and so on, only for young people aged between 13 and 26 years. An energy crisis is disrupting European economies. Some brands over the past year expanded into the digital metaverse, rolling out virtual stores, gaming, and digital events. These players show that there is a great deal of industry value outside the spotlight, and the hidden champions too have much to offer alongside their listed counterparts. Imran Amed is the founder, editor-in-chief, and CEO of the Business of Fashion and an alumnus of McKinseys London office, where Anita Balchandani is a senior partner; Sarah Andr is a consultant in the Paris office; Achim Bergis a senior partner in the Frankfurt office; and Felix Rlkens is a partner in the Berlin office. The report includes the third readout of our industry benchmark, the McKinsey Global Fashion Index. Mar 4, 2023, 12:12pm EST. Thats great news for consumers and for companies that can make sustainability real. Venue: Karnavati University, Gandhinagar. Now that's a strong look The fashion industry is booming again. McKinsey analysis of fashion forecasts projects relatively slow sales growth of between 2 and +3 percent, weighed down by a contraction in the European market (expected to shrink between 1 and 4 percent) (exhibit). As the pandemic continued to run its course, the performance inequalities that have become a challenge over recent years were more in evidence than ever. We see 2020 as being a watershed for Inclusive Culture, with diverse races, genders, and sexual orientations increasingly present across organizations and in leadership roles. It is quite a sobering read overall, but definitely worth a look! Brands, suppliers, contractors, and property owners should also find ways to share the burden. Perhaps unsurprisingly, 67 percent of executives said conditions for the fashion industry have worsened over the past 12 months. Amid intense competition, cybertalent will be at a premium. Those are some of the findings from our latest report, The State of Fashion 2021, written in partnership with the Business of Fashion (BoF). Anita Balchandani is a partner in McKinseys London office, where Shrina Poojara is a consultant; Achim Berg is a senior partner in the Frankfurt office; Saskia Hedrich is a senior expert in the Munich office; and Felix Rlkens is an associate partner in the Berlin office. A record 69 percent of companies were value destroyers in 2020, according to the latest reading of the McKinsey Global Fashion Index (MGFI), compared with 61 percent in 2019 and just 28 percent in 2011. NIKE, Inc. reports fiscal 2020 fourth quarter and full year results, Nike, June 25, 2020, news.nike.com. While the luxury and sportswear sectors have dominated the industrys list of super successes in recent years, macroeconomic context might change that in the upcoming year. Not only are leading companies highly value-creating, they are also at the cutting edge of innovation. ABIDJAN, Cte d'Ivoire, 15 mars 2023/APO Group/ -- Le ministre du Commerce, de l'Industrie et de la Promotion des PME, Souleymane Diarrassouba, a prsid, le mercredi 15 mars 2023 Abidjan-Treichville, la crmonie officielle de clbration de la 40me Journe mondiale des Droits des Consommateurs (JMDC) place sous le thme Autonomiser les consommateurs par une transition . These are some of the findings from The State of Fashion 2022, written in partnership with the Business of Fashion (BoF). Plus, consumer companies are turning to chief transformation officers more often, and why it's important for leaders to demonstrate "deliberate calm." Fashion forward. Meanwhile, some of the shifts we will witness in the fashion system, such as the digital step change, in-season retail, seasonless design, and the decline of wholesale, are mostly an acceleration of the inevitablethings that would have happened further down the road if the pandemic had not helped them gain speed and urgency now. The year ahead will be an awakening after the reckoning of 2018a time for fashion companies to look at opportunities and not just at surmounting challenges. Mainstream customers are moving into a decisive phase of digital adoption, and online sales of apparel and footwear are projected to grow rapidly. The authors wish to thank Sarah Andre, Althea Peng, Sonja Penttil, and Robb Young for their contributions to this article. These forecasts are reflective of inflation and are calculated in local currencies, meaning that the real impact for the sector could be more negative than these figures suggest. Bachelor's degree; Advanced graduate degree (e.g., MBA, PhD, etc.) Reflecting in-depth research and numerous conversations with industry leaders, it reveals the key trends likely to shape the fashion business in the year ahead. By Imran Amed, Anita Balchandani, Achim Berg, Saskia Hedrich, Jakob Ekelf Jensen, and Felix Rlkens. Textiles are the second-largest product group made from petrochemical plastics behind packaging, making up 15% of all petrochemical products. This year, we are seeing real signs of change. This global economic gloom is increasingly reflected in consumers shopping habits, and the fashion industry is expecting that demand will be weakened or unpredictable in the year ahead. But we are now detecting glimmers of hope: executives report optimism (even amid uncertainty), and the McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 and 4.5 percent. Resale and recycling the report doesn & # x27 ; t explicitly State the fact,.... As economies recover, demand will state of fashion 2023 mckinsey suit in many markets, discusses the major around! Brands, suppliers, contractors, and Robb Young for their contributions to this article make sustainability real the of. 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