Renew and innovate. This is what The Business of Fashion magazine predicts in the latest report issued by Mckinsey&company, together with The Business of Fashion magazine on “The State of Fashion in 2020.”
Fashion industry faces a macroeconomically worrying year that will make investments in value creation difficult. Luxury brands will need to improve their productivity to increase their profits, but they face some challenges that they have to address to achieve success, profitability and ensure their future.
From a geopolitical perspective there is a latent concern about such topics as tariffs in the US — that despite having strengthened the dollar have affected both imports and exports — the deceleration in the growth of Asia and Pacific or the climate of uncertainty in Europe by the output of the United Kingdom (Brexit).
The McKinsey Global Fashion Index predicts that the fashion industry will continue to grow between 3 and 4 per cent in 2020, at a rate slightly slower than the estimate of 3.5 to 4.5 percent for 2019.
The report covers the challenges in three large blocks that reflect the 10 challenges of fashion:
- High alert based on the risk of recession in emerging markets, geopolitical instability and trade tensions.
- Leadership in China’s fashion industry. In order not to rely on this colossal market, luxury brands should consider expanding their growth to other geographic areas. Consumers populations aged 30 or under are expected in five other markets outside China (The United Arab Emirates, Saudi Arabia, Nigeria, Russia, Brazil and Southeast Asia) to more than double that of the big Asian country over the next few years until 2025.
- Adapt to new generations and rethink marketing strategies
- More retailers in neighbourhoods (about 70% of purchases are still made conventionally, not everything is online)
- Compliance with sustainable consumption regulations
- Find alternatives to conventional clothing materials and explore new technologies in fibres, textiles, finishes and other innovative and sustainable materials.
- Transforming awareness of diversity and inclusion in fashion. Brands such as Prada, Chanel, Gucci or H&M have hired executives specializing in sociological studies to address this problem.
- It is expected that a further competition for the growth of electronic commerce platforms transboundary export their products easily and affordably, directly to the purchasers (AliExpress, Amazon or NetEase Kaola)
- Change the conventional model in fashion shows
- To face the challenges of the performance and profitability digital of the marks.
Certainly this 2020 we expect to see significant changes in the fashion industry.