2/26/2024 0 Comments Hopeful findings jewelry![]() Some 62 percent of executives in this year’s survey, conducted in September, cite geopolitical instability as the top risk to growth. With conflicts in Europe and the Middle East and strained international relations elsewhere, geopolitics is the number-one concern for fashion industry executives going into 2024, followed by economic volatility and inflation. 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. The eighth report in the annual series discusses the major themes shaping the fashion economy and assesses the industry’s potential responses. These are just some of the findings from The State of Fashion 2024, published by the Business of Fashion (BoF) and McKinsey. And China is expected to be similarly challenged amid 4 to 6 percent growth, which is a slight uptick from the end of 2023 but slow when considered on a historical basis. In the United States, nonluxury sector growth of 0 to 2 percent is forecast. Slumping consumer confidence and declining household savings are expected to be the most probable causes of restrained spending. The European market will likely expand by just 1 to 3 percent, compared with 5 percent in the first half of 2023 and 1 to 3 percent in the second half. ![]() 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.īeyond luxury, growth of 2 to 4 percent is predicted for the year ahead, in line with the probable outcome in 2023. 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. However, even there, companies will be challenged by the tough economic environment. Once again, the luxury segment is expected to generate the biggest share of economic profit. Against this backdrop, businesses will be challenged to identify pockets of value and unlock new drivers of performance.Īccording to McKinsey’s analysis of fashion forecasts, the global industry will post top-line growth of 2 to 4 percent in 2024 (exhibit), with regional and country-level variations. Looking toward 2024, the most prominent sentiment among fashion industry leaders is uncertainty, reflecting the prospect of subdued economic growth, persistent inflation, and weak consumer confidence. This article is a collaborative effort by Imran Amed, representing views of Business of Fashion, and Anita Balchandani, David Barrelet, Achim Berg, Gemma D’Auria, Felix Rölkens, and Ewa Starzynska, representing views from McKinsey’s Retail Practice. 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. 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. In 2023, the industry faced challenges that were both persistent and deepening. ![]() ![]() Strong margin performance meant the industry in 2022 achieved more than double the economic profit than in all years between 20, except for one. Yet even the non-luxury sector was ahead of its long-term average. Echoing the pattern of the previous year, the luxury sector outperformed, with a 36 percent rise in economic profit that offset weakness in other segments. In 2022, the industry again showed its resilience, almost equaling the record economic profit of 2021, the McKinsey Global Fashion Index shows. Storm clouds are gathering, but the experience of recent years shows how the fashion industry may ride out the challenges ahead.
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