Written by: Synzenbe
Written by: Synzenbe
According to McKinsey Global Fashion Index (MCFI), we are going to see some major changes this year.
McKinsey reported that the multi-billion dollar industry will see a 3.5 to 4.5 growth in 2019, which is slightly lower than 2018. This is due to a survey conducted by McKinsey in which 42% said that they expected the economic outlook to worsen in 2019.
Furthermore, it is expected that most growth will come from luxury and emerging markets in Asia. According to McKinsey, China is expected to overtake the US as the global fashion market in 2019. Still the US, will see a higher than expected growth in the luxury sector, compared to mid-market and mature economies.
Looking at the change in consumer demographics, it is time for fashion companies to accept the shifts in culture and act accordingly. Out with the old rules, there is a new sheriff in town who is demanding changes. Consumers now want massive transparency, sustainability, and companies that are not afraid to "self-disrupt" their own identity in order to realise these changes and win new generations of customers.
In addition to that, brands need to invest in enhancing their productivity and resiliency, as the outlook for the next year is uncertain. All of this was in the report 'State of Fashion 2019', co-written by BOF.
97 percent of the fashion industry's profit will continue to go to 20 companies. The top twelve of the twenty have been in this elite group for more than a decade. Among these are Nike, Inditex and LVMH, that have each doubled their profits over the past 10 years.
Next year we are also going to see a rise in India, as this country is expanding at a record pace. A growing middle class, a powerful manufacturing presence and their embrace of new technologies, has namely made India a go-to destination for fashion companies.
Trade 2.0 is a warning the companies should be making contingency plans with regards to trade. In other words, the apparel industry could be facing a shakeup in global trade chains. The fashion and apparel industry could be reshaped by new barriers, trade tensions and total uncertainty. According to McKinsey, this could provide new opportunities and renegotiated trade agreements.
The consumer shift towards sustainable fashion will also be continued in 2019. There is an increase in demand, especially amongst the younger generations Y and Z, for ethical and eco-friendly garments. Next to that, the 'younger' consumer generations will also call for faster service as well such as drone delivery.
McKinsey's report indicates new markets, new technologies and new consumer needs. This could be a great opportunity, but not without risk. With all roads leading back to technology, social cause and trust, and with the threat of potential geo-political and macroeconomic events, McKinsey is predicting that 2019 will be shaped by the consumer. Only those companies who embrace the zeitgeist movement and adapt accordingly, will emerge as winners by the end of 2019.
This article has been posted with permission from synzenbe.com