Leading global fashion authority news source, The Business of Fashion has teamed up for the first time with McKinsey and Company to release an in-depth report on the global outlook for the fashion industry in 2017.
The State of Fashion Report 2017 includes 50 pages of rigorous in-depth research and an analysis of the global fashion industry of all sectors, focusing on the themes, issues, and opportunities impacting the sector and its performance.
A review of the year 2016 is also included, and doesn’t sugar coat the difficulties many apparel companies faced.
“2016 has been one of the hardest years the fashion industry has ever experienced. Across all market segments, product categories, and geographies, the industry has been shocked by tremors in the global macroeconomic and geopolitical sphere, large- scale shifts in consumer behaviour, and intensifying business pressures to produce more for less—less time, less money, and less effort. “ – BoF-McKinsey Global Fashion Survey, September 2016
With 2016 behind us, the report gives a more optimistic outlook for 2017. It identifies key opportunities for 2017 from mass global discount retailers to exclusive luxury brands – as well as specific product categories, geographies and the challenges and opportunities that lie ahead.
While the report tends to focus on the larger mainly northern hemisphere countries, where the likes of the global apparel operators tend to be based, it is clear the problems facing the Australian fashion industry are a global problem.
The outlook for 2017 is broken down into three parts; Global economy, consumer shifts and The Fashion system. Key findings for 2017 are outlined below.
Volatility is the new normal. Geopolitical instability, terrorism, Brexit, and stalled trade deals will all increase a pervasive sense of uncertainty in the global economy. A variety of political events remain unsolved and will cause volatility in 2017 as the world adjusts to them.
China’s fundamentals, including growth of the middle and upper classes, remain strong and the government’s new fiscal policies are expected to improve conditions in 2017, but uncertainty remains. Growth of Upper/ Upper-Middle class households 2015-2025 helps to secure long-term fundamentals.
City-based strategies trump country-based strategies: a new class of rapidly growing wealthy cities in newly influential markets are becoming central to the evolution of fashion. New emerging cities will have larger populations than mature countries, e.g. by 2020 Istanbul > Austria
Working harder to keep up with smarter shoppers: ‘always-on’ consumers will become ever more sophisticated, more technology driven, and harder to predict.
The consumer spends more and more of his digital time on mobile devices – by 2018 4x times as much as on the desktop.
Opportunities to serve the young and the old better: fashion companies will need to fine tune and diversify the way they approach both retired and millennial consumers. The 60-plus-age segment will account for nearly 60 per cent of consumption growth in Western Europe and Northeast Asia.
The wellness dividend
Feeling good is looking good: more fashion players will start profiting from the wellness movement, rather than competing with it. The amount of money spent on gym memberships/ yoga classes is constantly increasing.
Changing the system
“See-now, buy now” and other disruptions to the fashion cycle: expectations set by the faster pace of fashion and consumer desire for instant gratification must be addressed. 15+ major fashion labels have announced See-Now, Buy-Now collections for 2017.
Investing more to nurture local clientele: 2017 will be the year of organic growth by deepening relationships with existing clients, rather than through geographic, channel and store network expansion. Growing a compound annual growth rate of more than 50 per cent, the global location-based-advertising market is expected to exceed 10 billion USD in 2018.
Digital innovation goes behind the scenes: digitisation will be the key to supply chain efficiency, lowering procurement costs and the enhancement of sourcing opportunities. 25% Fashion Executives see IT capacity for value chain digitisation as the key investment area for 2017.
Fashion conglomerates will continue to intensify their focus on big brands, creating space for other brands and industry outsiders such as private equity and family owners to acquire targets. Strong growth in M&A activity expected in 2017.
About the Author, Phoebes Garland
Phoebes Garland is the Co-founder & Co-owner of Garland & Garland Fashion & Fashion, a boutique leading fashion sales & consultancy agency based in Sydney.
Between the two of them, Phoebes & Robert Garland have over 60 years’ sales experience in fashion, publishing and advertising.
Phoebes is an industry mentor to designers with Australian fashion industry body, Australian Fashion Chamber and is on the Advisory Board for Fashion Design Studio (TAFE NSW) and is a regular contributor to Australian fashion industry magazine, Ragtrader.
A passionate supporter for finding a cure for Parkinson’s Disease, Phoebes Garland is also an ambassador to Shake it up Australia Foundation, which is partnered with the Michael J Fox Foundation.
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