The State of Fashion 2023: Resilience in the Face of Uncertainty, the seventh annual State of Fashion report by The Business of Fashion and McKinsey & Company reveals the industry is heading for a global slowdown in 2023 as macroeconomic tensions and slumping consumer confidence chip away at 2022′s gains.
It underlines that the fashion industry is heading for a global slowdown in 2023. Downcycle exposure, sustainability are the biggest opportunities while inflation is the greatest threat.
Deteriorating macroeconomic and geopolitical conditions have weighed heavily on the industry in the second half of the year (2022) and continue to leave fashion executives on edge as they look towards 2023.
In the BoF-McKinsey State of Fashion 2023 survey, 85 percent of fashion executives predict inflation will continue to challenge the market next year. Meanwhile, geopolitical tensions, specifically around the ongoing war in Ukraine, have disrupted supply chains and created an energy crisis that 58 percent of executives also believe will weaken the fashion market.
In aggregate, McKinsey expects global fashion sales growth of 5 percent to 10 percent for luxury, and negative 2 percent to positive 3 percent for the rest of the industry in 2023, while the dichotomies that previously defined the fashion business are expected to return.
The report highlights that fashion companies will need to rethink their operations. Many will update their organisational structures, introducing new roles or elevating existing ones to target key growth opportunities and respond more effectively to risk. Brands may also choose to see the next year as a time to team up with manufacturing partners to sharpen their supply chain strategies.
This may involve nearshoring to better respond to fast-shifting consumer demand or for leaning more heavily on data analytics and technology to manage inventory efficiently.
The 10 fashion industry themes that will set the agenda in 2023 include Global Fragility, Regional Realities, Two-Track Spending, Fluid Fashion, Formalwear Reinvented, DTC (direct-to-consumer) Reckoning, Tackling Greenwashing, Future-Proofing Manufacturing, Digital Marketing Reloaded and Organisation Overhaul.