In the first half of last year, Wuman shared the 2022 fashion industry report of the well-known consulting firm McKinsey.

What will the global fashion industry experience in 2023? What challenges and opportunities should we meet?

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If one word could be used to describe the outlook for the fashion industry in 2023, it would be "difficult". After 18 months of strong growth (early 2021 to 2022 after mid-year), the fashion industry is once again facing challenges: hyperinflation and confused customer sentiment already led to lower growth rates in the second half of 2022,

This slowdown is likely to continue until 2023.

Although many industry practitioners are in a better position than a year ago in 2020-2021, and fashion industry revenue to grow by 21%, profit margins rose 6 percentage points to 12.3%.

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Looking ahead, McKinsey expects the luxury sector to outperform other sectors of the fashion industry, as wealthy consumers will continue to travel and spend, making them less affected by inflation. Led by strong US and China, the luxury sector is expected to grow 5% to 10% this year.

Excluding the fashion industry outside the luxury industry, it is difficult to achieve significant growth. Affected by the shrinking European market (expected to shrink by 1% to 4%), overall sales growth is expected to be between -2% and +3%. Things are expected to be better in China and the United States, respectively.

The above is just a small part of the "2023 Business Status" jointly released by "The Business of Fashion" and McKinsey. This report is the seventh year in a series of reports discussing the key trends shaping the fashion economy, revealing the key trends shaping the fashion landscape for the year ahead.

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The ten trending keywords for 2023 are:

 

GLOBAL ECONOMY

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1. Global fragility. After experiencing high inflation unseen in previous generations, witnessing heightened geopolitical tensions, the global economy is in a state of turmoil as global consumer confidence falls due to tensions, the climate crisis and expectations of a recession.

Fashion brands have carefully planned and made prudent decisions to deal with the many uncertainties and recession risks in 2023.

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2. The current situation of the region. It has never been an easy task to judge where to land investment on a global scale. Geopolitical factors such as rising uncertainty and an uneven economic recovery from the post-COVID pandemic could weigh on investment in 2023. Brands can further refine their geographic presence by re-evaluating priorities of their regional growth strategy. For example, the report says more than 50 percent of business executives will prioritize North America as an operating region by 2023.

 

CONSUMER SHIFTS

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3. Two-Track Spending. Potential economic turmoil in 2023 could affect consumers differently, depending on disposable income. Some will delay or reduce purchases; others will hunt for bargains, increasing interest in resale, lease and demand for low-priced products. Fashion executives should adapt their business models to protect customer loyalty.

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4. Fluid fashion. Being gender fluid as consumer will affect attitudes towards gender identity and gender expression evolve. Specifically, one out of every two Gen Z teenagers, one person bought transgender clothing or fashion items. For many brands and retailers, there's a line between menswear and womenswear. The growing blur requires them to rethink product design, marketing, and the in-store and digital shopping experience.

5. Formalwear reinvented. Shoppers are rethinking what they dress for work, weddings and beyond, and there's a new twist on formalwear Definition. While offices and events may become more casual, special occasions may be dominated by statement-making attire. Consumers rent or buy these garments to stand out when deciding to dress up. Nearly 40% of the interviewed executives believe that occasion wear will be a strong growth area in 2023.

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FASHION SYSTEM:

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6. Direct to Consumer (DTC) Reckoning.

With the high cost of digital marketing and the continuous introduction of e-commerce laws, the sustainability of DTC is doubtful. Given the current growth, brands may need to diversify their channel mix, including wholesale and third-party markets, rather than keep following their direct-to-consumer consumer model.

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7. Solve "Greenwashing". As the industry grapples with its damaging impact on the environment and society, consumers, regulators and other stakeholders are increasingly scrutinizing whether brands’ behavior matches their commitment to sustainability propaganda. If brands are to avoid the stigma of “greenwashing,” they must show that meaningful and credible change is being made, while at the same time comply with emerging regulatory requirements.

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8. Future-oriented production process. The continued disruption of supply chains is a catalyst for the reallocation of global production resources. More than 2/3 of garment companies expressed that they hope that upstream suppliers will increase their capabilities in 2023 to strengthen digitalization. For example, textile manufacturing businesses can create new types of products based on vertical integration, near-shore production and small batch production by strengthening the application of digital production processes and supply chain model.

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9. Reposition digital marketing. Data-related industry rules are driving digital marketing into a new chapter, because precise user targeting is getting harder and more expensive. Brands will need to embrace creative activity and new channels such as retail media network and metaverse concepts to achieve greater marketing ROI and collect valuable first-hand data.

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10. Organizational capacity upgrade. Successful execution of the 2023 strategy will depend in part on the company's alignment with key functions. Fashion executives need a new vision for the organization of the future, one that focuses on attracting and retaining top talent, and empowering teams and key executive positions so they can execute on priorities like sustainability and digital acceleration.

 

 

What about Wuman Textile?

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Here are Wuman Textile's 5 thoughts on 2023: