TL;DR – The State of Fashion 2018 aims to look ahead and uncover the trends shaping the fashion industry in 2018.
The McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 to 4.5 percent. But the rebound is not being felt evenly across the globe. In fact, 2017 signals the end of an era. The West will no longer be the global stronghold for fashion sales. In 2018, an important tipping point will be reached when, for the first time, more than half of apparel and footwear sales will originate outside of Europe and North America, as the main sources of growth are emerging market countries across Asia-Pacific, Latin America and other regions.
The fashion industry is going through a seismic shift. While The State of Fashion 2018 aims to look ahead and uncover the trends shaping the fashion industry in 2018, it is also important to take stock of some of the massive long-term changes that serve as a backdrop for everything that is happening.
There are many challenges that have been facing by fashion industry over the past few years. In 2018, the top challenges have been identified, such as dealing with volatility, uncertainty and shifts in the global economy, competition from online and Omni channel, value chain improvement and digitisation, and decreasing foot traffic and offline retailing pressure.
The year 2018, the global economy will show things that unimaginable for fashion business. Fashion business should predictably unpredictable. Geopolitical turmoil, economic uncertainty and unpredictability are the new normal. Fashion companies and executives must continue to be vigilant and nimble in order to adapt to an ever-changing environment but they will increasingly focus on directing their energies towards what is within their control.
There also will have Globalization reboot. Despite the rise of nationalism, isolationist rhetoric and re shoring, globalization will not stall. A new phase of globalisation characterized by the exponential growth of cross-border bandwidth, connectivity and digital data flows will alter the global playing field and give certain players a competitive edge. Other than that, Asian trailblazers.
With two thirds of the world’s e-commerce unicorns, more than half of global online retail sales, and countless digital and tech innovations, Asia is no longer waiting for Western companies to step up Asian players will assert their power and leadership even more through pioneering innovations and global- scale investment and expansion.
The consumer in 2018 will also show some changes, such as getting personal. Personalisation and curation will become more important to the customer. As consumer values coalesce around authenticity and individuality, brands will value data even more to tailor recommendations, engage influences and personalize experiences. The fashion companies that flourish will re-focus on their strengths.
Besides that, platforms first will attract more customers. Consumers will increasingly look to online platforms as the first point of search, attracted by their convenience, relevance and breadth of offering. Whether mass, specialist or premium, platforms will continue to grow in scale and reach compelling fashion brands to find ways of engaging more with these powerful sales channels.
The question for fashion brands is no longer “if” but “how” to collaborate with big online platforms. Furthermore, people nowadays are mobile obsessed. As consumers’ obsession with mobile grows, the end-to-end transaction will also likely move to mobile. With an overabundance of mobile payment solutions already available globally, consumers will expect fashion companies to cater for increasingly convenient mobile transactions.
In 2018, there are few fashion system that shown. Such as, AI gets real. Leading innovators will reveal the possibilities of artificial intelligence across all parts of the fashion value chain, exploring new ways of creating value for those employed in the fashion industry. AI enhancements will go beyond the traditional areas of machine tasks into creative and customer interaction processes, blurring the line between technology and creativity. There also sustainability credibility.
Sustainability will evolve from being a menu of marketing- focused CSR initiatives to an integral part of the planning system where circular economy principles are embedded throughout the value chain. More fashion brands will plan for recyclability from the fibre stage of the supply chain and many will harness sustainability through tech innovation in order to unlock efficiency, transparency, mission orientation and genuine ethical upgrades. Furthermore, there will be off-price deception. Off-price sector growth continues to be driven by the notion that it provides a solution to challenges like excess stock and slow growth, but the US market serves as a warning about saturation and possible sales cannibalization.
As Europe and Asia get hooked on the myth of an off-price ‘panacea’, the fashion industry could be put at risk of margin erosion unless companies carefully consider their off-price channel strategies. Other than that, there will also have start-up thinking.
Due to an urgent and intense need for innovation across the industry, a growing number of fashion companies will aim to emulate the qualities of start-ups such as agility, collaboration and openness. Traditional and heritage players will continue to be compelled to open their minds up to new types of talent, new ways of working, new kinds of partnerships and new investment models.
Looking towards 2018, expect a continued uptick in global fashion industry sales growth, while not yet reaching the sales growth level of 2015 (5 percent). The project industry sales growth of 3.5 to 4.5 percent in 2018. In 2018 we expect this development to continue across all regions. The luxury segment enjoyed the strongest improvement in 2017, driven partly by the return of luxury consumption in Asia, and in 2018, forecast luxury to further accelerate to 4 to 5 percent growth.
The affordable luxury expects luxury to continue at strong 3.5 to 4.5 percent growth. Similarly, we expect the move away from the middle to benefit players in the value and discount segments. We forecast particularly strong growth of 4 to 5 percent in the discount segment for 2018, continuing its strong trajectory from 2017. The off price channel is expected to grow across European and Asian markets.