The State of Fashion report, released today, reveals that the war in Ukraine, rising prices and pressures on supply chains are the main threats facing the fashion industry as it prepares for a difficult year. The Business of Fashion You can also find out more about the following: McKinsey .
Executives are prioritizing countries such as China in the short-term, and the Middle East and North America will have the greatest growth potential by 2023.
According to the report, luxury will boost the industry. Global sales of this category are expected to increase by up to 10% in 2023 compared to a growth rate of up to 3% for the rest.
A press release from the two companies stated that 56 per cent of fashion executives believe conditions will worsen by 2023.
Fashion industry recovered strongly from pandemic. In 2021, global industry revenue grew by 21% year-on-year. This continued in the first half 2022 with a revenue increase of 13%.
As the year went on, however, many challenges that were unprecedented eroded any gains made and slowed down progress.
Eighty-five percent of fashion executives believe that inflation will be a problem next year, and 58 percent think the energy crisis will continue affecting the market.
The report does predict a slowdown in the industry but there are still some opportunities. Luxury fashion sales are predicted to grow between 5 and 10% globally in 2023. This compares to a global decline of between 2 and 3% for the rest.
In 2021, and the first half 2022, fashion companies were able to create solid foundations to help them weather the storm. The percentage of companies that are ‘value-destroying’, or those that generate negative economic profit, is now at its lowest level since 2013.
