With clouds brewing on the horizon, recent years might provide a sense of how the fashion industry will ride out 2024. The industry has shown its resilience in recent years, having achieved more than double the levels of economic profit in 2022 than in all the years between 2010 and 2020 except for one, yet by 2023 the industry was facing challenges that were both persistent and deepening. On a regional basis, Europe, and the US experienced slow growth throughout the year, while China’s initially strong performance decelerated in the second half.
Though the picture for luxury was more positive than the rest of the market in the first half of 2023, consumers’ appetite to shop for fashion was diminishing across the board by the second half, leading to slowing sales and uneven performance. Even luxury began to feel the heat after a lengthy period of growth that benefitted the entire industry. Looking to 2024, fashion leaders are anticipating further headwinds and are uncertain about prospects for the year ahead.
Looking to 2024, fashion leaders are anticipating further headwinds and are uncertain about prospects for the year ahead. Indeed, the word most often mentioned by executives in the BoF-McKinsey State of Fashion 2024 Executive Survey was “uncertainty.” Consumer confidence will remain fragile, although for different reasons in key markets of the US, Europe, and China.
As a whole, the fashion industry is predicted to achieve year-on-year retail sales growth of between 2 percent and 4 percent in 2024. Aside from economic challenges, one pressure point that cannot be ignored in the year ahead is the climate crisis.
After numerous extreme weather events in 2023, leading companies are likely to bolster their resilience to climate impacts in 2024. Inaction is no longer an option: extreme climate events are already placing the lives and livelihoods of fashion workers in danger and could put at risk an estimated $65 billions of apparel exports by 2030.