The fashion industry is expected to experience a mix of headwinds and tailwinds this year, and industry leaders must be strategic and cautious to navigate them successfully. The eighth annual "State of Fashion" report by an industry insider and McKinsey & Company predicts between 2% and 4% year-on-year retail sales growth in 2024, but macroeconomic, geopolitical, and climate-crisis pressures will pose serious challenges.
The report predicts that over 50% of fashion executives surveyed are planning to raise prices to bolster their businesses amidst increasing costs. To mitigate further headwinds in 2024, fashion companies must consider investing in developing more transparent and collaborative relationships with their suppliers and also prepare for other challenges such as the climate crisis.
Besides these challenges, the report identifies some pockets of opportunities for growth and innovation in 2024. Leaders surveyed in the report say that generative AI, sustainability, and travel offer such opportunities. For example, generative AI presents growth potential for creativity-focused use cases in design and product development. Approximately 73% of surveyed executives are planning to prioritize generative AI in 2024, but the lack of specialized talent may cause concerns.
Additionally, marketing is another area of focus for fashion executives. After years of relying on performance marketing, brand marketing may increasingly take center stage in the year ahead, with 71% of executives planning to spend more on brand marketing than in 2023 in a bid to cultivate emotional connections with customers.
Finally, as consumers travel with renewed enthusiasm in the year ahead, fashion companies may need to revamp how they engage with these consumers, including refreshing distribution and category strategies to meet travelers wherever they are. This shift is particularly timely as travel levels in 2024 are projected to exceed those in 2019, and travelers are looking for brand experiences.
In summary, the fashion industry must prepare to face a year of significant challenges and opportunities in 2024, and the report offers some insights and recommendations for fashion industry leaders to help them to strategically navigate the uncertain terrains.
Reference credits:
• The State of Fashion 2024 Riding Out the Storm - BoF-McKinsey Report.
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