Fashion has rarely been the most predictable of sectors even during favourable times. However, it would appear that – in the words of McKinsey & Company – the industry is looking towards an especially “tumultuous and uncertain 2025”.
The American multinational strategy and management consulting firm has released a report, entitled The State of Fashion 2025, indicating that the industry will face “challenges at every turn” through the year ahead.
However, there will still be growth opportunities – for those brands that are able to find them.
Has the long-predicted “negative environment” for fashion brands finally come to pass?
Declaring that a “long-feared cyclical slowdown has arrived”, McKinsey & Company stated that the global fashion industry has been confronted with a dynamic market, economic uncertainty, and shifts in consumer behaviour. The organisation added that brands’ efforts to hunt out avenues for growth in 2025 would mean “navigating a complex maze”.
It is certainly difficult to argue that fashion brands across the planet are battling a complicated mix of factors that threaten to hold back their growth.
For example, consumers have become more price-sensitive in recent times, having been buffeted by the high inflation of the last few years. There has also been, in McKinsey’s words, “the surprising rise of dupes, the acceleration of climate change, and the continued reshuffling of global trade”. Furthermore, the organisation has indicated that it anticipates “even starker” regional differences than was the case even in 2024.
The company explained: “In short, the negative environment predicted by many in the fashion industry this time a year ago has now materialised… 2025 is likely to be a time of reckoning for many brands.”
Slow growth and downbeat sentiments could be trends of the coming year
In its consideration of the apparel sector’s prospects, McKinsey said that, “judged purely by the top line”, the 2025 outlook seemed to be a continuation of this year’s sluggishness. It is anticipated that fashion-industry revenue growth will stabilise in the single digits.
Indeed, while the last few years have seen the luxury end of the market take the leading role in creating value, the McKinsey Global Fashion Index has predicted that in 2024, it is nonluxury that will drive the entirety of the increase in economic profit. This has not occurred since 2010, excluding the COVID-19 pandemic.
Having said this, while McKinsey expects fashion-industry growth to remain modest, a slight increase is still expected compared to the previous year.
Nonetheless, a certain amount of pessimism prevailed among the fashion leaders quizzed for the yearly BoF-McKinsey State of Fashion Executive Survey. Just a fifth (20%) of respondents said they expected improvements in consumer sentiment in 2025, while about four in 10 (39%) indicated that they anticipated industry conditions would deteriorate.
There was, however, at least some reason for cheer among fashion brands active in Europe, as it is expected that falling inflation and heightened tourism on the “Old Continent” will bring benefits for the industry.
Can your own fashion brand defy the tricky environment that 2025 looks set to bring?
While the challenges of the next few months look likely to be meaningful, at least one thing remains the case: by joining forces with a proven luxury brands marketing agency such as Skywire London, you can help put your business in the optimal position to innovate, survive, and grow.
Enquire to our creative, strategic, and marketing professionalstoday. When you do, we will be delighted to have a conversation with you about the role we can play in steering your brand to durable success through 2025 and beyond.