The latest ‘State of Fashion 2022’ report by The Business of Fashion and McKinsey & Company released states, the global fashion industry is set to recover in 2022, with fashion sales surpassing 2019 levels by 3-8 percent. What’s more, recovery will strongest across China and the US, with Europe lagging behind. The other key highlights of the latest report are: Supply chain pressures will be the main challenge for the industry, posing a risk to the pace of recovery with 67 percent of businesses expecting to increase prices next year; Sustainability will remain high fashion’s agenda, with 60 percent businesses ramping up investment in closed-loop recycling solutions to reduce environmental impact; 32 percent industry executives identified digital as the biggest opportunity for growth, followed by sustainability (12 percent).
Key Takeaways
The report done is based on an analysis of exclusive interviews with top industry executives and a survey of more than 220 international fashion executives and experts, providing an authoritative view of what lies ahead for the industry.
The report identifies 10 themes:
• Uneven Recovery: Recovery from the pandemic will be uneven across different geographies; those with strong healthcare and economic resilience will outperform their peers. Fashion businesses with international footprints will need to assess local conditions regularly to mitigate risk. It states approximately 4 out of every 5 vaccines distributed globally by September 2021 were in high- and upper-middle-income countries.
• Logistics Gridlock: Pressure on global supply chains, rising costs, and logistical logjams threaten the industry’s ability to deliver products to customers. Businesses must rethink their sourcing strategies and look to implement new supply chain management to cope with customer demand in the year ahead. Almost 49 percent of fashion executives signalled supply chain disruptions as the number one theme to impact their business in 2022.
• Domestic Luxuries: International tourism will not fully recover until at least 2023. To compensate for the loss of international shoppers, luxury brands should engage further with domestic consumers to capture a bigger share of the domestic market. 51 percent of 2019 air traffic flows between Asia and Europe are expected to recover in 2022.
• Wardrobe Reboot: Loungewear and sportswear enjoyed a boom during the pandemic, but as the world begins to open up once again as social restrictions ease, consumers will reallocate wallet share to other categories as they adjust to new lifestyles. 37 per cent of fashion executives expect occasionwear to be a top-three category for year-on-year sales growth.
• Metaverse Mindset: Fashion brands looking to engage with high-value young consumers should explore the potential of non-fungible tokens (NFTs), gaming, and virtual fashion as new routes to community building and commerce. 81 percent of Gen Z played video games in the past six months, averaging 7.3 hours per week.
• Social Shopping: Fashion players are using social commerce to create seamless shopping experiences from discovery to purchase. Though opportunities vary by market, companies should embrace in-app checkouts and test live streaming, augmented reality, and other associated technologies. 37 percent of fashion executives cited social commerce as one of the top three themes that will impact their business in 2022.
• Circular Textiles: The scaling of closed-loop recycling could help reduce fashion’s environmental impact at the material level. As these technologies mature, businesses will need to embed them into product development and adopt large-scale collection and sorting processes. 60 percent of fashion executives have already invested or plan to invest in closed-loop recycling next year.
• Product Passports: Brands are increasingly using product passports to share information with consumers and partners to boost transparency, authentication, and sustainability. However, businesses must coalesce around common standards and engage with pilot projects at scale. Approximately 2 out of 5 fashion executives plan to adopt product passports in 2022 or have already done so.
• Cyber Resilience: Businesses face more threats of cyber attacks and risks of improper data handling than ever before. Fashion players must urgently improve their defenses and invest to make digital security a strategic imperative. 53 percent of fashion executives say it is likely or very likely their company will experience a significant cyber-attack in 2022.
• Talent Crunch: Emerging from the pandemic, employees from upper management to the retail front line will be reconsidering their priorities. In order to attract and retain the best talent, companies must create flexible, diverse, and fully digitized workplaces. 45 percent of fashion employees cited “sense of purpose” as one of the most important factors in choosing to remain at their employer.
