The fashion industry is likely to grow at 2.5-3.5 per cent in 2017 in terms of sales, up from 2-2.5 per cent in 2016, according to a recent report. First macroeconomic indicators, including GDP growth forecasts, are projected at 3.4 per cent compared with 3.1 per cent for 2016, however, it does not reflect impacts of political shifts in the US and UK.
The investment community and the fashion brands themselves forecast improvement across the industry next year. Nearly 40 per cent of executives interviewed for the State of Fashion 2017 report by McKinsey & Company expect conditions for the fashion industry to improve in 2017, compared with 19 per cent who reported improving conditions in 2016.
Value and affordable luxury are likely to be the big winners, both outpacing the industry average at a projected 3-4 per cent and 3.5-4.5 per cent growth, respectively. However, all market segments, except for the discount market, should see a slight sales growth improvement of 0.5-1.5 per cent, states the report.
Athletic wear is positioned to be the absolute category winner, maintaining 6.5-7.5 per cent sales growth, albeit no longer growing at a double-digit rate overall, according to the report. The affordable luxury segment seems likely to continue benefitting from consumers ‘trading down’ from luxury, while signs point to the continued growth of the value segment in line with the international expansion of large global players.
According to survey respondents, the most pressing challenge next year will continue to be dealing with volatility, uncertainty, and the shifts in the global economy, followed by growth in sales and profitability. In addition, fashion executives continue to see competition from online players as one of their top three challenges for next year. Last, supply chain improvements, decreasing foot traffic, and the speed of the fashion cycle weigh equally on their mind as challenges to face in 2017.
Trends that are likely to define the fashion agenda in the coming year according to this fashion report are intensifying volatility, China’s comeback, urban engines, shrewder shoppers, generation correlation, wellness dividend, fashion cycle disruptions, organic growth, upstream technology and ownership shake-up.
“The industry now has the opportunity to stabilise and reset. Next year’s success stories are most likely to come from those that are already planning for the year ahead. They should do this in the context of the following trends that we believe will shape the fashion industry in 2017,” says the report. (KD)
Fibre2Fashion News Desk – India