The McKinsey and Design Market Research claims that there is a wave in the industry. The developments shaping business involve innovations, creativity, digitalization, openness, rapid design, supply chain transformation, and internal operations,
The top three terms “uncertain, evolving and chose” were used by managers in 2016 in the latest survey jointly carried out by McKinsey and Business of Fashion to characterize the condition of the fashion industry. That’s no surprise. In recent years, we have witnessed several causes of turbulence: a Brexit referendum in Great Britain, extremist threats in multiple areas of the globe, the Trump presidency, Chinese economic slowdown, global market instability, disruptive changes of numerous ways, increasingly shifting customer preferences, and comportment amid developments in technology. The consequence was an immense strain on the apparel industry.
With stagnating income margins, 2016 witnessed the lowest growth trend in revenue of 2-3 percent. This is in sharp contrast to the performance of the fashion industry in the last decade of 2005–2015, where, according to the McKinsey Global Fashion Index, the industry grew at an annual rate of 5.5%. Interestingly enough, the apparel industry remains one of the most significant global value-generating sectors in the world. The multinational retail sector will be the seventh biggest economy in the world if measured alongside specific countries’ GDP.
The top challenges and opportunities: 2016 vs 2017
How do business experts do with top-of-the-mind problems? Here is a brief summary of the key problems and prospects for 2016 and 2017. The survey delivered. This is clear and here to stay to resolve instability and confusion. That is why the global and technical transition induces improvement in market preferences. Currently, consumers with a relentless relation, expertise, and discernment are so much easier to please and so much more volatile that they try to match their transactions to their deeper beliefs.
We have seen prospects develop in the face of difficulties. Successfully introduced “see right now, buy now” runway players such as Burberry, Tom Ford, and Tommy Hilfiger, which are presentations that satisfy the customer’s immediate need. A radically new idea is to reconfigure the whole design and product creation process to allow end-users to access the runway sections instantaneously from a variety of places or platforms. It needs to be seen if this is applied in a broader and more competitive manner.
The top trends that will shape the fashion industry 2016-2017
The global disruptions of wars, extremism, and financial disasters affecting consumer perception are important phenomena to note. This is also important in the retail industry as emotional transactions are choices and consumers are less inclined to shop if they are confused or terrified.
China’s economic downturn became a significant subject of discourse. In 2016, China’s GDP fell to 6.7%, compared to 7% in 2015. Increasing Chinese consumers’ preference overspending and sharing wallet payments in resources and expertise, thus moving the value chain from generic goods to luxury items. Because of its importance, the Chinese market remains significant. Yet, as demand development decreases, developing markets are becoming more attentive. India and the United Arab Emirates are expected to be the fastest developing nations. They lagged compared to China and the United States with regard to market size.
Another fascinating phenomenon is products that appeal to other customer habits. Athletic wear and sports have been a significant phenomenon in reaction to the casualization of fashion preferences. To anyone that doesn’t identify with the conventional male-female paradigm, sexless mode appeared. In March 2016, Zara released its first range without sex.
The ‘modest-fashion,’ which reaches Muslims from the Middle East, South-East Asia, and the rest of the planet, has been a significant genre. In this business segment, which is estimated to be worth $327 billion based upon the Global Islamic Economy Research, Dolce and Gabbana, Uniqlo, DKNY, and Mango, Tomme Hilfiger and several other global brands are at risk.
Increased interaction for on-line and networked customers is also pursued by international brands. The latest trend is to use virtual reality ( VR) by fashion brands for an immersive consumer experience. Preteen shows from New York Fashion Week, including Prabal Gurung collections, were broadcast in 360 degrees VR. Through their stores, Dior, Tommy Hilfiger, and Topshop introduced customers to pre-recorded displays at their catwalks. While still in its early stages, this is very exciting in terms of developing a diversified brand experience. This in addition to that reality in RFID and AR technology (AR) shaping intelligent fitting rooms and mirrors which redefine customer experience and perceptions in the fashion retail industry.
The following are the most significant trends which will decide the course for the fashion industry.
Cities should be the sources of success for business penetration and development initiatives for companies, toward countries and regions. Various divisions would include towns as main markets. Tokyo, for example, maybe the leading clothing market in 2025, but the list of categories of jewelry, bags, and luggage is expected in Hong Kong. Whereas Los Angeles, Tokyo, and New York will be among the top ten fashion markets in 2025, Beijing, Mumbai, and Shanghai are emerging cities.
Better-informed, eternally connected, more value-added, and demanding consumers will put pressure on brands to provide greater comfort, price, personalization, and transparency experience. To any brand serious about remaining in the market, CRM would be important to invest in.
While many speak about millennials, the McKinsey report shows that aging and elderly communities are seeing substantial increases in market share. Through 2025, in developed economies, the world population aged over 60 years will hit 30%, and in developing economies 13%. Brands will do well not only to meet the desires of the ages, but also the people.
It is no longer feasible to reduce costs through manufacturers to supply and pressure them. The search for low-cost countries to reduce money is no longer feasible. Only apparel businesses will gain organizational productivity in the retail industry, create consistency and cooperation with core business suppliers in partnership with established buyer-supplier partnerships. The best path forward is for them to collaborate together. Brands can have considerable growth in the technical innovation and digitalization of the supply chain. Approaching fair manufacturing chains, the Speed Factory or Adidas Manufacturing Center in Belgium are moving in the right direction. More businesses will focus on the organic growth of systems, operations, and efficiencies and will focus on an internal focus on inorganic growth through expansions and acquisitions.
The design business is primed for an internal shake-up. We’re going to see winner and loser emerging, based on who’s able to adjust to the transition versus who’s been along the old route. The main trends to live, succeed, and prosper in this modern age include technology, creativity, digitalization, openness, design immediacy, supply chain transformation, and internal operations.