Professional Documents
Culture Documents
The State of Fashion 2024
The State of Fashion 2024
of Fashion
2024
2
The State
of Fashion
2024
ACKNOWLEDGEMENTS
The authors would like to thank Ángeles García-Manso, Olivia White and Liann Wu
from McKinsey’s London and New York offices respectively for their critical roles in
delivering this report. We would also like to thank Abhishek Goel for his significant
contribution to the MGFI article again this year.
A special thanks to all members of The Business of Fashion and the McKinsey
communities for their contributions to the research and participation in the
BoF-McKinsey State of Fashion 2024 Executive Survey and the BoF-McKinsey State of
Fashion 2024 Consumer Survey, especially the many industry experts who generously
shared their perspectives during interviews. In particular, we would like to thank Nima
Abbasi, David Allemann, Ana Andjelic, Rachel Arthur, Jean-Marc Bellaiche, Olivier
Bialobos, Frederic Court, Cyril Foiret, Gstaad Guy, Mun-il Han, Florian Heubrandner,
Norma Kamali, Erwan Rambourg, David Savman, Tony Wang and Andrew Wyatt.
The wider BoF team has also played an instrumental role in creating this report — in
particular, Marc Bain, Brian Baskin, Nick Blunden, Sheena Butler-Young, Cathaleen
Chen, Jael Fowakes, Fred Galley, Olivia Howland, Vikram Kansara, Sarah Kent,
Daniel-Yaw Miller, Alex Negrescu, Tamison O’Connor, Diana Pearl, Anna Rawling,
Darcey Sergison, Arunima Sharma, Charlene Teressa, Amy Warren, Robert Williams,
Anouk Vlahovic, Josephine Wood and Robb Young.
We would like to thank the following McKinsey colleagues for their special
contributions to the report creation and in-depth articles: Ekaterina Abramicheva,
Tera Allas, Sarah André, Magdalena Balcerzak, Mosa Barlass, Tom Bauer, Larissa Blau,
Pamela Brown, Marc Canal, Matthew Chapman, Becca Coggins, Daniel Crohmal,
Federico Cucinelli, Lindsay Delevingne, Sandrine Devillard, Gilles Djayep, Linda
Dommes, Victor Duran, Erik Eklöw, Guenter Fuchs, Ezra Greenberg, Gizem Günday,
Fiona Hampshire, Holger Harreis, Colin Henry, Steve Hoffman, Sara Hudson, Julia
Huang, Daniel Hui, Julian Hügl, Patricio Ibáñez, Jonatan Janmark, Younghoon Kang,
Dale Kim, Patrick Klinkoff, Simona Kulakauskaitė, Krzysztof Kwiatkowski, Nikolai
Langguth, Madé Lapuerta, Benjamin Lau, Leila Le Merle, Bridget Lousa, Karl-
Hendrik Magnus, Siddhant Malhotra, Ignacio Marcos, Dunja Matanovic, Dominik
Matuszewski, Jessica Moulton, Karin Östgren, Gizem Ozcelik, Jesko Perrey, Roger
Roberts, Dmitrii Rykunov, Amaury Saint Olive, Steve Saxon, Kandarp Shah, Marie
Strawczynski, Saga Stugholm, Alex Sukharevsky, Kimberly Te, Alexander Thiel,
Martha Torres, Alexis Trittipo, Jonathan Woetzel, Alexis Wolfer, Meri Yrjänen, Jackey
Yu, Isabell Zang, Rebecca Zhang and Daniel Zipser.
We’d also like to thank David Wigan for his editorial support, Amy Vien for her creative
input and direction and Diana Ejaita for the cover illustration.
5
The State of Fashion 2024
CONTENTS
10 Executive Summary
12 Industry Outlook
20 Global Economy
Theme 01. Fragmented Future
In-Depth: The Tumultuous Path to an Exit
Theme 02. Climate Urgency
34 Consumer Shifts
Theme 03. Vacation Mode
In-Depth: How China’s Tourists Will Return in 2024
Theme 04. The New Face of Influence
Gstaad Guy: Catering to the 1% with Social Media Wit
Theme 05. Outdoors Reinvented
On: Capitalising on the Perennial Sportswear Boom
60 Fashion System
Theme 06. Gen AI’s Creative Crossroad
In-Depth: Driving Growth Through Generative AI: An Executive Playbook
Theme 07. Fast Fashion’s Power Plays
Musinsa: Taking the K-Fashion Ecosystem Global
Theme 08. All Eyes On Brand
Dior: Balancing Tradition, Innovation and Scale
Theme 09. Sustainability Rules
Rachel Arthur: How the UN Wants Brands to Sell Sustainability
Theme 10. Bullwhip Snaps Back
PVH Corp: Transforming Supply Chains Through Trust and Transparency
7
CONTRIBUTORS
8
Joëlle Grunberg Janet Kersnar
9
The State of Fashion 2024
EXECUTIVE SUMMARY
Riding Out
the Storm
W
ith clouds brewing on the horizon, Aside from economic challenges, one pressure
recent years might provide a sense point that cannot be ignored in the year ahead is
of how the fashion industry will ride the climate crisis. After numerous extreme weather
out 2024. events in 2023, leading companies are likely to
The industry has shown its resilience in recent bolster their resilience to climate impacts in 2024.
years, having achieved more than double the levels Inaction is no longer an option: extreme climate
of economic profit in 2022 than in all years between events are already placing the lives and livelihoods
2010 and 2020 except for one, yet by 2023 the industry of fashion workers in danger and could put at risk an
was facing challenges that were both persistent and estimated $65 billion of apparel exports by 2030.
deepening. On a regional basis, Europe and the US How should fashion companies prepare? With
experienced slow growth throughout the year, while cost-saving tactics mostly exhausted, the focus is
China’s initially strong performance decelerated in expected to be on growing sales, underpinned by
the second half. Though the picture for luxury was new pricing and promotion strategies, rather than
more positive than the rest of the market in the first volume increases — across the industry, net intent
half of 2023, consumers’ appetite to shop for fashion to raise prices is more than 50 percent, according to
was diminishing across the board by the second half, the BoF-McKinsey Executive Survey. Cost pressures
leading to slowing sales and uneven performance. are predicted to abate, with less than 20 percent
Even luxury began to feel the heat after a lengthy of executives expecting the cost of goods sold and
period of growth that benefitted the entire industry. selling, general and administrative expenses to rise
Looking to 2024, fashion leaders are anticipating more than 5 percent.
further headwinds and are uncertain about prospects In 2024, the industry is expected to bear
for the year ahead. Indeed, the word most often the impact of fluctuations in demand that have
mentioned by executives in the BoF-McKinsey State punctuated the past few years. It is during such times
of Fashion 2024 Executive Survey was “uncertainty.” that supply chains experience a “bullwhip effect,”
Consumer confidence will remain fragile, although in which small sales variations cause high levels
for different reasons in key markets of the US, of volatility, leading to factory underutilisation,
Europe and China. As a whole, the fashion industry is layoffs and delayed infrastructure investments. To
predicted to achieve year-on-year retail sales growth navigate these challenges, fashion brands should
of between 2 percent and 4 percent in 2024. consider investing in developing more transparent
10
Executive Summary
and collaborative relationships with their suppliers. At the same time, brands may find consumers are
Meanwhile, fashion supply chains could be under more demanding when it comes to authenticity and
increased scrutiny amid incoming regulations on relatability, leading to a shift towards influencers
several fronts. This includes new sustainability who are more quirky, vulnerable and less-polished.
rules in the European Union and the US, which Forward-looking companies should consider leaning
will require brands and manufacturers to double into this new wave of content creators to enhance
down on initiatives aimed at cutting greenhouse gas their brand stories.
emissions and waste, while building business models As consumers travel with renewed enthusiasm
that protect and preserve natural resources. The fast- in the year ahead, fashion companies may need to
fashion industry, which has already been buffeted by revamp how they engage with consumers who are
a cohort of companies like Shein and Temu that are shopping abroad. For the first time since the Covid-19
not only faster and cheaper but also fuelled by big pandemic, travel levels in 2024 are projected to
marketing budgets, may be particularly pressured by exceed those in 2019. Chinese travel to overseas
these new regulations. destinations is expected to reach between 70 percent
When seeking to identify growth levers, one area and 100 percent of pre-pandemic levels in 2024. As
that respondents to the BoF-McKinsey Executive these shoppers return, there is a growing desire for
Survey said they are homing in on is generative AI, brand experiences and traditional shopping trips
where there is significant potential in creativity- in both tourist destinations and second-tier cities.
focused use cases in design and product development. Alongside a return to travel, there is also a shift to
Some 73 percent of executives expect to prioritise spending more time outdoors, which will likely drive
gen AI in 2024, but many may face a talent gap, given up demand for outdoor wear in 2024, further blurring
that just 5 percent said they are ready to make best the lines between functionality and style.
use of the technology. All told, executives are bracing for a strategically
Marketing is another area of focus. After years of challenging year ahead. Fashion leaders need to plan
relying on performance marketing, brand marketing carefully for a range of different scenarios, become
may increasingly take centre stage in the year ahead, better equipped to manage pricing and get ready to
with 71 percent of executives planning to spend accelerate when the storm begins to clear.
more on brand marketing than the in 2023 in a bid
to cultivate emotional connections with customers.
11
The State of Fashion 2024
INDUSTRY OUTLOOK
Destination
Unknown
F
ashion industry executives looking expected conditions remain the same and 38 percent
towards 2024 are on edge. The most expected the situation to worsen, marking the biggest
prominent sentiment among fashion divide in executives’ expectations for the year ahead
leaders is “uncertainty,” according to the since the inception of the BoF-McKinsey survey in
BoF-McKinsey State of Fashion 2024 Executive 2017.2 Yet the outbreak of the Israel-Hamas war in
Survey.1 Causes for concern include geopolitical October underscores the uncertain environment,
events, weakened economies and the continuing raising questions about whether a regional widening
impact of high interest rates. Yet executives also of the conflict could impact the global economy and
see some reason for optimism in specific markets have ramifications for the fashion industry.
and segments. Geopolitics continue to be a firm fixture on
Looking ahead to 2024, 26 percent of respondents executive radars — 62 percent of respondents to
to the survey conducted in early September expected the survey cited geopolitical instability as the top
conditions to improve year on year, 37 percent risk to growth, while economic volatility is cited
12
Industry Outlook
Exhibit 1
Europe US China
24
13 12
9 10
5 4 to 6
1 to 3 1 to 3 2 0 to 2 1 to 3
Non-
Luxury −1 0 to −2
−3
−10
−13
−18
49
40
32
15 16 16
10 10
5 to 7 4 to 6
3 to 5
1 1 to 3 2 to 4 1 to 3
Luxury
−8
−25
−27
H1 H2 H1 H2 H1 H2
2020 2021 2022 2023E 2024E 2020 2021 2022 2023E 2024E 2020 2021 2022 2023E 2024E
Note: Growth forecasts reflective of inflation; growth rates calculated on actuals expressed
in local currencies
13
The State of Fashion 2024
Exhibit 2
Source: BoF-McKinsey State of Fashion 2024 Executive Survey, BoF-McKinsey State of Fashion 2023 Executive
Survey, BoF-McKinsey State of Fashion 2022 Executive Survey
14
Industry Outlook
Exhibit 3
More than 5% 25
69%
1% to 5% 44
No change 18
−4% to 0% 6
−5% or less 6
percent and 5 percent is predicted in 2024, compared percent is expected, compared to 16 percent in the
to 10 percent in the first half of 2023 and 5 percent to 7 first half of 2023, which dropped to between 1 percent
percent in the second half of the year. An anticipated and 3 percent in the second half. Though moving in
rise in inbound tourism, boosted by Paris’ hosting the right direction, the projected growth rate in the
of the Olympic and Paralympic Summer Games, year ahead stands in sharp contrast to 2020’s 32
will likely be a growth driver, as will a pipeline percent and 2021’s 40 percent. Renewed uptake of
of store openings in tier two and tier three cities international travel may dampen domestic demand,
across Europe.12 13 as affluent consumers resume shopping for luxury
In the US, luxury is expected to grow at 2 percent outside the country. However, it’s worth noting that
to 4 percent year on year in 2024, compared to 1 the size of China’s luxury market remains almost
percent in the first half of 2023 and between 1 percent double what it was in 2019.15
and 3 percent in the second half. This would represent While the biggest fashion markets are seeing
a return to the long-term pace, with slightly stronger only tepid signs of renewed growth, others may be
sales driven by higher-end aspirational brands. more compelling. When asked about the countries
However, the luxury boom of recent years is not likely or regions they believe will be the most promising
be rekindled. Rather, stabilisation at a lower level is in the year ahead compared to 2023 in the survey
expected. A strong dollar against, for example, the conducted in September, executives cited the Middle
euro may also lead to some spend shifting abroad.14 East (51 percent net intent), India (39 percent net
As for China, luxury growth of 4 percent to 6 intent) and Asia Pacific (34 percent net intent). North
15
Industry Outlook
17
The State of
GLOBAL ECONOMY CONSUMER SHIFTS
In 2024, the global The frequency and Consumers are It’s time for brand Technical outdoor
economic outlook intensity of extreme gearing up for the marketers to update wear has been
will likely continue weather-related biggest year of their influencer propelled by
to be unsettled. events in 2023 mean travel since before playbooks. A new consumers’ post-
As new and the climate crisis the pandemic. But guard of creative pandemic embrace
ongoing financial, has become even a shift in values personalities is of healthier
geopolitical and more visible, leaving means travellers gaining brands’ lifestyles as well as
other challenges the fashion value have a different set attention, “gorpcore,” and is
weigh heavily chain especially of expectations, winning trust and likely to accelerate
on consumer vulnerable. With even as shopping fandom among even further in
confidence, fashion climate risks remains high on key audiences. 2024. More outdoor
markets in the worsening across the agenda. Brands Working with these brands will likely
US, Europe and continents, the and retailers should personalities in launch lifestyle
China are facing fashion industry consider refreshing 2024 will require collections while
differing headwinds, can’t hold off any distribution and a different type of lifestyle brands
requiring suppliers, longer on building category strategies partnership, an embed technical
brands and resilience into its to meet travellers emphasis on video elements into
retailers to bolster supply chains and wherever they are. and a willingness to collections,
contingency helping to abate relinquish a degree further blurring
planning, among emissions. of creative control. the lines between
other measures. functionality and
style.
110% 40%
−16 %
800%
$65bn
Consumers’ net intent More than $65 billion of In 2024, global travel More than 40% of Trade activity on resale
to spend on apparel apparel exports are at volumes are projected consumers prefer platform StockX for
is −16% across the US, risk of being wiped out to reach 110% of 2019 fashion influencers Salomon, Arc’teryx and
Europe and China in by climate events such levels, the first year to who are relatable and The North Face grew on
Q4 2023 as flooding and extreme exceed pre-pandemic authentic average 800% in 2023
heat levels vs 2022
Fashion 2024
FASHION SYSTEM
01.
Fragmented
Future
In 2024, the global economic outlook will likely
continue to be unsettled. As new and ongoing
financial, geopolitical and other challenges weigh
heavily on consumer confidence, fashion markets
in the US, Europe and China are facing differing
headwinds, requiring suppliers, brands and
retailers to bolster contingency planning, among
other measures.
KEY INSIGHTS
21
The State of Fashion 2024
Exhibit 4
Europe1 −29
US −25
China 7
1 Europe includes respondents from France, Germany, Italy, Spain and the UK
Consumers around the world might be mistaken if at the US Federal Reserve Bank are among those at
they believe 2024 will offer a chance to catch their central banks who expect interest rates to remain
collective breath after enduring a post-pandemic “higher for longer.”26 27
period of turbulence. Universally, slowing growth, What will likely differentiate 2024 from the
new and continued geopolitical conflict, and past few years is that consumers in key economies
consumer spending pressures are likely to define may be confronting different challenges from each
economic prospects. And as in previous times, the other, thus creating additional complexity for
impacts will likely not be felt uniformly as market fashion executives steering their companies through
responses diverge. headwinds from region to region.
As 2023 rolls towards its end, forecasters have In Europe, the economic picture is gloomy, as it
readjusted their outlooks as the strains of high continues to struggle under the shadow of the war
inflation and subsequent interest rate hikes showed in Ukraine. By the second quarter of 2023, Europe’s
few signs of falling closer to target levels. By October, biggest economy, Germany, saw growth stagnate,
the International Monetary Fund’s forecast put and the risk of a second recession within a year is still
global GDP growth at 2.9 percent in 2024, down hovering.28 29 Meanwhile, in the UK, Europe’s second-
from 3 percent in 2023 and 3.5 percent in 2022.24 The largest economy, growth was slow as the economy
IMF cites slowdowns in advanced economies as the attempted to shrug off 2022’s surge in inflation and
primary culprit. adjust to 14 consecutive interest rate hikes.30 31
Inflation, still remaining high, will likely GDP growth in the euro zone is set to remain
continue to be in the limelight. According to the IMF, low, seeing only a tentative rise in 2024 — from 0.7
the global headline inflation rate is set to fall to 5.8 percent in 2023 to 1.2 percent in 2024, according
percent in 2024, from 6.9 percent in 2023 and 8.7 to the IMF.32 A monthly euro-zone survey by the
percent in 2022.25 Against this backdrop, officials European Commission found that consumer
22
Global Economy
A pedestrian on The Bund in Shanghai, China. Getty Images.
confidence hit a six-month low in September.33 The pressures. The economy moved into deflation, and an
euro zone’s ongoing cost-of-living crisis is straining ongoing crisis in the property market — which drives
many households, alongside continued higher core 25 percent of China’s economy — left apartment
inflation rates compared to the US.34 35 sales in August 47 percent below 2019 levels.40 41
In the US, where Federal Reserve policies appear Major property companies are buckling under the
to have averted outright recession and achieved lower weight of unsustainable debts and losses.42 Youth
levels of inflation, growth prospects seem slightly unemployment has been high, hitting 20.8 percent in
brighter than those in Europe. However, GDP growth May (the latest date that China’s National Bureau of
is expected to slow next year, from 2.1 percent down Statistics published new figures).43
to 1.5 percent.36 Chinese consumers have continued building up
Various events in the second half of 2023 savings, while a return to spending has been slow.44
underscored the fragility of consumer confidence At around 35 percent to 45 percent of GDP, China’s
in the country. For example, in October US policy gross savings rate has been historically high and,
makers lifted the three-year freeze on student-loan according to the World Bank, the country has the
repayments,37 leaving 37 percent of respondents to a highest savings-to-GDP rate among large economies.
Morgan Stanley survey anticipating that they would Indicators suggest that in 2023, China’s savings levels
have to cut spending in order to make payments, increased further, perhaps as households expanded
while 34 percent said they would not be able to make their safety nets out of precaution.45
payments at all.38 Earlier in the year, credit card debt In contrast, savings pots have dwindled in both
reached an all-time high of $1.03 trillion, according the US and Europe. An unusual amount of excess
to central bank research, with high interest rates and in savings was built up in these regions during
financing charges also contributing to headwinds.39 the Covid-19 pandemic, but analysis now suggests
In China, 2023 held different economic that these are likely to run out by the end of 2023,
23
The State of Fashion 2024
after consumers returned to shopping more freely in the six months to August.53 India’s bellwether
following the lifting of pandemic lockdowns. The manufacturing Purchasing Managers Index (PMI)
subsequent toughening of the economic climate hit a 31-month high in May and the services PMI
in 2023 has also meant that it is difficult for reached a 13-year high in July. GDP growth stood
consumers to replenish their savings, and even as at 6.9 percent in fiscal 2023.54 Strong investment
savings remain reasonably high in absolute terms, activity, consistent domestic demand and a policy-
inflation is causing them to devalue. This bodes ill for maker push to invest in infrastructure buoyed the
discretionary spending in 2024, after recent years rapid growth. This rate will likely moderate in 2024
of relatively buoyant consumption.46 47 Pressure on but remains strong with forecasted GDP growth of
household budgets is likely to prompt a decline in 6.3 percent.55
discretionary spend. In the third quarter of 2023, net The impact of 2024’s mixed outlook will be felt
intent to purchase apparel was negative 25 in the US by fashion businesses across the value chain. Brands
and negative 29 in Europe, according to a McKinsey and retailers will likely need to confront a further
survey.48 wave of low consumer demand in some key markets,
while suppliers may feel the amplified effects of
Rays of Light
this dampened demand even more as it echoes
Still, there are certain country-level reasons for some along the supply chain, leading to underutilised
degree of optimism. This is the case with China, capacity. Revenue growth in this environment is
even if the base case is for muted demand and slow likely to be driven by price rather than volume, and
GDP growth, from 5 percent in 2023 to 4.2 percent businesses will need to plan price increases with
in 2023, according to IMF forecasts. The volume of care and precision to avoid alienating cash-strapped
imports expanded 1 percent year on year in the first consumers.
half of 2023 (compared with a decline of 6.4 percent To build greater resilience across value chains
in the same period in 2022), indicating a tentative in 2024, fashion decision makers can focus on
rise in domestic demand.49 50 contingency planning, ensuring that scenarios take
Consumer spending plans in China appear to be into account high levels of uncertainty and the range
marginally more positive than in the US and Europe, of regionalised consumer demand shifts. Scenarios
with a 7 percent net intent to purchase apparel for each region will need to factor in increasingly
as well as jewellery, and 8 percent for footwear, divergent underlying factors. Meanwhile, strong
McKinsey research shows. Meanwhile, 69 percent inventory management is likely to remain a priority,
of consumers are planning to splurge on shopping.51 continuing successful cost management programmes
However, even if cautious, optimism for the country implemented in post-pandemic times.
should be tempered, as the overall outlook may be Meanwhile, suppliers can expect an increasingly
disappointing — forecasts for shopping and travel competitive landscape. Manufacturing sector price
have remained dampened in recent months,52 and wars are a possibility as weak consumer demand
growth is still well below historical levels. puts pressure on orders and leads to excess capacity
Emerging Asia provides potential, too. For in some supply chains. Suppliers may want to work
example, in India, consumer confidence reached a to build deeper, collaborative relationships with
four-year high in September 2023, while India-based brands to reduce exposure to price competitiveness,
executives are more optimistic than western peers, while ensuring they retain tight control of costs in
with 85 percent of respondents to a McKinsey the year ahead.
global survey saying that conditions have improved
24
Global Economy
IN-DEPTH
The Tumultuous
Path to an Exit
By Sara Hudson, Pamela Brown, Leila Le Merle and Simona Kulakauskaitė
The State of Fashion 2024
Private equity (PE) firms looking to exit their fashion discretionary consumer categories, high valuations
industry assets in 2024 may find they have some and difficulties obtaining debt financing.58
difficult choices to make. Against a backdrop of PE firms are likely to continue to see more
public market volatility, finding an attractive route limited exit options.59 On one side, strategic buyers
to exit has been challenging, to such an extent that have not made many investments in the past few
future deal-making may provide less-than-ideal years, given their caution around adding further
returns and raise questions about the long-term complexity to their portfolios, and have focused
value creation opportunities across parts of the instead on optimising their existing operations.60
fashion industry. PVH Corp and VF Corp, for example, last acquired
The significant shift in fashion’s financial market targets in 2018 and 2020, respectively. On the other
performance had, in fact, already started in 2018. side, few PE-backed brands can reach the scale that
Apparel, fashion and luxury (AF&L) companies an initial public offering requires. This then means
generally tracked benchmark indexes closely up attracting another PE investor, but they will likely be
until then, after which industry performance began confronting the same concerns about the industry’s
to diverge. While luxury companies outperformed long-term value creation as the public market.
the MSCI World Index by 14 percentage points An increasingly important priority for investors
in the five years to October 2023, non-luxury has is to minimise exposure to the “fashion risk”
underperformed the same index by 3 percentage inherent in brands that rely on actively shaping
points.56 or getting fashion trends right.61 Naturally, these
A similar scenario has been playing out in brands see swings in popularity over time, which
the private realm, with PE investors becoming makes it difficult to assess their value at any point
The New York Stock Exchange. Shutterstock.
increasingly cautious about non-luxury fashion in time, encouraging investors towards brands with
categories, with deal volume stagnating over the iconic, timeless designs and a credible, compelling
last decade (except for 2021 which was a record brand story. Even if investors are able to identify the
PE deal year) even when “dry powder” — that is, brands with staying power, the added challenge of
capital available for investment — grew in the PE how to underwrite the intangible value — that is the
industry overall.57 In early 2023 amid an overall value of the brand — adds complexity and risk to the
downward trajectory in the broader PE space, PE deal-making process.
activity in AF&L ground to a halt due to pressure on PE players have long homed in on luxury targets,
26
Global Economy
Exhibit 5
Market values are higher for companies with strong revenue and profit growth
Enterprise value (EV) growth and underlying drivers,
Sector aggregate growth (5.5%)
5% 2% 16% 14%
EBITDA margin change (2010–2022)
N=46 N=44
N=38 N=37
N=115 N=68
N=102 N=63
for example the sale in August 2023 of luxury of deals that have exceeded their typical holding
womenswear brand Zimmermann to PE firm Advent periods and need a sale to realise returns for
International. However, large luxury houses and investors. However, about half of the assets that
other strategic suitors are equally attracted to these are at or near the end of their holding periods are in
assets and are typically also active bidders when segments which investors are increasingly wary of.
brands come onto the market. Fashion-focused women’s apparel currently makes
PE firms are also not singularly focused on up 12 percent of this cohort in EMEA and poses a
luxury — sportswear, footwear, wellness, outdoor, significant amount of trend-related risk.64 A number
modern jewellery and intimates are on their radars of potential deals in this category have stalled in
too.62 Also in demand are B2B players further down 2023, including Giuseppe Zanotti (L Catterton),
the value chain that allow PE investors to gain Sezane (General Atlantic), Isabel Marant (Montefiore
exposure to the fashion industry indirectly (without Investment) and Ganni (L Catterton).65
assuming fashion risk). Transactions in this space In the current economic climate, PE investors
include Permira’s acquisition of luxury contract are also likely to be cautious about department
manufacturer Gruppo Florence in late 2022 and stores and other “third-party” retailer assets (e.g.
San Quirico’s 75 percent purchase of Minerva Hub, a online and offline retailers that primarily sell goods
metallic components and leather producer for luxury from other brands), amid increasing macroeconomic
companies, in 2023.63 headwinds and narrow profit margins. Third-party
retail accounts for 36 percent of assets held (offline
Looking to Divest
24 percent and online 12 percent).66
Across the PE industry, there is a growing backlog All told, PE firms’ choice may come down to
27
The State of Fashion 2024
Exhibit 6
Around half of fashion assets that private equity investors may want
to offload soon are brands, which can pose trend-related risks
Distribution of assets acquired by private equity investors in EMEA in 2020 or earlier,
%, total = 111 assets
54%
24 12 19 12 12 6 5 10
Offline retail Online retail Specialists1 Footwear and Womenswear Jewellery Sports B2B
accessories companies
delaying exit or compromising on price. But PE firms were below their listing prices. An outlier is On,
could also decide to sell to brand management groups, whose share price has turned a corner and is now
some of which have started making acquisitions. trading close to its listing value. Another exception
Authentic Brands Group, which bought Reebok in from 2021’s IPO group is Zegna, whose shares at the
2022, as well as WHP and Blue Star Alliance, are end of September 2023 were up 13 percent.69
among such acquirers specialising in turning around Several factors have contributed to the
distressed assets. However, the prices on offer are not outperformance of Zegna and On. One is the strength
always going to be attractive. of the brand story. The heritage of craftmanship of
Zegna, born in wool mills in Italy and deeply rooted
The Public Market View
in its local environment, aligned with consumers’
If investors cannot sell into private markets, they desire for high-quality fabrics. Furthermore, Zegna
may look to the public markets for their exit. Since moved away from a reliance on formalwear towards
the 1980s, there were on average two to four AF&L classic but “quiet” collections in time for the quiet
IPOs in Europe and North America every year. The luxury boom in recent years.
number of AF&L IPOs spiked in 2019 as well as 2021, Investors also reward consistent and strong
with 25 IPOs over those two years, and have included top-line growth.70 On grew revenue more than 60
brands such as Zegna, Allbirds, Dr Martens as well as percent in both 2021 and 2022, driven by its highly
luxury marketplace The RealReal.67 innovative solutions and design that appeal to a broad
But the performance of newly listed AF&L group of customers looking for comfort. Zegna’s
stocks has generally been challenging. Since 2018, revenue grew 27 percent and 16 percent in those two
the stock price of newly floated AF&L companies years.71 Another factor is that strong performers
has dropped an average of 40 percent one year after sit within in-demand categories like luxury and
listing, according to data from McKinsey Corporate sportswear. Luxury now makes up close to half of the
Performance Analytics.68 Exceptions include USWE industry’s total economic profit, having increased
(IPO in 2021), Revolve (2019) and Levi Strauss (2018). its economic profit 3.5 times from 2018 to 2022.
As of the third quarter of 2023, the stock prices Sportswear’s (including sports footwear) economic
of nearly all AF&L companies that had IPOs in 2021 profit grew 1.7 times from 2018 to 2022, despite a 17
28
Global Economy
percent drop in 2022.72 tailwinds. Of course, even these may not guarantee
A McKinsey Global Fashion Index analysis success. Consistent performance in meeting (and
in 2023 of publicly listed AF&L enterprise value exceeding) investor expectations is critical to share
between 2013 and 2023 suggests that while profitable price performance.
growth is most attractive to investors, revenue When deciding when to IPO, owners should
growth is generally more heavily rewarded than closely monitor consumer trends and public
margin accretion. Margin accretive companies that perceptions, as well as the performance of recently
grew revenue above the industry average saw a 11 listed companies. In addition, PE owners listing their
percentage points uplift in enterprise value growth, portfolio companies will need to consider the impact
compared to margin accretive companies that grew of retaining a meaningful stake post IPO.77 By doing
below the industry average. In contrast, companies so, they expose themselves to share price volatility
that grew revenue above the industry average only due to company performance, as well as broader
saw a 5 percentage points uplift if they were margin market moves.
accretive compared to those that grew revenue but A public market revival is typically a precursor
were margin dilutive. of PE deal-making and the funds with fashion
specialisms are likely to move first. Non-fashion
Signs of Revival
specialists are likely to remain on the sidelines for
Towards the end of 2023, there were many rumours longer. Still, there are nascent signs of a more general
of large IPOs for AF&L players, including Shein73 shift in sentiment, with $1.2 billion of PE “dry
and Skims,74 raising expectations for a return of deal powder” putting pressure on funds to begin investing
activity. One of the highest profile IPOs of 2023 was again.78 Meanwhile, investment committees will
29
The State of Fashion 2024
02.
Climate
Urgency
The frequency and intensity of extreme weather-
related events in 2023 mean the climate crisis has
become even more visible, leaving the fashion value
chain especially vulnerable. With climate risks
worsening across continents, the fashion industry
can’t hold off any longer on building resilience into
its supply chains and helping to abate emissions.
KEY INSIGHTS
30
Monsoon rains in Hue, Vietnam. Sergi Reboredo/Getty Images.
For many fashion businesses, addressing climate- of manufacturers — brands will also need to revisit
related risks is often a priority that is eclipsed their supplier standards and invest to ensure they
by other challenges they deem more urgent are sufficiently addressing new climate-related
or imminent. However, due to the geographic dimensions.
footprint and structure of fashion’s supply chains, Globally, 2023 will likely be remembered as a
it is especially vulnerable to extreme and increasing year of climate-related disasters, and the frequency
climate volatility. In 2024, a mindset shift is needed of these disasters is only expected to increase due to
across the industry to acknowledge that maintaining climate change.81 Soaring temperatures around the
the status quo is no longer an option and climate world will make 2023 one of — if not the — hottest
risk cannot be viewed as a long-term project to be years on record, which scientists say is the result of
tackled further down the line. The past year has both El Niño weather patterns and global warming.82
provided ample examples of why climate de-risking 83
Sweltering temperatures, wildfires, torrential rain
needs immediate action given fashion value chains’ and flash floods have devasted communities around
exposure to extreme weather conditions around the the world, leaving behind death and destruction. Few
world.80 De-risking will not be the sole responsibility regions seemed to be spared.84 85 86 87 88
31
The State of Fashion 2024
Though the human and environmental tragedy other challenges — notably economic uncertainty,
looms large, it is also hard to ignore the economic geopolitical tensions and inflation — to be vying for
toll. The US, for example, had suffered an annual their attention ahead of climate risk.94 Yet, the past
record, at $23 billion, of climate-related disasters year should be a wakeup call for fashion. With fashion
even before 2023 comes to an end, surpassing 2020’s still responsible for between 3 percent and 8 percent
record high.89 And drought in Argentina in 2023 of total greenhouse gas emissions,95 a mix of short-
could cause the country’s economy to shrink by 2.5 and long-term strategies can help companies address
percent, according to the International Monetary the climate challenge. Companies, for example, may
Fund.90 Beyond the Americas, China lost more than look to de-risking the value chain and revamping
$7.6 billion due to severe drought in 2022.91 Globally, structural and operational legacies, or doubling
the cost of each climate-related disaster is estimated down on sustainability.
to have increased 77 percent over the past 50 years,
Outsized Risks for Fashion’s Value Chain
reports the World Economic Forum.92
As global warming exceeds its current level of Every part of the fashion value chain is affected by
1.1°C above pre-industrial levels, productivity growth the climate crisis, not least because so much of the
is set to fall. With global warming levels potentially industry is reliant on the countries and regions most
reaching 2.2°C by 2050, global GDP levels could be directly impacted by climate upheavals, signifying an
reduced by up to 20 percent, while warming of up to outsized risk for fashion in comparison to many other
5°C by 2100 could lead to “economic annihilation,” industries. By 2030, extreme weather events could
according to Oxford Economics.93 jeopardise $65 billion worth of apparel exports and
The BoF-McKinsey State of Fashion 2024 eliminate nearly one million jobs in four economies
Executive Survey found that executives expect that are among the most central to the global fashion
Exhibit 7
1. China 20 30
2. India 16 3
3. Philippines 0 0
4. Bangladesh 0 9
5. US 12 1
6. Pakistan 6 2
7. Thailand
8. Ethiopia 0
1
67% 1
0
52%
of cotton exports of apparel exports
are highly affected are highly affected
9. Brazil 6 by climate disasters 0 by climate disasters
10. Vietnam 6 6
Source: United Nations Office for Disaster Risk Reduction, World Trade Organisation
32
Global Economy
Every part of the fashion value chain is affected by the climate crisis
not least because so much of the industry is reliant on the countries
and regions most directly impacted by climate upheavals.
exhaustion from dehydration and lack of sleep due prioritising worker health and safety. This can be
to high temperatures, while 53 percent of surveyed actioned through operational shifts such as offering
Cambodian workers reported becoming unwell more frequent breaks, rehydration amenities and
due to heat stress. Meanwhile, as temperatures proactive temperature monitoring of the factory
climb, productivity is expected to fall significantly, floor, alongside capital investments in fan systems.
estimated to decrease at about 1.5 percent for every Longer term, and most importantly, companies
degree that temperatures rise above 25°C.103 should invest in innovation across the value chain
Climate is also impacting fashion’s logistic aimed at helping to reduce fashion’s impact on the
strategies. Across all industries, 90 percent of planet. This will touch on all areas of the value chain,
exported goods are reliant on shipping to reach their from new material innovations such as lab-grown
final destinations, but an estimated $122 billion of fibres, more efficient and ethical product reuse and
economic activity at ports is at risk from disruptions recycling, and a shift from encouraging make-take-
caused by extreme climate events.104 105 The summer waste consumption culture.
of 2023 saw Europe’s worst dry spell in 500 years, Industry-wide initiatives will be crucial to
with ships navigating the Rhine River forced to facilitate progress at scale. Joining pacts such
reduce the weight of cargo in order to continue as the Fashion Pact, the Sustainable Apparel
their journeys. A similar narrative played out on the Coalition and the Fashion Charter is a strong first
Panama Canal. In China, drought slowed traffic on step, but action must follow alignment. Individual
the Yangtze River, forcing companies to move goods company adaptation should be supported by urgent
through alternative, often more expensive routes.106 collaborative change.
33
Consumer
Shifts
03. Vacation Mode
04. The New Face of Influence
05. Outdoors Reinvented
Consumer Shifts
03.
Vacation
Mode
Consumers are gearing up for the biggest year
of travel since before the pandemic. But a shift
in values means travellers have a different set of
expectations, even as shopping remains high on
the agenda. Brands and retailers should consider
refreshing distribution and category strategies to
meet travellers wherever they are.
KEY INSIGHTS
35
The State of Fashion 2024
Exhibit 8
Sightseeing 18 49 34 16%
Active sports/outdoor
activities
19 51 30 11%
1 Net intent calculated as the difference between the percentage of respondents who ‘will do more’ and the
percentage of respondents who ‘will do less’
Note: numbers are rounded and may not add to 100
In the aftermath of the Covid-19 pandemic, their work trips into “workation” trips, a global
consumers around the world have embraced travel phenomenon that combines business with leisure.
with a new fervour. Despite cost-of-living pressures Business travellers in the US, Europe and Asia take
and economic uncertainties, global travel flows on average six “workation” trips annually, with 29
(calculated as the total number of kilometres percent of these trips to international destinations,
travelled by paying airline passengers) are projected according to travel-agency specialist Travel Edge.109
to return to 100 percent of pre-pandemic levels in 110
2023 and reach between 105 percent and 110 percent For many consumers, travelling and shopping
in 2024, according to McKinsey analysis.107 go hand in hand. Leading players like LVMH and
A fundamental change of lifestyles adopted in Kering have cited tourists, specifically Americans
recent years is helping to fuel this rise. For example, in Europe, as a key driver of increased sales in the
remote and hybrid work are more entrenched than first half of 2023, which grew 47 percent and 53
they were pre-pandemic. A growing number of percent respectively.111 Moreover, the BoF-McKinsey
workers are no longer tethered to offices. In the State of Fashion 2024 Consumer Survey found that
US, only 39 percent of companies now require staff 80 percent of global respondents expect to shop for
to work from their offices full time, down from 49 clothes, footwear and accessories while travelling in
percent at the start of 2023, according to workplace the year ahead, with 28 percent expecting to spend
provider Scoop’s Flex Index, which predicts the more than the previous year while travelling.112 For
number to fall to 15 percent in the coming years.108 brands and retailers, these travelling consumers will
Meanwhile, business travellers are extending provide new growth opportunities.
36
Consumer Shifts
sightseeing, culture, local dining and nightlife as Dior’s Dioriviera, which launched in 2018 to
well as local shopping.116 117 “Set-jetting” destinations showcase the brand’s annual beach collection in a few
inspired by television and film are also resonating select destinations.127 By summer 2023, Dioriviera
with travellers — consider what the series “The Game had reached nearly two dozen pop-up and concept
of Thrones” has done for tourism in Dubrovnik on shop locations, extending beyond iconic spots such as
the Adriatic coast of Croatia.118 Beverly Hills, Saint-Tropez and Capri, setting up shop
While travel itineraries are being redrawn, further East in places like Bali and Phuket.128 129 130
some brands are already adjusting where and how Meanwhile, Coach launched its first Coach Airways-
they connect with shoppers. In some cases, this has themed pop-up in Malacca, Malaysia featuring a
meant expanding store networks into second-tier concept store and café housed in a Boeing 747 jet,
cities. Uniqlo has been focusing on accelerating new selling ready-to-wear, bags and travel accessories.131
openings, including plans for a store in Scotland, on Fashion is also joining forces with hospitality to
Edinburgh’s Princes Street, in 2024.119 Edinburgh, reimagine experiences for travellers. For example,
too, has been in Chanel’s line of sight as it opened its the Four Seasons Hotel in Houston, Texas and
first Scottish pop-up in the city this past summer.120 fashion membership club Vivrelle have partnered to
In other cases, it has meant capitalising on trending offer hotel guests complimentary access to an on-site
locations from popular culture. This is what Louis luxury “closet” of brands such as Prada, Gucci and
Vuitton did in Taormina, Sicily, where it opened a Dior.132 Saks Fifth Avenue has also rolled out Fifth
branded café and boutique in 2023 after the hilltop Avenue club concepts that offer personal styling,
town served as the backdrop of the hit series, trunk shows and special events at various Ritz-
“The White Lotus.”121 122 Carlton and St Regis hotels.133
37
The State of Fashion 2024
Zimmermann 2023 resortwear collection. Simon Lekias / Isa Sanchez / Getty Images.
38
Consumer Shifts
IN-DEPTH
How China’s
Tourists Will
Return in 2024
By Daniel Zipser, Asina de Branche, Steve Saxon, Jackey Yu and Liann Wu
The State of Fashion 2024
For more than two decades, outbound travel pandemic, domestic travel has thrived in mainland
from mainland China was a major catalyst for the China, currently on track to exceed pre-pandemic
growth of global tourism. In 2019, China accounted levels in 2023.145 Despite the current economic
for one-fifth of international tourism spending, uncertainty affecting the country, consumers’
amounting to $255 billion as the result of a total of willingness to travel is robust. McKinsey consumer
166 million outbound trips.144 However, this growth research in Q3 2023 shows that travel is the category
Chinese tourists and luxury fashion shoppers. Tomohiro Ohsumi/Getty Images.
engine came to a halt with the Covid-19 pandemic Chinese consumers are most likely to splurge on,
and the ensuing lockdowns. exceeding other categories such as restaurants and
After three years of restrictions, mainland groceries.146 During the country’s eight-day Golden
Chinese consumers are getting ready for new Week holiday in October 2023, the Chinese took
travel adventures. For fashion brands and retailers nearly 826 million domestic trips, up over 70 percent
around the world, the return of China tourism from last year.147 In 2024, this domestic momentum
is a welcome silver lining to the current clouds is expected to continue, with mainland travel
hanging over the country’s economy. However, flows reaching 110 percent to 120 percent of
to maximise the opportunity, companies need to pre-pandemic levels.
prepare for consumers with different behaviours and One major reason for the strength of domestic
expectations than pre-pandemic. tourism is local destinations have become
increasingly attractive. Hainan has emerged as a
Domestic Strength
top hotspot for tax-free shopping, where fashion
With international borders closed through the sales in April 2023 were 203 percent higher than
40
Consumer Shifts
Exhibit 9
Personal 19 57 25 6%
Domestic
Business 8 42 50 42%
Personal 17 44 39 21%
International
Business 13 52 34 22%
1 Net intent calculated as the difference between the percentage of respondents who ‘will travel more’
and the percentage who ‘will travel less’
Note: Numbers are rounded and may not add to 100
pre-pandemic levels.148 The island is set to become Bulgari, Valentino and Versace.151 Higher duty-free
one of the world’s largest luxury retail markets in allowances on e-commerce purchases and the price
the next five years and is expected to attract over 80 parity of brands with markets abroad decreasing
million visitors annually. In October 2023, luxury from up to 50 percent in the late 2010s to between
travel retailer DFS announced a major project — its 10 percent and 20 percent today, also incentivise
largest ever — to build a “world-class, seven-star” domestic spending.152
luxury retail and entertainment destination in Given strong domestic options, experts forecast
Hainan’s Yalong Bay by 2026 that will cover more a permanent repatriation of luxury spend. While
than 128,000 square metres and attract over 1,000 China’s 460 billion yuan ($63 billion) personal
luxury brands.149 luxury market will continue to grow in the long
Outside of Hainan, retail in the mainland has term, domestic shopping may account for 60 percent
improved significantly as well. Top brands including to 70 percent of the spend (and international 30
Hermès, Dior, Chanel and Louis Vuitton invested percent to 40 percent). McKinsey analysis indicates
heavily in their domestic footprints during the a likely permanent reversal from pre-pandemic
pandemic by renovating flagship stores, opening levels of about 40 percent domestic and 60 percent
VIP salons and strengthening sales associate teams international.153
to cater to local clientele.150 Luxury has also entered
Outbound Returns
domestic airports for the first time — in September
2023, DFS entered the domestic terminal at While domestic travel continues to surge, 2024 will
Chongqing airport with a line-up of brands such as also see the long-awaited renaissance of Chinese
41
The State of Fashion 2024
outbound travel. Outbound travel from the mainland (58 percent) and sightseeing (57 percent). Shopping,
is recovering quickly, and may grow from almost 0 meanwhile, is in seventh position.161
percent of pre-pandemic levels in 2022 to 50 percent While the shifting demand landscape suggests
in 2023, with potential to almost double to 70 percent big shopping hauls are lower on the list vis-à-vis other
to 100 percent in 2024. A full recovery could take activities, shopping data from tourism tax refund
place by the end of 2024 or early 2025.154 company Global Blue points to spending on shopping
What will drive outbound recovery among still being on track to recover in force. This year, in
Chinese consumers? Primarily, there is a burning Asia Pacific, the shopping spend of mainland Chinese
desire to go out and explore further afield again. tourists is already 109 percent of 2019 levels. This has
During the October Golden Week holiday, demand for been driven by a significant increase in the average
Alibaba’s Fliggy visa processing services were over spend per shopper.162
70 percent higher than May Day, China’s last major In continental Europe, the shopping recovery
national holiday. The number of outbound bookings has been slower, with like-for-like in-store sales to
also hit a high for the year. Moreover, travel interest mainland Chinese tourists reaching 41 percent of
spans both business and leisure.155 Some 39 percent pre-pandemic levels, despite a 54 percent jump in air
of respondents from the latest BoF-McKinsey State capacity.163 Leading the recovery are ultra-high-
of Fashion 2024 Consumer Survey plan to travel net-worth individuals, who are spending 28 percent
more internationally for personal reasons, while 34 more per transaction on average.164 According to
percent plan to travel more for business reasons.156 Jean-Marc Bellaiche, the chief executive of French
On the supply side, barriers to outbound travel luxury retailer Printemps, most business this year
are also falling, leading to increased flight capacity. has been from individual clients at a much higher
Total seats in September 2023 reached over 50 level compared to pre-Covid, while group travel —
percent of pre-pandemic levels and have consistently which represented nearly a third of sales in 2019 — is
risen week on week.157 Regulatory hurdles have also significantly down.165 Therefore, as travel normalises,
eased as travel bans to more than 170 countries have European stores could expect a recovery of shopping
been lifted, adding momentum to the recovery.158 spend close to pre-pandemic levels, though in
The regions that will likely benefit immediately are the near-term driven by value of shoppers rather
those that are easiest logistically to get to, including than volume.
other East Asian countries and Southeast Asia — over
New Shopping Priorities
40 percent of surveyed consumers have expressed
interest in travelling to these regions in 2024.159 When it comes to shopping, Chinese travellers now
Outside of the “four-hour flight circle” around China, have a more sophisticated set of expectations than
tourism is also picking up in Australia and New before the pandemic. To start, in-store experience is
Zealand, United Arab Emirates, Turkey and Egypt, a top priority. This is especially true in luxury: In the
according to Fliggy.160 latest McKinsey China Luxury Consumer Survey,
81 percent of consumers said they want to touch
The Experience Imperative
and feel products, regardless of the initial discovery
For Chinese tourists who return abroad, there has channel.166 This means they now look for elevated
been a fundamental change in priorities. Much higher in-store experiences, full assortments, deep product
on tourist agendas is the desire for experiences. education and immersive interactions.
According to the BoF-McKinsey consumer survey, Digital expectations have also matured, as
dining out and trying local cuisine are the most 61 percent of Chinese luxury consumers are true
popular travel activities (63 percent expect to do omnichannel shoppers.167 This means they are
more on the next trip), followed by being in nature more likely to engage with brands that can interact
42
Consumer Shifts
43
The State of Fashion 2024
04.
The New Face
of Influence
It’s time for brand marketers to update their influencer
playbooks. A new guard of creative personalities
is gaining brands’ attention, winning trust and
fandom among key audiences. Working with these
personalities in 2024 will require a different type of
partnership, an emphasis on video and a willingness
to relinquish a degree of creative control.
KEY INSIGHTS
44
Consumer Shifts
Capturing consumers’ attention online isn’t about to Gen-Z loses active attention for advertising after just
get any easier for fashion businesses. 1.3 seconds.172
On Instagram, engagement rates have fallen, Even in this environment, influencers continue
by roughly 30 percent year on year in 2022,170 while to be a powerful channel for brands to break through
the reach of posts has diminished.171 Consumers the noise and connect with consumers, with the
are showing signs of fatigue towards traditional influencer-marketing industry forecast to reach
influencer marketing after years of being bombarded $21.1 billion in 2023, up from $16.4 billion in 2022.173
with product promotions and brand announcements. However, the influencer landscape has been evolving
The BoF-McKinsey State of Fashion 2024 Consumer in the past few years as consumers increasingly
Survey found that 68 percent of respondents were demand authenticity, entertainment and relatable
unhappy about the high volume of sponsored content personalities, with this trend likely to gather
on social media platforms and 65 percent were momentum in the year ahead.
turning less to fashion influencers than a few years According to the BoF-McKinsey consumer survey,
ago. Young consumers are becoming particularly consumers are gravitating towards relatable and
adept at tuning out the noise. One study found authentic influencers far more than other attributes
45
The State of Fashion 2024
Exhibit 10
such as an aspirational lifestyle or celebrity status. more pronounced as influencers emphasise their
Marketing and influencer firms echo these findings individuality. Gen-Z in particular value pursuing
— a 2023 survey found that, although beautiful and their own unique identities and appreciate diversity
aspirational content was effective, social media users among other attributes, according to a Stanford
were more likely to follow influencers whom they University study.180 This generation’s favourite
deem authentic and fun.174 platform for following influencers is TikTok,181
The changing dynamics are reflected in where which was also deemed the best platform by Gen-Z
users spend their time online. TikTok, often regarded respondents for promoting a product through
as a platform that promotes authenticity,175 has taken influencers in a 2022 survey, surpassing both
the lead among some user groups. A March 2023 study YouTube and Instagram.182
estimated that US adults spent nearly 56 minutes a While traditional influencers who convey an
day on average on TikTok. By comparison, US adults aspirational lifestyle and command large audiences
spent just over 30 minutes on average on Instagram.176 are likely to remain important for fashion marketing,
TikTok’s success, which has prompted Instagram to other influencers who come across as less scripted or
emulate the platform with its Reels video feature,177 is polished are already gaining audiences. Quirkiness,
based largely on how it surfaces content, emphasising humour and vulnerability are helping this cohort
measures such as the time users spend on a post and stand out. A case in point is Alix Earle, who has
whether they return.178 As a result, any creative and built a following of nearly 6 million on TikTok,
entertaining content can reach a wide audience, even not with any sort of viral hit but rather with her
if the creator doesn’t have a high number of followers. apparent relatability and willingness to be herself.183
The platform BeReal, meanwhile, saw surging user Madeline Argy’s TikTok confessionals, which
growth in 2022, and while there are doubts about take the form of funny, rapid-fire videos such as a
its longevity,179 its emergence may well be a response tearful questioning of what DJs actually do, have
to the perceived inauthenticity of social media’s earned her roughly 5 million followers. And Sabrina
large incumbents. Bahsoon, who goes by Tube Girl, shot to fame posting
TikTok videos showing her dancing in the London
The New Guard
Underground, an act that’s been called “unapologetic
Though consumers have rewarded greater self-expression.”184
authenticity online for some time, it is becoming While the styles of these creators differ, what
46
Consumer Shifts
47
The State of Fashion 2024
EXECUTIVE INTERVIEW
Gstaad Guy:
Catering to the 1%
with Social Media Wit
By Tamison O’Connor
G
staad Guy — who keeps a lot of things about it purely followers, I spoke about how
his real identity a secret based on conversations with him. Constance loves his Loro Piana
— began making a name I filmed one video on Snapchat, vicuña gilet. A couple of weeks
for himself only a few years ago making fun of things I’ve heard later, I was told by the salesperson
in niche social media circles by him say, while really dialing up the at Loro Piana on Sloane Street
parodying the lives and tastes absurdity. I sent that video to his that people have been coming into
of the ultra-rich through sharp, mum, all in character, this fictional the store asking to buy the items
satirical social commentary character I coined Constance, I was wearing in my video. And all
delivered through fictional inspired by my friend. His family similar gilets had sold out.
personas: mainstay character and closest friends found the I was accidentally selling
Constance, an old-money British video hilarious. His mum sent it to dozens of products that cost about
aristocrat who peppers his all the Gstaad mums’ WhatsApp three grand, with under 5,000
conversations with French and group chats, which went to followers. This has never been
Italian and dresses head-to-toe different parents and students of done before; I knew it because I’ve
in LVMH’s “quiet luxury” bastion the Le Rosey boarding school [in been on the other side. [I thought]
brand Loro Piana, and guest- Switzerland]. And it then quickly there’s really something here.
star Colton, a happy-go-lucky, trickled into Gstaad-frequenting
What is it about Gstaad Guy
nouveau-riche Gen-Z American. Geneva, Monaco and London
that attracts your target
His humour is carefully targeted: communities.
audience?
many of Constance’s quips will sail My satirical social commentary
far above the heads of the average would focus on things that are I was making fun of a place that’s
Joe or Jane, but leave 1 percent only really relatable to very few very inconvenient to access
of the wealthy, who are used to in Gstaad, Monaco, Geneva and through commercial means of
flitting between Gstaad, Monaco Mayfair [in London]. By video transport. It is three hours away
and London, chortling. (According five, I think I had maybe 4,000 from any commercial airport.
to Forbes, a good chunk of its
Billionaires List is among
his following.)
Equally, luxury fashion
brands also get where Gstaad
Guy is coming from — to the
extent that several have entered
into partnerships with the social
media star. Loro Piana launched
600 limited editions of its Open
Knitted Walk shoes exclusively
for Gstaad Guy followers; the
collaboration sold out within
hours and became the fastest-
selling product the brand had ever
made, according to Forbes.
49
The State of Fashion 2024
And it’s, frankly, too expensive partnership are two very different
and too quiet for someone to just things.
stumble upon. So through travel For Gstaad Guy, I always had to
inconvenience, unaffordability and have a “tasting” for my potential
the privacy of the Swiss mountains, clients before they hired me as
Gstaad just attracts some of the their chef. And the way I always
world’s wealthiest people — people played that game is: who is Gstaad
that commute between their Guy in real life? What are the
chalets in Gstaad, townhouses in products and items that he would
London, chateaux in Saint-Tropez actually love? And let me just talk
and boats on the Mediterranean. about those things more and more.
And because I was making jokes I never thought I would have the
about them and the way they live scale to convert the masses of
their lives there, I was attracting voyeurs. And I still don’t think I do.
them. But I know I have the storytelling
abilities to convert and elevate
In this influencer landscape
customers of an existing brand to
that is so saturated, what’s the
new, better products, and to an
white space that you occupy?
elevated perception of that brand.
I am in a very unique position, Slowly, through storytelling, I
where I have, through fiction, built a really strong connection
created very authentic characters. with my audience around a very
People have a deep connection few, very high-end products, which
with the characters, likely because are historically very difficult to
of how authentic to their values market, and it gave the brands
they are. Especially Constance. no choice but to work with me. I
And because of the rather became their ambassador before
niche jokes I’m making. I have they asked me to. I think that’s
the highest concentration today what every brand is looking for
of high-net-worth people of any now. Ad space is readily available,
social media page globally, who but authentic connections with
are being communicated things an audience are scarce. If you
that are delivered lightly through have the choice, who are you
tongue-in-cheek storytelling that’s going to choose? Obviously, the
very digestible. person who has the most authentic
connection with your brand and
What has your Gstaad Guy
ideal customers, so it doesn’t seem
account led to in terms of
like an ad in your face.
business opportunities?
Historically, luxury has been
Gstaad Guy is an atypical account.
very protective of the way that
With anything atypical, especially
The Gstaad Guy social posts. Gstaad Guy. brands are communicated.
in the luxury world, you don’t sell
Content poking fun at their
it like you sell commodities. It’s
top customer base was not
not, ‘Hey, here’s my price, buy or
something that they would have
leave it and move on.’ That’s bad
typically engaged with. What’s
for the buyer and the seller. In
changed?
the world of luxury social-media
marketing, selling ad space I think the only thing that’s
and having a very authentic changed is that it’s been digitised.
50
Consumer Shifts
If you look at the real conversion archetypes’ personalities and The world’s obsession with scale
of top clients around a truly desires. Their conversations are so is a bad one, and I learned that
luxurious brand like Loro Piana, often about products, and why this the hard way when I worked on a
it was never happening in a product is better than the other. start-up before this. I raised a lot of
magazine or on a billboard. It It really came as second nature to money and all my investors said is,
was always happening at a dinner my content and storytelling. From “scale, scale, scale,” and we ended
table, among friends and like- my very first video, when I never up with two million users that we
minded people. And the way the had any commercial intentions could not convert financially. If I
items were discussed was always or ideas, Constance was talking had raised far less venture money
through a passion for excellence about his favourite restaurants, instead, and had 300,000 users
[and] often through the delivery of destinations, clothes and Loro who were paying, that’s a much
comedy and relaxed nonchalance, Piana gilet. It never seemed better position to be in. And then
as one does at a group dinner. inauthentic; I wasn’t talking about scale those paying customers very,
If you’re smart and you’ve the art of yoga and all of a sudden very slowly and make something
made enough money to afford selling toothpaste. I’ve just been sustainable.
this stuff, you know that luxury expressing who my characters That’s the core of luxury. If
is often ridiculous by design. Of are, and how their buying desires you have few people who love
course, the brands can’t say that, are all intrinsically linked to your products and you just grow
but the people at the dinner table their values and interests. Real that sustainably, you can remain
can, and that’s happened for life connoisseurs like Constance a luxury brand and you can get
generations. … A brand can talk demand excellence in all your customers on the ladder of
51
The State of Fashion 2024
05.
Outdoors
Reinvented
Technical outdoor wear has been propelled by
consumers’ post-pandemic embrace of healthier
lifestyles as well as “gorpcore,” and is likely to
accelerate even further in 2024. More outdoor
brands will likely launch lifestyle collections while
lifestyle brands embed technical elements into
collections, further blurring the lines between
functionality and style.
KEY INSIGHTS
52
Consumer Shifts
Exhibit 11
One lasting impact of the Covid-19 pandemic has been
soaring consumer interest in healthier lifestyles and Sneakers from outdoor brands On,
nature-focused activities,187 like camping, hiking and
boating. In the US, 82 percent of people said they had Salomon and Asics are among the
participated in such outdoor activities, compared top sellers on resale platform StockX
to 60 percent in 2020,188 while nearly half of survey
StockX top five brands by trade growth, year-on-year
respondents in the UK report spending more time change (H1 2023 vs H1 2022),1
outdoors than prior to the pandemic.189 In China, %
by the end of 2021, more than 400 million people
were taking part in outdoor sports,190 and between Outdoor brands Other brands
Source: StockX
From Outdoors to the Mainstream
Many of the fastest-growing sports brands of recent Luxury brands also have a toehold in the
years have roots in outdoor performance but have outdoors. The North Face and Gucci collaboration,
since transcended their core customer bases to attain unveiled in 2021, was one of the first big tie-ups
widespread popularity. In July 2023, The North Face between luxury and outdoors. Since then, a wave of
announced its 10th consecutive quarter of double- performance-influenced footwear collaborations
digit revenue growth,195 while Amer Sports, backed by have followed, including those from On and Loewe,
a consortium led by Chinese sportswear giant Anta, Hoka and Moncler, and barefoot shoe maker Vibram
has said it plans to scale Salomon and Arc’teryx, two and Balenciaga.199 In terms of apparel, Jil Sander and
of its brands that were born as niche ski and climbing Arc’teryx collaborated on a collection of sportswear-
brands, respectively.196 infused mountain gear,200 while Adidas and
A similar evolution is taking place with technical Moncler created a capsule collection of puffers and
and trail running brands such as Deckers-owned track jackets.201 These partnerships have elevated
Hoka and On, which found loyal customers within gorpcore, while celebrities like Kendall Jenner and
running communities before their innovative, Bella Hadid have taken to combining high luxury
high-comfort solutions found appeal with wider fashion with outdoor wear and hiking shoes.
audiences. On reported a 69 percent year-on-year Mid-market brands have been heading outdoors,
jump in revenue to $1.3 billion for 2022, exceeding too: H&M’s summer 2023 “Move” collection featured
analyst expectations, while Hoka is on track to hit $2 water-repellent parkas and convertible hiking
billion in annual revenue.197 198 trousers, while Inditex’s loungewear and activewear
53
The State of Fashion 2024
brand Oysho launched hiking boots within its Reflecting this dynamic, Arc’teryx chief
permanent range alongside a hiking collection executive Stuart Haselden said in spring 2023 that
for women.202 Free People similarly expanded its the company is investing in sub-brand Veilance to
merchandise to include hiking sticks and trekking cater to consumers looking for fashion-forward yet
poles.203 minimalist technical clothing without the typical
In the year ahead, brands are expected to forge gorpcore hallmarks.208 Outerwear label Goldwin
ever-closer ties between style and utility as lifestyle has introduced simple, loose suiting made from
brands deepen investment in the outdoors, and ultra-lightweight wool and bamboo fibre,209 while
outdoor brands increasingly court fashion-focused Roa Hiking, a brand favoured by rapper Drake, has
customers. married a luxury aesthetic with functionality with
As such, outdoor specialists are likely to more products such as thermal-lined trousers made from
closely align their products to everyday lifestyles. water-repellent nylon fabric.210
Merrell, which started as a purveyor of high- When it comes to footwear, outdoor-style shoes
performance hiking boots, is among the brands to from performance brands that “sneakerheads”
have developed lifestyle footwear,204 while Icelandic started coveting in recent years are likely to gain
outerwear brand 66°North named Kei Toyoshima, even more traction with consumers in 2024. On was
a menswear design consultant at Louis Vuitton, as the fastest-growing sneaker brand in 2023 on resale
creative director in 2022 to enhance its appeal with platform StockX, with trade activity up more than
broader audiences.205 15,000 percent year on year, while trade activity
Meanwhile, luxury players from Dior to Burberry for Salomon and Asics was up 202 percent and 72
are moving from one-off outdoor capsules to percent respectively.211
permanent collections. Prada’s Linea Rossa technical This may spur brands to lean further into styles
line has recently been sported by style makers that straddle utility and fashion and can be worn in
such as A$AP Rocky.206 In turn, outdoor labels both urban and outdoor settings. For example, one of
have started to borrow from the luxury playbook Salomon’s top sellers is its Sportstyle XT-6 Gore-Tex
by, for example, opening high-profile flagships and shoe, which features performance benefits but is
pop-up experiences that elevate their brands. This designed for use in daily life.212 The brand has teamed
includes Arc’teryx’s latest flagship store in Osaka’s up with Maison Margiela to launch an Autumn-
Shinsaibashi neighbourhood, which features the Winter 2023 collection including a “Cross Wader”
first Arc’teryx cafe with food inspired by the brand’s trainer which bridges technical performance and
Canadian roots, as well as a Japanese menu.207 style,213 building on the success of the two brands’
“Cross Low” sneaker worn by Rihanna at the 2023
Quieter Styles Ahead
Super Bowl.214
However, as the gorpcore trend cools, brands may In the coming year, utility, durability and
be challenged to shapeshift their outdoor offerings. performance may prove to be a good match for
Similar to how the “quiet luxury” aesthetic gained consumers’ budgets, increasing the appeal of the
popularity as consumer interest in streetwear waned, outdoor category. As such, brands across all price
“quiet outdoor” styles are likely to gain popularity in segments should get ready to embrace the outdoors in
the year ahead, with consumer preferences shifting its new, blended form and find a place in the shifting
from flashy performance jackets and cargo trousers competitive landscape.
to elevated garments with minimal logos while still Indeed, competition may increase across price
featuring technical fabrics. points and categories, with some outdoor brands
54
Consumer Shifts
Rihanna performs during the Super Bowl LVII halftime show. Kevin Mazur/Getty Images.
skewing apparel towards the high end (Arc’teryx, For outdoor brands looking to conquer fashion,
The North Face) and capturing some of luxury embracing a quieter aesthetic may be the key. On the
brands’ wallet share, while others look to further other hand, fashion brands making their foray into
shake-up the footwear market (Hoka, On, Salomon). outdoor wear may be able to crack the design code
The challenge for all brands will be to establish but may have to rapidly scale capabilities and
relevancy among diverse customer segments, from suppliers to compete. Redefining the go-to-market
technical outdoor-goers to StockX customers, while strategy to prioritise innovation and extensive
staying true to the brand’s core. Otherwise, brands testing of materials for performance will likely
may risk watering down their identities and losing become table stakes.
what makes them distinctive in the first place.
55
The State of Fashion 2024
EXECUTIVE INTERVIEW
On: Capitalising
on the Perennial
Sportswear Boom
By Daniel-Yaw Miller
T
he way David Allemann running and professional track and The sportswear category
sees it, On’s expansion field, then to the pivotal moment has become increasingly
from geeky, high-tech in the company’s history when On competitive, with newer
running footwear into fashion- entered into a partnership with entrants. But even as the market
forward sportswear is evolution, tennis star-turned-investor Roger gets more crowded and 2023
not revolution. Having co-founded Federer in 2019, capturing the has been challenging generally,
the company in 2010 to make attention of not only gym-goers On continues to grow. How
quirky-looking running shoes and hobbyist runners, but enabling does the brand stay ahead and
for top athletes and avid amateur it to continue expanding its global consistently build desirability?
runners215 — whose prototype footprint and product mix, to
Generally, the performance-
made from cut-up garden hoses generate a record net sales of
sports space is a super interesting
is still proudly on display at On’s 1.22 billion Swiss francs ($1.36
one where there is so much
Zurich headquarters — Allemann billion) in 2022, with apparel’s
opportunity because we’ve just
has seen how a performance brand contribution to the top line steadily
seen that massive channel shift of
like On can “naturally transition” rising year on year.
consumers, pretty much almost
into the wider world of fashion, With many consumers
making performance and sports
while staying true to its sporting continuing to embrace
their new uniform. Driven by
credentials. The key, he says, is performance wear as their
the fact that consumers now
credibility with consumers. everyday “uniform,” Allemann
probably, on many days, are
In the case of On, that “organic” says there are plenty of growth
working from home and have it
ability had multiple implications — opportunities for performance-
much easier to integrate sports
from distance running came trail sport brands.
and potentially even nature if it’s
close by. ... In a sense, the market
has become much bigger and
we feel it’s because of the new
uniform. I think this benefits every
[brand] that comes from a true
performance and sports core.
In the case of On, we’ve been
working very hard over the last
13 years — it’s still a young brand
— to build at the intersection of
innovation, but also design and
sustainability, because we feel
if you get that formula right … I
think you [can] be relevant for the
consumer in this market.
57
The State of Fashion 2024
from performance silhouettes. Of hoodies, track pants or even make sportswear the new uniform.
course, you can create a sneaker backpacks, these are now so big in If we look at fashion brands these
coming from fashion, but it’s just fashion. But ultimately these are days they almost feed on sports
much less credible. Also, if you think all silhouettes that are originally technology, whether it’s stretchable
about membrane jackets, technical coming from the sports category to fabrics or closure systems.
58
Consumer Shifts
Open] and Ben [Shelton, winner in DNA that is part of our success other big, big markets. You have
of 2023’s Laver Cup in Vancouver, formula. Together with Tim, to build that nucleus in different
Canada] on board. we have continued to build the cities but you can’t go after the full
Going back to the very origin of apparel business for On. market. So, in a similar sense, we
On. … When we started developing It is hitting exactly at that started in the major hubs in the
On, we always went to our intersection where it’s with US and in London then [a pop-up
— back-then — lab in a carpenter the most technical fabrics with store] in Liverpool in the UK. We
workshop and tested the shoes ultralight membranes that win started with Shanghai and Beijing
or the new outsoles out, together ISPO awards — very technical, but and are expanding from there.
with our athlete friends. So it’s at the same time also accessible Building that community first
always been the case for On that and versatile so that you can make is really important for us because
innovation and athlete testing are it part of your uniform, whether the community is also what carries
intrinsically connected. you’re road running, whether you’re you. For us, it’s very much about our
It just happens now on a much out on the trails, or whether mission to ignite human spirit through
bigger scale. So we’re building that you’re travelling. So our apparel movement. To have that movement,
scale and I feel the On Athletics addressed a range of activities you have to have a community
Club has given us an opportunity across a very active lifestyle. around you. That is at the core.
to build almost a family of athletes, You’ve also probably observed
Have you found any interesting
who sometimes live together, train how we’ve been opening our retail
differences between, say, the
together and are part of that On experiences around the world.
Chinese market and other
Athletics Club, but are of course There’s Regent Street [flagship
markets?
also our daily testing ground of store in London], but already
every innovation step we take. more than 10 stores in China, as Yes. What we realised is that for
Iga is so involved in the well as US stores including New example the speciality stores —
development of her shoe that we York, LA and so on. Just to see how the grassroots [speciality] retail
keep iterating to make it even apparel is embraced in our retail partners that helped us grow
better, and so it’s actually quite a experience again, gives us the feel across the rest of the world — exist
long process how we work together that we’re hitting the right spot. So, less in China and so we realised
to get the best out of it. It’s at the for example, in some of our stores that we have to, to a certain extent,
very core of On, and it’s also not in China, apparel is already 20 build that on our own. That’s
something where we’re basically percent of the sales. also why we have almost as many
saying, ‘Let’s bring in an athlete, stores, or probably as many stores,
As a performance brand in the
let’s get some ideas,’ and then opened in China alone as we have
sportswear category in China,
we do something together and in the rest of the world. These
what is the On strategy for
we move to the next athlete. It’s [On] stores or retail experiences
penetrating that market?
long-term relationships. become a hub for building our
We started in China quite a while community. Then a lot, of course,
How has On’s approach to
ago and it’s a fully Chinese team crosses over into the digital
launching its apparel category
that sits in Shanghai. We’ve pretty sphere. But [in China] you have to
been evolving?
much started the relationship with build that grassroots community
It’s fantastic to have Tim the China market as we started yourself.
[Coppens] on board [as our apparel in a lot of the markets, where it’s This interview has been edited and condensed.
designer since 2022]. Tim has, I really about grassroots and making
think, this unique background, sure that you’re doing fun runs,
being originally a snowboarder that we are connecting to the
and a skater, starting out with training community, which is very
sports brands, then crossing over important in China as well, and
to fashion, then having his own that we’re also physically present,
fashion brand. We feel this duality which is what we realised as in
59
Fashion
System
06. Gen AI’s Creative Crossroad
07. Fast Fashion’s Power Plays
08. All Eyes on Brand
09. Sustainability Rules
10. Bullwhip Snaps Back
Fashion System
06.
Gen AI’s Creative
Crossroad
After generative AI’s breakout year in 2023, use
cases are emerging across creative industries,
including fashion. Capturing the value of this
transformative technology in 2024 will require
fashion players to look beyond automation and
explore its potential to augment the work of
human creatives.
KEY INSIGHTS
61
The State of Fashion 2024
Disruptive technologies in the workplace generally continues, it could be one of the most transformative
fall into three categories — those that enhance technologies for the fashion industry in a long while.
existing skills while creating new ones; those that Early experiments have offered a promising start, but
replace skills while reducing the need for others; and the transformative power of gen AI will become more
those that fall somewhere in between. So where does evident as use cases move beyond one-off projects and
one of 2023’s buzziest technologies216 — generative become embedded within fashion’s value chain.218
artificial intelligence — fit? For creative teams in the The overall financial impact of gen AI on the
fashion industry, the year ahead could help them find industry is potentially significant. According to
the answer. recent McKinsey analysis, as much as one-fourth
Gen AI — algorithms pre-trained on large of the value is expected to be driven by use cases at
volumes of data such as text, images and code, often the design and product development stage of the
fine-tuned with other corporate data, that can create value chain.219
new, complex content — had a breakout year in 2023 It’s no surprise then that gen AI is on industry
as powerful new tools hit the market. By January, executives’ radars. The BoF-McKinsey State of
two months after its launch, ChatGPT reached Fashion 2024 Survey of global fashion executives
an estimated 100 million users, a record pace of found 73 percent of respondents said gen AI will be an
growth at the time.217 Multiple platforms and tools important priority for their businesses in 2024. Yet
have since entered the market, and a dizzying array while many are experimenting with the technology,
of start-ups are seeking to leverage these, while just 28 percent said their businesses had tried it for
strong open-source alternatives are challenging design and product, indicating fashion companies
proprietary models. are not yet capturing its value in the creative process.
While the technology’s use is nascent in Caution is understandable. The technology
many industries, it’s accelerating. If its trajectory could impact jobs and workflows. The fashion
62
Fashion System
Exhibit 12
Organisational and
Do not use, but we are working
with third parties who use it
14 corporate support 26
functions
industry has also seen a fair share of technological ways. However, the focus so far has been on one-off
enthusiasm that has swiftly sputtered — notably, the use cases with clear advantages when it comes to
metaverse. Based on rate of progress and investment, cost, efficiency or customer experience, rather than
however, gen AI is likely to offer a different story. The those with potential for wider industry disruption.
technology has more practical applications than the Online shopping assistance is one area where
metaverse, making it more attractive to businesses it is making its mark.223 Online retailer Zalando
and investors. Equity funding for gen AI-focused announced the launch of a beta ChatGPT-based
start-ups skyrocketed in 2023, reaching $14.1 billion natural language-powered shopping assistant in
in the first half of the year alone, compared with spring 2023 that allows a visitor to its site to ask
$3.5 billion in 2021 and $2.5 billion in 2022.220 A questions and get answers as well as customised
significant share of the surge was due to Microsoft’s product recommendations.224 Kering, Mercari and
January announcement of its $10 billion, multiyear Shopify have similarly introduced AI chatbots.225
deal with OpenAI, the research laboratory behind Brands using the technology to write product
ChatGPT.221 In the second half of the year, Amazon descriptions for their sites include Snipes, a sneaker
announced a $4 billion investment in the artificial and streetwear retailer, and Adore Me, the lingerie
intelligence start-up Anthropic, pushing 2023’s company recently acquired by Victoria’s Secret.
investments in gen AI even higher.222 Shopify, meanwhile, has introduced a gen-AI writing
assistant for merchants.226 227
A Range of Applications
Other brands have begun exploring gen AI tools
Part of gen AI’s potential lies in the array of tasks in one-off creative and marketing projects.228 Ganni
to which it can be applied, and fashion businesses used the technology at its Spring/Summer 2024
are already beginning to adopt it in several concrete runway show for an installation that let guests ask
63
The State of Fashion 2024
design process, injecting more agility from trend potential must be communicated clearly to creatives
detection to product development and by leveraging to ensure the technology is adopted without
analytics data to rapidly produce large numbers undermining the role of the designer.
of new designs. Meanwhile in luxury, gen AI could As the number of gen AI adopters in fashion
become an additional medium in the designer’s expands and the technology evolves, it will require
repertoire, allowing them to experiment with rapid more than a superficial understanding of its role in
iterations, compile mood boards that draw from enhancing and unlocking creativity. It holds exciting
diverse sources and curate the output. It can equip potential for companies to create unique gen AI
less technically skilled designers with the ability to models that enable them to infuse their brand DNA
visualise their concepts. The unexpected results across design processes, rather than relying on the
produced by AI tools can even provide inspiration. generic output of image generators. For creatives,
Fashion brands Collina Strada and Heliot Emil success will hinge on the support and infrastructure
have leaned into this space to craft their Spring/ of their ecosystems that enable them to move from
Summer 2024 collections. Both fed images of manual creators to true creative curators. When
previous looks into a gen-AI tool to produce new implemented effectively, the technology can benefit
designs that could be refined with text prompts.230 and amplify the creative process, thus augmenting
Online retailer Revolve also used the technology for human capability, while retaining the artistic skills
a series of eye-catching, colourful billboards and and knowledge of designers. Ultimately, say experts,
dropped a limited capsule collection with garments human-centred innovation will likely be the most
from the campaign, with further experiments under important use of AI.234
way.231 Meanwhile, Spanish brand Desigual launched
an on-demand collection that was designed using AI
64
Fashion System
IN-DEPTH
Driving Growth
Through Generative AI:
An Executive Playbook
By Roger Roberts and Kimberly Te
The State of Fashion 2024
Exhibit 13
1 List is non-exhaustive
Gen AI use • Write briefs • Draft research • Hyper-personalise • Enhance digital • Accelerate store • Create
for a product packs on brands, loyalty programmes experiences, layout design individualised
cases
collection using vendors and and offers based such as virtual with 3D designs training materials
analytics suppliers on customer clothing try-ons, and simulations based on roles
preferences, displaying
• Generate • Augment real- • Provide real-time • Automate support
generating products on
mood boards, time demand store insights to tasks such as HR
custom content AI-generated
visual imagery forecasting assist managers and accounting
models
and creative by combining • Accelerate and employees report generation
inspiration using insights from marketing content • Enhance or legal drafting
briefs/brand DNA multiple datasets creation, such as customer service
• Improve talent
from previous copywrite drafts and clienteling
• Tailor product acquisition,
collections and campaign through
return offerings streamlining
photoshoots advanced virtual
• Convert sketches to individual candidate sourcing
assistants
into numerous 3D customer • Enrich social through advanced
product designs preferences, data channels • Draft product algorithms that dive
and tech packs identifying using sentiment descriptions for deep into professional
for production products to return analysis and e-commerce networks to identify
and facilitating consumer data sites and screen the
customised to pivot content best candidates
exchanges and messaging
accordingly
66
Fashion System
Generative AI (gen AI) offers a plethora of and talent readiness. For instance, producing
opportunities to build new capabilities across the AI-generated marketing materials could be a quick
fashion value chain, from inspiration mood boards win for some organisations, while others might view
to marketing campaigns and virtual shopping this as a longer-term play if data and platforms are
assistants. As new use cases emerge and the stakes not ready. Talent upskilling is often needed and can
become higher, there is an opportunity for leadership demand an accelerated approach to building learning
teams to move from “thinking to doing,” while journeys for current staff, targeted hiring and smart
retaining a human-centred approach tied strongly partnering. Tech and talent foundations will, of
to brands’ core values. Forward-looking companies course, need investment and a commitment to new
may want to develop a playbook for executives, which ways of working.
could help them navigate the new technology and
Shaping Teams for Impact
guide them in effectively applying gen AI throughout
their organisations. Gen AI implementation is typically a team activity.
Teams should be structured around sets of
Setting Priorities for Impact
opportunities and use cases, while close collaboration
In the rush to unlock gen AI’s potential, it would be across business units and between functions (legal,
easy to take an opportunistic approach, jumping risk, HR, finance) and technology and engineering
into applications in the hope that some of them teams will be essential. Internal and external
hit the mark. More productively, senior leaders recruiting should focus on the skills necessary for
and their organisations can focus on impact to the important use cases, shifting from a role-centric to
core business and build a portfolio of use cases a skills-centric model. Consider a brand that seeks
that offer both short-term benefits and broader, to use gen AI to personalise online ads to individual
more transformational potential. Establishing customers. Required skills could include design,
collaboration early on between business and data analytics and prompt engineering. Such a team
technology functions will be critical when deciding might comprise a product manager, marketing lead,
where to focus and when identifying funding and copywriter, designer, data scientist, specialised
assessing feasibility. While initial moves will likely engineers (machine learning, data, cloud) and a risk
fall outside “business as usual” investment, they specialist.
can be integrated with broader tech and IT strategy A shared, central “control tower” can orchestrate
investments in the next planning cycle. and choreograph these fast-moving teams — giving
Companies have been making fast progress them the support, shared skills and sustained
in putting gen AI into action. Amazon is testing funding. A council of senior leaders in business,
AI-generated customer product review summaries legal, tech and product roles can provide purposeful
on its homepage to help customers quickly distil governance that balances speed and risk. Often
the high volumes of reviews.235 Google offers hyper- AI-driven initiatives are decentralised and siloed,
realistic clothing try-on, using AI-generated clothes which can limit success. A central team could
and models.236 Across the fashion and luxury value coordinate organisation-wide development of the
chain, companies will likely see the largest profit technology platform and set-up guardrails for risk
gains from gen AI in product design and assortment, and compliance, enabling faster and more effective
followed by content-focused marketing, and sales progress through centralised coordination. The
and customer experience, according to McKinsey central team could also preside over technical
forecasts. Further gains are likely to be made by infrastructure, employee upskilling, internal
AI-generated campaign. Revolve.
67
The State of Fashion 2024
Exhibit 14
Risk/Legal
UI/UX
/Ethics
Designer(s)
Specialist
Executive sponsorship:
ML. Ops Domain
designated sponsor and
Engineer Expert committee to own end-to-end
privacy and ensure execution
Product Business
Manager Lead
Squad members will vary
based on use case, industry
and context
Software Cloud
Engineer Engineer
Data Data
Engineer Scientist
68
Fashion System
69
The State of Fashion 2024
needed at most fashion companies, rather than one from cloud providers, but tech teams internally
or two. must set expectations and share accountability.
In one example of a fashion-tech partnership, Quality assurance, including content moderation, is
designer Norma Kamali partnered with AI creative likely to be an ongoing activity, throughout the life
studio Maison Meta to fine-tune gen AI models using of the model and after it is released into production.
content from the Kamali’s 56 years of designs. Kamali Ongoing monitoring of model performance and
said she hopes to use gen AI to preserve her creative output will likely be key to maintaining high
legacy and empower her brand’s future. She sees close standards for any brand.
collaboration with tech partners as a key to success, Navigating these risks can enable leaders to
where they iterate to improve tools and identify pursue gen AI responsibly in a fast-changing world.
new practical applications in her business. Kamali Governance will need to be flexible and ready to
completed gen AI coursework at the Massachusetts adapt at speed. Organisations that take a human-
Institute of Technology to learn more about AI and to centred approach — considering the impact of gen
encourage her employees to experiment with AI tools AI on employees, customers and communities, and
in their daily work.242 prioritising user needs and experiences — are more
likely to succeed.
Navigating Risks
Scaling Up
As fashion companies embrace the potential of gen
AI, balancing enthusiasm with caution is likely to be Gen AI is redefining the art of the possible. Very
a key to success. Notable areas of risk include bias, rapidly constraints have shifted from technology
the effect on creativity, intellectual property rights limitations to the creativity of leaders in applying it to
and data protection. their businesses. In this context, hands-on learning
Gen AI outputs are based on data from which should be a goal of its own — and learning rates may
they are trained, and biased data can have negative soon separate winners from losers. According to an
consequences on customers and other audiences. International Data Corporation report, 40 percent
Brands and their partners should carefully construct of worldwide retailers and brands are experimenting
comprehensive datasets and ensure data teams with gen AI, while 21 percent are investing in gen AI
include diverse backgrounds and perspectives. In applications.244 Likewise, over the next three years,
addition, while gen AI can augment creativity,243 up to 74 percent of retail and e-commerce companies
overreliance on models trained exclusively on past plan to increase gen AI spending.245
designs could also inhibit creativity. Designers To enable successful employee adoption,
can instead use gen AI as a “thought partner,” organisations could provide training programmes
critically evaluating gen AI outputs as “inspiration,” to onboard employees and offer resources that help
experimenting with ideas and building on outputs to them use gen AI. Such programmes can help upskill
create net-new designs. employees and educate them on benefits, highlighting
Fashion brands and designers should be how gen AI can expand their capabilities and reduce
especially careful of the risks related to intellectual repetitive tasks, rather than eradicate jobs.
property (IP). Foundation models are trained on Leaders can set the tone. To help drive responsible
massive amounts of internet-sourced data and IP. gen AI adoption, leaders could foster creativity by
Organisations should consider how their creative creating psychologically safe environments where
designs are shared online, as they could be used to users feel empowered to experiment and learn by
train external models. Likewise, without a watchful doing, while investing in internal communication and
eye on licensing terms, third-party models could change management. While gen AI’s profit potential
employ an organisation’s data and IP for their own is high, the challenge of bringing these possibilities
use. Similarly, companies should ensure that they are to life is very much a human-centred one.
not sharing confidential and customer-sensitive data
with models and gen AI applications.
Building secure and scalable IT infrastructure
is imperative. In most cases, this is likely to come
70
Fashion System
07.
Fast Fashion’s
Power Plays
Fast-fashion competition will likely become even
fiercer in the year ahead. Challengers, led by Shein
and Temu, are changing tactics around price, customer
experience and speed. Success for disruptors and
incumbents will likely hinge on their ability to
adapt to evolving consumer preferences, while
navigating regulations that may impact the industry.
KEY INSIGHTS
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The State of Fashion 2024
In 2023, fast fashion accelerated. Following in the However, this speed does not always translate to
footsteps of e-commerce giant and market leader delivery times — customers often wait weeks for
Shein, a cohort of challengers has upended the parcels to arrive for the sake of trendy designs and
competitive landscape by producing fashion quicker low prices. Customer loyalty is built on more than
and cheaper than before.246 The first generation just price or speed — the third generation of players is
of fast-fashion heavyweights, like H&M and Zara, also transforming the customer experience through
that introduced the concept of trendy runway- gamification, micro-incentives and social media
inspired fashion at affordable prices has before been communities.251
challenged by a second generation of digital-first
Updating the Model
fast-fashion players like Asos and Boohoo. Now, a
third generation of companies is making its mark. Undergirding the third generation are several
Rising players include Temu — a marketplace owned operating model innovations:
by China-based PDD Holdings, which overtook Agile, scalable manufacturer-to-consumer
Amazon as the most-downloaded shopping app in supply chains: Some third-generation companies
the US and in most of the other 16 markets in which have developed large networks of suppliers who often
it operates just months after launching;247 Turkey- manufacture exclusively for them. For Shein, which
based Trendyol, a marketplace backed by Chinese was initially built with a first-party, owned-inventory
internet giant Alibaba; and Cider, a US-based retailer model (before introducing a third-party, cross-
targeting Gen-Z with a third-generation fast-fashion category marketplace in 2023), strict performance
business model. management of suppliers drives reliability, while
These companies, with their ultra-low prices direct-to-consumer delivery from China enables
and rapid turnover of trendy styles, have captured rapid scalability with low inventory risk. Temu,
the attention of consumers in western markets. Two meanwhile, operates purely as a marketplace, finding
companies stand out in this regard: Shein and Temu manufacturers with excess capacity and onboarding
(which are the focus of this analysis). According to them to sell unbranded goods directly to consumers
the BoF-McKinsey State of Fashion 2024 Consumer in a low-price “B2B2C” model.252 While Temu’s
Survey, 40 percent of US consumers have shopped prices are often between 10 percent and 40 percent
at Shein or Temu in the past 12 months; in the UK, lower than Shein’s, the retailer has faced challenges
a newer market for the retailers, that figure is at 26 relating to quality control and reliability.253 254
percent. Meanwhile, consumers indicate they are Data-driven product design and testing:
looking to increase their spend with these players: At Shein, products are designed or selected using
net future purchase intent for Shein and Temu is, demand-driven trend modelling, which includes
on average, 18 percentage points higher than that of a range of data inputs from current trends to viral
first-generation competitors.248 products to consumer perception. Shein adds
Ultra-low prices are integral to the success of the between 2,000 and 10,000 items to its app every day
business model. Shein’s average SKU price of $14 is and produces in small batches; to maintain a tight
significantly lower than H&M’s $26 and Zara’s $34.249 grip on inventories, hit rates comparing product
Turnaround times from trend capture to product page visits to sales are evaluated in real time.255
availability are also condensed: Shein aims for 10 Temu’s approach also evaluates hit rates to feed back
days, under half the 21-day minimum elsewhere.250 information to sellers on trends and demand levels
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The State of Fashion 2024
Exhibit 15
Fast fashion’s
evolution
Original runway-to-high street Digital-first players with The latest challengers with
retailers offering trend-driven quicker turnaround times and ultra-fast trend-to-production
fashion at affordable prices rapid DTC logistics times and ultra-low prices
Example
H&M Primark Zara Asos Boohoo Missguided Shein Trendyol Cider Temu
companies1
players mature. For example, while Temu’s large Shein is attempting to diversify its strategy in a
performance marketing spend and discounts have bid to maintain its leading position. The company is
so far helped the company to grow, it remains to be experimenting with offline retail, including pop-ups
seen if it will be able to maintain its current strategy, and shops-in-shops.269 It has formed a joint venture
which requires significant investments in customer with Forever 21 to expand its US offline experience,
acquisition and razor-sharp logistics.267 and has also recently acquired the Missguided brand
in the UK.270 271 In response to import tax restrictions,
The Imperative to Adapt
Shein is also expanding its supply chain beyond
The scene has been set for further disruption in its network of manufacturers in China, building
the industry. In the face of incoming regulations, warehouses in Europe, the US and Canada, as well as
increasing public scrutiny and falling valuations factories in Brazil.272
(Shein’s $100 billion 2022 valuation reportedly As Shein adapts its model to face the new
dropped to $66 billion in 2023), third-generation challenges — from a network of low-cost
players may not be able to settle into their business manufacturers largely in China to new suppliers
models just yet and may need to adapt again.268 elsewhere in the world, and from a direct-to-consumer
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Fashion System
online model to offline or omnichannel retail — doubling down on marketplaces to expand across
what has been its competitive edge could face some categories, price points and consumer segments.
dilution and the stickiness of its core customer base Customer engagement is likely to remain a key
may be challenged. differentiator, as third-generation players use their
The “everything store” marketplace model strong communities and gamification tactics to
might hold the key to potential success for players. increase average basket size, seeking to grow profits
Shein has piloted the model in the US and Brazil and safeguard a viable business model for the future.
and has indicated potential to expand in 2024.273 The industry as a whole could feel the effects of these
The retailer is even beginning to enter luxury third-generation players: companies might want
fashion, with listings from some luxury brands to take note of their most successful strategies to
posted by third-party sellers making their way onto capture the attention of the modern consumer.
its marketplace (although the authenticity of these
items is, as yet, unverified).274
In 2024, market disruption may gather pace,
with third-generation fast-fashion companies
75
Exhibit 16
Gen-Z (18–24)
US
26 26
24 23
30 14
Millennials (25–42)
10 9
4
UK
Gen-X (43–55)
45
34
31
27
21 20
20
15
Boomers (56+)
12
76
in Numbers
In a proprietary survey of consumers in the UK
and US, we find that shoppers from all age groups
are increasingly turning to third-generation fast-
fashion retailers such as Shein and Temu.
US UK
−4pp
−14pp
Share of wallet1
Indexed to H&M
+16pp
+34pp
1 Share of wallet calculated as total stated retailer spend as a percentage of total stated fashion spend.
Includes those who did not shop with the retailer
2 Net purchase intent calculated as difference between percentage of consumers who expect to buy
more from the retailer and percentage of consumers who expect to buy less from the retailer in the
next two to three years
These companies stand out for not only their low prices
but also choice, experience and social buzz
US and UK respondents’ perception of retailers,
%
Low High
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The State of Fashion 2024
EXECUTIVE INTERVIEW
Musinsa:
Taking the K-Fashion
Ecosystem Global
By Janet Kersnar
H
aving a global presence “Musinsa Season Preview” event, when fans really take interest.
and recognition would where customers could visit four Then also when people watch
have been hard to offline venues in Seoul to share K-content like movies and dramas
imagine only just a few years their thoughts alongside those of and they see how Korean people
ago for Korea’s fashion industry, a panel of industry experts on the or celebrities dress or what their
which is increasingly on global Spring/Summer 2024 collections lifestyle is like, people gradually
brands’ radars thanks in large from 30 local brands, which could start to become familiar with their
part to fashion’s ability to then adjust pricing and inventory lifestyle and their dress.
benefit from the recent surge in based on the feedback. It’s a bit like what happened
popularity of K-films and series, Beyond Korea, Musinsa is now with hip-hop. People who were
according to Mun-il Han, who present in 13 countries, selling doing hip-hop in Korea wanted
became CEO of the Seoul-based around 800 Korean brands. to emulate that way of life and
fashion marketplace in 2022 at Han said one of the markets consume the brands that were part
the age of 33. “When I look back where K-fashion is in increasing of that. We feel that K-content is
[in 2018 when I joined] fashion demand is Japan, where it set up a now at a similar juncture, where
marketplace Musinsa, it usually subsidiary in 2021 and has become it’s being exported abroad. It’s
was quite rare that a CEO or a top the company’s largest global taken a while for fashion to have a
executive of a global brand would market. distinct connection with K-culture
actually come to Seoul, and even but it’s starting to happen. At
With bands like BTS, Blackpink
if they did, they wouldn’t stay very Musinsa, we want to leverage
and most recently New Jeans
long,” he recalled. “That has very that opportunity to really expand
(the latter a Musinsa brand
much changed.” our global footprint, after having
ambassador), K-pop’s star just
But Musinsa wasn’t going to grown very rapidly by mainly
seems to keep rising higher.
wait around for global recognition focusing on the online fashion
Analysts at Bernstein recently
to make its own mark on Korea’s market in Korea.
said the K-pop industry could
fashion industry. Starting out in
generate annual revenue of Ever since Musinsa became
e-commerce’s early days in 2001
approximately $10 billion by a fully fledged fashion
as an online platform for sneaker-
2030, or roughly double 2023’s retail platform in the 2010s,
loving high school kids to share
level. How is K-fashion riding fashion retail generally has
street fashion photos, Musinsa has
that wave? been undergoing disruption
grown into a fashion marketplace
and change. What has been
that it says comprises a community I don’t think the global impact of
Musinsa’s role in this? Does
of 13 million, largely Gen-Z fans, K-pop is fully hitting home to us
Musinsa consider itself one of
with a 2023 funding round that in Korea. It’s not just K-pop stars
the disruptors?
reportedly valued the company at but also K-celebrities who are
approximately $2.76 billion. really gaining global exposure with We definitely see ourselves as a
According to Han, Musinsa the popularity of K-content or for disruptor. Korea’s fashion market
has taken a different approach movies and dramas. Especially in the past was very much led
than other fashion e-tailers by fashion and luxury brands, they by the department stores — you
focusing on the sellers — that is, are leveraging K-pop stars and only had a handful of brands that
the 8,000 local and global brands signing them on as their brand were able to launch in department
selling their apparel and footwear ambassadors. We can indirectly stores and that were recognised
on its Korean platform or via its feel the extent to which these pop as bonified brands. Whereas with
app, including independent brands stars now have so much influence the emergence of a platform such
it helps fund and support by, for and power. as ours, we see many new brands
example, providing marketing and We’re still in the incipient emerging to create a fashion
innovative initiatives to connect stages, but I think when these ecosystem.
them directly with customers. One artists or musicians share their Back in 2001, we started as
such initiative was its first-ever daily lives on social media, that’s an online community. It was a
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The State of Fashion 2024
community where young people companies also wanted to do compared to other e-commerce
were able to freely exchange business online but weren’t really platforms is that we really zero in
information and narratives about aware of what young people like on managing the sellers.
fashion and lifestyle that they and need. Also, we focus more on what
were interested in. This was a very I would call the “essence” rather
In terms of that ecosystem,
active community, a community than things like gamification. What
how does it enable Musinsa
where we were also able to I mean by that is, people who are
to differentiate itself in
introduce overseas street fashion interested in fashion or lifestyle
an increasingly crowded
brands that Koreans may not have through our community are able to
e-retailing market?
been familiar with and introduce ask questions about fashion. They
some local brands that were up If we look at this from a platform are able to get recommendations
and coming. perspective, the China-based from other people within the
Right from the beginning, we platforms are really doing well in community. We don’t think that
had a very strong understanding of terms of gamification. But in Korea, algorithms alone provide the best
what young people wanted, what I don’t think we see any notable recommendations, so we try to mix
their needs were. At the same time, results with gamification. Rather our curation with the data to come
brands were looking for channels than that, I think the biggest up with the best recommendation
to sell their products and large differentiator of our company for our customers.
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Fashion System
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The State of Fashion 2024
08.
All Eyes
On Brand
Brand marketing will likely be back in the limelight
in the year ahead as the fashion industry confronts
a shifting landscape in which performance
marketing no longer reigns. Consumers’ emotional
connections to brands will likely be critical as
fashion marketers reorientate their playbooks to
emphasise long-term brand-building strategies.
KEY INSIGHTS
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Fashion System
Exhibit 17
Performance marketing 15 39 46
Brand marketing 6 23 71
+25pp
Brand-building isn’t what it used to be. After years of Brand marketing is also proving to be pivotal in
leaning heavily on instantly trackable performance transforming a label’s market position, while often
marketing, the fashion marketing landscape is helping it capture entirely new customer bases.
shifting. A convergence of factors, including pressures
Identity Revamp
on discretionary spend, is sharpening consumer
appetite for entertaining brand storytelling that Effective brand marketing needs to employ a multi-
captures their aspirations and interests, well beyond pronged strategy over time, rather than one-off
the products on offer.275 Spurring this change are the moments. Sustained, holistic brand marketing
increasing costs of performance marketing alongside can transform brand images, as several recent
new data privacy regulations restricting customer examples show.
targeting, forcing marketers to find different ways to Germany-based Hugo Boss launched an image
engage with shoppers. reboot with heavy investment in brand marketing
Many fashion leaders now plan to reprioritise that aimed to attract young consumers. With newly
marketing spend. According to the BoF-McKinsey differentiated branding for “Hugo,” aimed at Gen-Z,
State of Fashion 2024 Executive Survey, 71 percent and “Boss,” aimed at Millennials, it updated its logo
of executives plan to increase brand marketing spend and other visual cues and enlisted ambassadors
in 2024, while 46 percent intend to do the same for like Hailey Bieber, rolling out a star-studded web
performance marketing.276 This marks a fundamental and out-of-home campaign and hosting events
shift for many fashion companies, including direct- including see-now-buy-now fashion shows and
to-consumer labels that have built their brands using sponsoring sporting events to feature its new
the trackable, targeted performance-marketing streetwear-influenced looks. In March 2023, the
playbook.277 company announced the first full-year results since
While brand marketing by its very nature doesn’t the rebrand, attributing record sales of €3.65 billion
enable the same depth of trackable insights as ($3.85 billion) in large part to the “momentum”
performance marketing, it does offer other benefits throughout 2022 it gained from the new-look Boss
— notably, done effectively, it can help brands to and Hugo brands.278
stand out in an increasingly saturated media world. Italian luxury house Ermenegildo Zegna Group
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The State of Fashion 2024
began a refresh of its Zegna menswear brand in the The Brand Marketing Toolkit
run-up to its initial public offering in 2021. The brand
As consumers crave greater connection and
streamlined and modernised its image, dropping
authenticity from brands, marketing efforts will
“Ermenegildo” from its name and condensing three
home in on brand storytelling and emotional affinity
sub-brands into one modern, slick Zegna-branded
through multiple avenues.
umbrella. The company also collaborated with luxury
One way this can be done is by leveraging the
streetwear label Fear of God to tap into a broader,
personalities behind a brand, such as the founder or
younger audience as part of a wider casualisation
creative director. Think Miu Miu (Miuccia Prada)
campaign, which expanded Zegna’s brand authority
or Loewe and JW Anderson (Jonathan Anderson)
from tailored suits to luxury leisurewear for the
or Jacquemus (Simon Porte Jacquemus) — labels
modern quiet luxury consumer.279 280 281 Zegna’s
that featured in the recent quarterly Lyst index of
full-year 2022 sales rose 16 percent year on year to
fashion’s most prominent brands.286 Underscoring
€1.5 billion ($1.6 billion).
how many consumers gravitate towards the people
Meanwhile, New Balance has used collaborations
who personify and drive a brand,287 organic content
as a part of its broader strategy to elevate the
can be created around these personalities in
brand and drive demand. In addition to targeted
authentic, personable ways.
inventory allocation across channels, product drops
However, there are other ways to build
and marketing investments, the sneaker brand
communities that don’t rely on a brand’s stand-out
leveraged tie-ups with image-driving partners, such
personality. In the case of Nike, bold ad campaigns
as JJJJound, Miu Miu, Joe Freshgoods and Aimé
featuring high-profile athletes have over the years
Leon Dore, while tapping ALD’s Teddy Santis to be
created a perception around the brand for focusing
creative director of New Balance Made in USA.282
on social causes.288 Meanwhile, as heritage luxury
These actions have reinforced New Balance’s brand
brands have shown, there’s plenty of scope for
positioning, with it ranking as one of the best-selling
storytelling that pivots around other aspects of
brands on sneaker resale platforms Goat, StockX and
their brands’ unique qualities. Hermès, for example,
Flight Club.283 284 285
has long employed deep brand stories that evoke
84
A Jacquemus pop-up. Jacquemus.
The State of Fashion 2024
a history of craftmanship. At Tiffany & Company, and brand specialists as well as data, finance and
the brand was revitalised after its acquisition by strategy leaders to form a cohesive brand story. After
LVMH, balancing established brand stories and years of focusing on performance marketing, CMOs
new campaigns with stars like musicians Jay-Z and must now invest in hiring and training teams to
Beyoncé to access a new generation of consumers.289 bolster brand marketing capabilities, ensuring that
There’s also a brand marketing opportunity by the marketing department contains both brand and
creating memorable shopping moments. Connecting performance marketing specialists that can work
emotionally with consumers has become increasingly closely together. Indeed, more companies may hire
difficult in a world of ever-shortening attention chief brand officers as brands take a more holistic
spans. However, by meeting consumers in the real view of their storytelling and marketing efforts.
world with activations that span channels, brands Undergirding this is a focus on the long-term
can capture attention and build a more pervasive story. This will require a mentality shift, with impact
presence in customers’ lives. Immersive stores, measurement focused on longer-term, strategic
featuring visually striking spaces and interactive, horizons, rather than instant return on investment —
multisensory experiences, can be employed here.290 while blockbuster marketing campaigns can generate
291
A range of brands have already been experimenting immediate buzz, maintaining consumer attention
with boldly designed pop-ups which often have the thereafter is a challenge. Consumers expect to see
additional benefit of serving as ideal backdrops for brand stories that are consistent and authentic; the
shoppers’ social media posts. Examples include success of purpose-led brands such as Patagonia
Jacquemus’s handbag vending machines, Chanel’s are proof points. Brand marketing may need to be
perfume-themed diner, H&M’s immersive collection maintained with consistent storytelling throughout
launches and Pretty Little Thing’s themed influencer consumers’ day-to-day lives, from large-scale events
showroom.292 293 294 295 to touchpoints on social media. However, 2024
Melding marketing strategies with adjacent won’t be about generating more and more content,
industries such as music, film and sports, is also or perpetually refreshing brand identities. Now, the
helping fashion brands remain relevant with focus needs to be on “less is more,” with carefully
customers. In 2024, brands may consider investing crafted storytelling that amplifies a brand’s clear,
further in cross-industry collaborations, joint coherent personality.
ventures and sponsorships.296 LVMH announced its
“premium” sponsorship deal of the 2024 summer
Olympic and Paralympic Games in Paris, with plans
for individual brands to make standout contributions
in the run-up to the games.297 298 Following on the
heels of LVMH’s news, Kering-owner François-
Henri Pinault announced that his family’s holding
company Artémis had closed a multi-billion-dollar
deal to acquire a majority stake in Hollywood talent
giant Creative Artists Agency, perhaps a precursor to
fashion players inking more cross-cultural deals.299
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Fashion System
EXECUTIVE INTERVIEW
Dior:
Balancing Tradition,
Innovation and Scale
By Robert Williams
87
The State of Fashion 2024
D
uring 18 years at Christian C-suite executive since Parfums driven approaches that are
Dior, Olivier Bialobos has Christian Dior and Christian Dior increasingly popular, or would
established himself as the Couture in the 1960s. Then under that be antithetical to the idea
French couture house’s 360-degree new CEO Delphine Arnault in of luxury?
communications maven amid an 2023, Bialobos was elevated to the
Desirability — not just visibility
ever-widening scope of projects role of deputy managing director
— has to be the target. That’s
to craft a varied, yet consistent in a consecration of his long-term
always been part of Dior from the
message and glorify the Dior name. contribution to and vision for the
beginning. There’s no recipe, but it
Bialobos joined the company French house.
all has to do with values somehow.
in 2006 during the heyday of
Dior revenue has been growing Mr Dior had a vision with strong
former womenswear creative
in recent years, and Citi values: creativity, exceptional
director John Galliano — then
estimates that it will rise to savoir-faire, inventiveness,
was charged with building a stable
€10.2 billion ($11.4 billion) in audacity. Don’t forget that this
platform amid frequent creative
2024 from €8.7 billion ($9.3 was just after the [Second World
turnover under Raf Simons and
billion) in 2022. How does this War]. Those values remain very
a studio-designed interregnum
change the job of marketing a important to us today; then we
before the blockbuster tenure
luxury brand? could also add sustainability.
of Maria Grazia Chiuri since
Performance marketing
2016. On the menswear side, his It isn’t the scale that makes the
is about playing the game, it’s
work intersected with creative job different so much as the
normal. But while you have to
director Kris Van Assche, and then period we’re living in. There’s so
work on your current clients and
Kim Jones, as well as Victoire many communications tools that
make them dream, you also have to
and Cordelia de Castellane to have appeared and you need to
work on your potential clients, and
design jewellery and homeware, always be adapting to. Twenty
make them dream. You promote
respectively. years ago, there was no Instagram,
the product properly and strongly,
Still, Dior’s message of dreamy no TikTok, not to mention all
but then you also create emotions.
glamour and couture excellence the more specific platforms in
came across more strongly than countries like China and Japan. ‘Designer of Dreams’ [Dior’s
ever as owner LVMH continued Now we’re also seeing new retrospective museum exhibit
to invest heavily in celebrating opportunities related to TV thanks that has been shown at the
the prized asset, the first brand in to streaming platforms like Netflix, Musée des Arts Decoratifs
chairman Bernard Arnault’s luxury Apple TV. (in Paris, Victoria & Albert
empire. All of this means that, in London and Long Museum
In addition to multi-million- compared to the past, we have to in Shanghai] seems to mainly
dollar runway spectacles produce much more content. Not address the latter priority,
throughout the year — from so long ago, you were doing one ad which a lot of people would just
Paris Couture Week to far-flung campaign, maybe a little film every call ‘brand marketing,’ although
travel shows to weekend-long season. Marketing the fashion side on quite a large scale. You also
experiences for high jewellery was essentially just pictures. And recently opened Dior’s own
collectors — the brand has invested we didn’t have so many collections fashion museum — La Galerie
in establishing itself as a cultural to promote either. Dior in Paris, the world’s largest
institution through museum museum devoted to a single
When operating across so
exhibitions as well as countless designer. What is the strategy
many channels, what steps can
artist collaborations and celebrity behind those museum projects?
marketers and communicators
partnerships.
take to avoid saturating We wanted ‘Designer of Dreams’
In 2021, Bialobos’ remit
the market, to avoid being to be a mix of our heritage and also
expanded to include oversight
overexposed? Can couture Dior today, presented in a modern
of Dior’s beauty division, the
brands adopt the performance- way. It’s been a huge success —
first time the units have shared a
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Fashion System
normally the MAD gets 400,000 on the couture side, or they’ve How can the codes and values of a
visitors per year, during ‘Designer started to feature the updated brand like Dior change over time?
of Dreams’ it had 800,000 people logo and typefaces from 2017
For the codes, Dior has long been
in six months. more prominently.
associated with its flagship bar
What’s very important is to
It’s not just the clothes, now. jacket or cannage stitching. But
make people dream, and with this
One of Maria Grazia Chiuri’s other motifs can become codes
show some people who don’t care
favourite photographers, Brigitte over time, like how Maria Grazia
about fashion, they escape and
[Niedermair], recently shot the revived the Toile de Jouy and made
dream for hours. It’s about when
J’Adore campaign. We are using it a stamp of the brand.
you get out of the Galerie Dior or
more and more of the same visual In terms of values, the notion
the V&A with stars in your eyes —
language overall. of femininity has evolved over the
and now Dior means something
There are also some of the years and under every designer.
to you.
same ambassadors across beauty Maria Grazia brought something
What’s also great is we have a
and fashion, like Jisoo [from South about not just femininity but
huge range of products, starting
Korean band Blackpink]. feminism that was really a very
with a fragrance or even a lipstick,
strong statement.
up to an haute couture dress. So, if Dior has navigated the
She was convinced it was the
you love Dior you can buy into the transitions from John Galliano
right thing and she had a vision.
brand at every level. to Raf Simons to Maria Grazia
She didn’t want to fight — there’s
Chiuri. What did you learn
You’ve been responsible for the something negative about that —
from managing that creative
‘One Dior’ image since 2021 but rather she wanted to promote
turnover?
— meaning you oversee image something.
and communications for Dior’s I was very fortunate to work with In 2017, she’s been very
cosmetics now too. What were all those incredible designers, criticised in fashion because of a
the most important steps you’ve who each had a vision; each had T-shirt [reading “We Should All Be
taken towards unifying the Dior a different way of working or of Feminists”]. Today I receive calls
message across fashion and finding inspiration. John was from museums all over the world
beauty? taking research trips, making to have this outfit.
these research books that were
You need a common thread — a Are there any other lessons
sort of like his version of a mood
fil rouge we would say in French you’d like to share about
board, then spending hours in
— between fashion and beauty. marketing a luxury brand?
these very closed-door fittings
That’s very interesting and
with just his immediate deputies. Mr Dior used to say, ‘Tradition
pretty challenging because it’s
Raf was more focused on art and needs to be disrupted so that
two different timetables: You
artists. With Maria Grazia, it’s it always remains modern and
don’t often create a lipstick or a
more open, it’s about visiting desirable.’ That’s a quote I use
fragrance in less than two years,
ateliers, reading tonnes of books, almost every day.
while we can create a [fashion]
trying to have a conversation —
collection in four months. This interview has been edited and condensed.
with artisans, with people. She
But both can focus on the icons LVMH is part of a group of investors who, together,
isn’t trying to put the light on hold a minority interest in The Business of
and the codes, to become one voice Fashion. All investors have signed shareholders’
herself. documentation guaranteeing BoF’s complete
— which is stronger and louder.
Ultimately our designers editorial independence.
We’re unifying the messages
are constantly reinterpreting or
and the energy.
sublimating our codes because it’s
More and more of Dior’s about storytelling, and creating
perfume ads have been re-shot dreams. All the designers are
with clothes, reflecting the immersing themselves in the
current designers’ aesthetic archives.
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The State of Fashion 2024
09.
Sustainability
Rules
The era of the fashion industry self-regulating
sustainability is drawing to a close around the
world. Across jurisdictions, new rules could have a
widespread impact on both consumers and fashion
players. Brands and manufacturers need to revamp
business models to align with the changes ahead.
KEY INSIGHTS
• The regulations span the entire fashion value chain, from product
design to marketing, and will impact consumers and companies
globally.
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Fashion System
The fashion industry is heading for a reality check. By expected to become required by law.306
the end of 2024, self-regulation of sustainability may Marketing: Greenwashing is high on consumer
no longer be an option.300 Many new rules around the and regulatory agendas, with the claims of many
world are set to mandate action on everything from companies seen as vague or misleading. The new
textiles production and chemicals use to recycling EU Green Claims Directive curbs greenwashing by
and waste. requiring sustainability-related declarations and
While some industry progress is evident, the statements to be specific, backed by evidence, verified
pace of transformation falls short of what is needed by independent bodies and communicated clearly.307
to prepare for impending regulations. Across the France has already taken the first step, requiring
industry, the polluting use of fossil fuels continues to large companies to put carbon labels on all clothing
dominate production while circular business models sold in the country.
are still in their infancy. If progress continue at the Waste management: Less than 1 percent of
current pace, clothing and footwear consumption fashion textiles are recycled308 and a truckload of
is expected to increase by over 60 percent, from products are sent to landfill or incinerated somewhere
62 million tonnes in 2022 to 102 million tonnes in in the world every second.309 310 An amendment to the
2023.301 Waste Framework Directive is calling for Extended
With the industry struggling to move forward, Producer Responsibility, which already exists in
regulators are stepping in. Leading the charge is France, and which requires companies to finance
the EU as it pursues a vision for a climate-neutral, the collection, sorting and recycling of textile waste.
circular economy, with growth decoupled from Fees are expected to vary based on production output
the consumption of finite resources.302 303 The and pollution levels caused, a principle known as
EU’s textiles vision is encapsulated in its Strategy “eco-modulation.” All EU countries will be required
for Sustainable and Circular Textiles, passed in to launch textile collection programmes by 2025
June 2023, which envisages an industry defined by and the destruction of unsold goods is expected
products made with respect for the environment and to be banned.311
social rights. As many as 16 pieces of legislation are Reporting: Despite huge volumes of corporate
currently under discussion, with the first coming to environment, social and governance (ESG) disclosure,
force in 2024. The window for brands to prepare to companies still struggle to secure sufficient data
comply is narrowing quickly.304 and performance metrics or define economic
activities that can be considered sustainable. A lack
The Heat is On
of comparability across brands inhibits effective
With fashion responsible for significant emissions, decision making among investors and consumers.
pollution and waste, regulators are set to require The upcoming Corporate Sustainability Reporting
companies to both fix their own operations and Directive (CSRD) requires companies to report
force higher standards in their supply chains. on ESG activities via a standardised framework.
The regulations apply across key areas of activity, Meanwhile, the Corporate Sustainability Due
impacting consumers and companies within and Diligence Directive mandates environmental and
outside the EU. human rights diligence and action plans across the
Product design: Up to 80 percent of a product’s value chain.312
environmental impact is determined in the design Notably, the requirement for standardised,
phase and is baked into materials and dyes.305 The comprehensive public disclosures has become a
EU’s flagship Ecodesign for Sustainable Products lightning rod of debate in the fashion industry, with
Regulation (ESPR), set to come into full effect some executives concerned about the amount of data
by 2025, sets minimum design standards for all and analysis required. At a recent conference, the
individual products sold within the EU. This includes head of sustainability at Puma said that the brand
requirements around recyclability, durability, had been publishing reports for 20 years but was
reusability, repairability and use of hazardous “nowhere near being able to fulfil the requirements
substances. Digital product passports that collect of CSRD.”313 314
and share this information with consumers are The impact of the EU’s new rules are expected
91
Exhibit 18
Draft Microplastic Legislation: Aims to reduce the release of microplastics into the
environment across manufacturing stages
US Adopted California SB 253: Requires businesses with more than $41 billion of annual
revenue operating in the state to report scope one through scope three emissions
Proposed New York Fashion Sustainability and Social Accountability Act: Requires supply-
chain transparency, ESG disclosures and due diligence for apparel companies
conducting business in New York with annual global revenue of $100 million
1 EU Strategy for Sustainable and Circular Textiles implements the commitments of the European
Green deal and the Circular Economy Action Plan to reinvent the entire lifecycle of textile and
footwear products
2 In the EU, adopted directives still need to be translated into national law by each member state within
a two-year period. Adopted regulations go into force immediately
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Fashion System
to extend beyond the region’s borders, especially ahead presents an opportunity for fashion executives
into Asia, where 70 percent of the EU’s textiles to revamp their business models. But this will likely
are manufactured.321 In addition, lawmakers in require a holistic approach rather than targeting
other regions are progressing their own initiatives. select parts of the value chain:
In the US, the New York Fashion Sustainability Traceability: Achieving full supply-chain
and Social Accountability Act plans to hold major visibility across all tiers of manufacturing will be a
brands accountable for ESG impacts and supply- critical enabler for regulatory compliance. However,
chain traceability.322 In the UK, the Green Claims many brands currently have limited visibility over
Code aims to stem greenwashing, while China has their suppliers at best, and therefore lack reliable
committed to peaking carbon emissions before 2030 and standardised data to make meaningful progress.
and become carbon neutral by 2060.323 Advances in blockchain and other technologies
As the regulatory landscape evolves, the year may enable more transparent and efficient
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The State of Fashion 2024
monitoring. Adidas, for example, has achieved with global brands like H&M, Inditex and Levi’s,
material traceability at scale by using TrusTrace’s Renewcell plans in 2024 to reach full capacity of
digital traceability platform, which is also used 120,000 tonnes, or the equivalent to 600 million
by companies including Renfro Brands and Brooks T-shirts.319 Fully embedding these new materials
Running.315 into supply chains remains a challenge, however —
Sourcing and production: As upstream supply- Renewcell recently cited slower-than-expected sales
chain activities account for the majority of carbon of its cellulosic pulp to fibre producers.320
emissions in apparel, there may be a sharper focus on
A Greener Horizon
decarbonising material and garment production.316
In the production process, main decarbonisation While regulations are being finalised, brands need
levers include energy efficiency and energy transition to capitalise on this grace period to get ahead.
initiatives. As brands shift to more sustainable Regulatory competence is a critical muscle brands
materials, they may look for new suppliers or need to build and is one that few have today. And
join strategic alliances. Kering, for example, has given the fundamental challenge regulation poses to
established supplier-focused sourcing standards and some segments, such as fast fashion, procrastination
created the Material Innovation Lab dedicated to the is ill-advised.
sourcing of sustainable materials and fabrics,317 while Brands should consider establishing a squad
Hermès has partnered with start-up MycoWorks’ to of regulatory experts. This squad can review the
secure access to its engineered mycelium.318 laws relevant to the business, conduct materiality
Design: New requirements for circularity are assessments and advise on implications for the
expected to shake up the design process. For example, organisation. However, regulation ultimately cannot
a focus on longevity and durability may demand fresh be outsourced to a single team. All C-suite executives
attention to details such as stitching and seams. need to build knowledge, align strategies within
Equally, materials that cannot be separated in the regulatory programme, identify capabilities
recycling may need to be avoided, meaning designers and tools required for change, and disseminate
may need to think more creatively about design knowledge across respective departments.
choices. Design libraries may increasingly support Additionally, brands should consider viewing
material selection, while 3D sampling may reduce regulation as an opportunity rather than a threat.
use of resources. Packaging design is also impacted, For example, regulation may spur demand for certain
with new rules emerging around composition of materials, creating supply and peaking demand. This
labels and tags and elimination of single-use plastics. could be transformed into a competitive advantage by
End-of-life waste: To minimise production strategically gaining access to innovative materials
and waste, new business models are coming to in short supply.
the fore. Resale continues to grow through brand Finally, industry associations and trade groups,
partnerships with secondhand marketplaces, such such as the Council of Fashion Designers of America
as The RealReal or Vestiaire Collective. In-house or the European Fashion Alliance, have a major role
programmes offering resale, rental and repair are to play in shaping policy. Corporate leaders should
gaining traction as well. There is also an opportunity consider engaging with such groups, contributing
to accelerate closed-loop recycling. Stockholm-based to discussions and galvanising stakeholders to
Renewcell is ramping up the world’s first at-scale co-create effective regulation between policy makers
fibre-to-fibre recycling factory. In partnership and the industry.
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Fashion System
EXECUTIVE INTERVIEW
Rachel Arthur:
How the UN Wants
Brands to Sell
Sustainability
By Sarah Kent
I
n June 2023, the United Typically, a piece of work like Then we start moving into areas
Nations published a report that would lead to a consumer-facing that are newer, and I think typically
with a radical message for campaign on the need for greater where the communication
fashion brands: stop pushing sustainability within the fashion sector professional has more of a forte
overconsumption.324 [or] more sustainable consumption. or skill set that can be brought to
“The Sustainable Fashion Actually, the outcome from strategy the table that hasn’t existed here
Communication Playbook” was that while that kind of work previously. This is where we’re
published by the United Nations was possible and viable and could looking at culture change.
Environment Programme and be considered necessary, there We clearly call out that we
UN-backed Fashion Industry seemed to be a much more powerful need to eradicate messages of
Charter for Climate Action took lever to consider, not just looking at overconsumption. This is probably
aim at the core of fashion’s business, what consumers could do, but why the heaviest area [of what we are
examining the role marketing consumers were consuming in the outlining] in terms of complexity
plays in driving the cycle of way that they were. in practice. Marketers are ‘KPI’d’
overproduction and overconsumption That comes down to primarily on how much they can sell, so this
that underpins the industry’s the brands and then the media, is going against that logic.
environmental impact.325 and the ecosystem that surrounds But we really present positive
It’s an issue signatories to the them. The industry is so good solutions. We’re not trying to do
UN Fashion Charter, who include at creating desire. But we’re away with fashion as it exists,
many of the world’s biggest brands, making people fall in love with but change the focus of it. From a
have pledged to tackle. But it something that isn’t serving us marketer’s standpoint, it’s about
also strikes at the heart of one of on a planetary basis. The primary saying, how can we put more of our
fashion’s biggest sustainability message put forward is based effort, energy, creativity, budget
hurdles: businesses geared towards on a linear economic model and towards circular solutions?
driving more consumption will on messages fundamentally of
Can you outline what you mean
always be part of the problem. overconsumption.
by circular solutions?
Increasingly, regulators are These job functions need
looking to tackle the challenge to be part of this conversation. Ultimately, you’ve got to start
from various angles, looking at Communication needs to be with people buying less, but then
ways to make brands responsible aligned to sustainability. The you might look at other ways of
for textile waste and incentivise playbook basically is the “how.” consumption — resale, rental,
designing for long life and keeping what you’ve got for longer,
What are the key recommendations?
circularity. But the role marketing so the repair market, with the last
plays has been overlooked, said Basically, there’s a role for marketing, thing on the list being recycling
Rachel Arthur, a sustainability there’s a role for storytelling. before you buy something that’s
strategist and sustainable fashion Brands need to make sure that completely new and unsustainable.
advocacy lead at UNEP. everything they’re doing in There’s a lot of room within that
That needs to change, but that sustainability is matched by what for exploration, creativity.
doesn’t mean the end of fashion, it they’re putting out in the world. And it is important here to
just means a new focus, she said. Within the playbook, we spell recognise that there isn’t one size
that out, with [a set of] pillars of work. fits all. Sustainable consumption
Rachel, you spearheaded the
First, how do we ensure we’re looks different in different
playbook project. Why did you feel
not greenwashing or putting markets. In some markets, we
like this was the thing to focus on?
forward anything in the way of know that basic needs still need
This started on the UNEP side with misinformation? I’d say that’s kind to be met, so we’re not asking for
a piece of work that was looking at of table stakes. This is not new to reduction in consumption as a
the role of communication to help the industry, but unpacking it is blanket global view.
drive change and inspire action quite complex and it’s evolving fast [But] the third section is about
within the industry. as more policy comes in. ‘reimagine values,’ and this section
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Fashion System
could underpin all of it. We’re is interesting starting to think of unsustainable production.
trying to inspire people to think about what that could look like The waste side of things is a very
and aspire to something different. from a sustainable consumption interesting lever. We have to
We call [fashion marketers] standpoint and what might be recognise in this conversation
‘architects of desire,’ so how can indeed possible within all of that. around overconsumption just how
we redirect aspiration towards The fourth section of the much waste there is in terms of the
sustainable lifestyles? [playbook’s] principles is called stuff that was [never sold].
‘drive advocacy.’ It looks at a What we also really need to see
You’ve already alluded to the
couple of lenses. Obviously, how is incentives for businesses around
tension underlying this work:
do we push for greater education doing ‘the right thing.’ On the one
you’re essentially trying to
from a broad consumer-based hand, that’s [encouraging the use
encourage marketers to start
standpoint? Within that, of ] sustainable preferred materials
selling something that is at odds
we talk about the internal lever so consumption that is happening
with their current KPIs and
that communicators can help is less impactful, but also do we
where it’s not clear what the
play to help ensure that there’s push for circular solutions to be more
business model is. How does this
accountability for change within easily facilitated or incentivised?
fit with broader conversations
the business. Also [they can] I’m not sure that we’re seeing that
around sustainability?
help play a role within the policy play out fully as yet but I think all of
It is the elephant in the room. I landscape, recognising that a lot those things combined — which we
think most businesses along that of these businesses are incredibly know is not going to happen overnight
sustainability journey now recognise powerful and that there could — would be incredibly beneficial.
that, but that doesn’t mean they’re be an opportunity from a very
Are things missing from the
yet willing to address it at the board competitive standpoint to advocate
conversation, and in particular
level or the senior executive level. for wider change that facilitates
the policy conversation?
This is new, not in the sense sustainability in a wider sense.
that nobody knows about it, but it’s This elephant in the room around
How do you see the regulatory
not yet been a true conversation. production levels and volume.
landscape at the moment?
What we have been trying to do It’s really interesting to think
with the playbook is to say this There’s so many things going about what that looks like at a
needs to be on the table. on within the policy landscape, policy level. While we see certain
It’s not on the shoulders of which are interesting, potentially regions looking at reducing, for
those who work in a communication exciting, highly complex and instance, fast fashion, I think
capacity, of course, but if you look bewildering for a lot of the there’s a much bigger picture that
at the bigger picture of what the industry to get their head around. isn’t necessarily in there, which is
playbook is talking about, it is The green claims side of things, looking at consumption behaviour,
addressing the system’s challenge, the industry is kind of ready for and how that’s perpetuated by an
which is to say that we can push as it. Everybody just wants that overproduction model and how we
hard as we possibly want with all of guidance. Yes, there are going to look at that holistically in terms
the evolution that is needed, but we be hurdles to actually get people of the way that businesses are
won’t get anywhere within that if on the right page, but just having measured on success.
we don’t also look at volume. black and white, ‘this is what you Lastly, the area that we don’t
can and this is what you can’t do,’ include as much as we should is
When we talk about systems,
it’s going to be really helpful for around the worker side. How do
regulation often comes up as
everybody. And it also helps level we ensure that garment workers
a lever for change. What role
the playing field. are being paid a living wage or
should policy play?
In a wider sense, I think we’re the right amount for what they’re
We’re seeing policy come down at an interesting juncture in terms creating. What does that look like
the line that is focused on the of policymakers recognising this in a world of creating less?
green claim side of things, but it role of consumption as a result This interview has been edited and condensed.
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The State of Fashion 2024
10.
Bullwhip
Snaps Back
Changes in consumer demand have resulted in the
“bullwhip effect,” where cuts to orders increase
in magnitude at different parts of a supply chain,
putting pressure on fashion’s suppliers. Now, if supply
is to keep pace with anticipated renewed demand,
brands and retailers should consider focusing on
transparency and bolstering strategic partnerships.
KEY INSIGHTS
98
Fashion System
Exhibit 19
Consumers
and brands Suppliers
0 to �5
�20 to �30
�30 to �40
�50+
1 Approximate changes in order demand as proxied by export trade data from seven top textile
producing markets: China, Hong Kong, Germany, Italy, India, Pakistan, Turkey. Includes cotton and
synthetic fabrics, yarns and fibers
Far from resolving in 2024, the fashion industry’s production and decreasing order volumes — often
supply-chain volatility of the past few years is driven by communication gaps and forecasting
set to continue. Upstream apparel suppliers inaccuracies.
and manufacturers have undergone significant The bullwhip effect reached fashion in 2020
disruption, where changes in consumer demand and 2021 as retailers contended with pandemic-
have resulted recently in a sharp decline in factory related disruptions when products arrived late
utilisation, widespread layoffs, and delayed and overcompensated for inventory shortages by
investments. As brands and retailers look to scale up ordering too much stock. When post-pandemic
capacity to meet renewed demand, they may start to inflationary pressures and economic uncertainty
feel the repercussions of recent upstream strains. arose in the second half of 2022, making consumers
This turmoil is known as the “bullwhip effect,”326 more cautious than anticipated, retailers were left
a phenomenon where changes in consumer demand with billions of dollars in unsold goods.327 As a result,
escalate across the value chain. In the case of fashion, many orders for the upcoming 2023 season were
changes in consumer demand are magnified at reduced or cancelled.
each step from retailers to garment manufacturers The pullback has disproportionately impacted
to yarn and raw material suppliers. In the face upstream suppliers. Across seven of the world’s
of falling demand, each part of the supply chain biggest textile exporting countries, fabric exports
overcompensates by reducing forecasts, lowering dropped nearly 20 percent in the last quarter of 2022
99
A production line at a textile factory in China. Zhao Qirui/Getty Images.
compared to the year prior, followed by a 40 percent textile-producing countries. For starters, a large
drop in yarn exports in the first quarter of 2023.328 share of textile and garment workers live on low
Factories that were at full capacity in 2021 may have wages and have little if any savings to fall back
been operating at 30 percent to 40 percent below on. Today, the increased stress on factories could
capacity in 2023, according to industry experts.329 increase the risk of labour abuses, such as wage theft
It’s a similar story for textile machinery players. and union busting.
Swiss manufacturer Rieter reported a 63 percent In China, the world’s largest textile producer,
year-on-year drop in orders in the first half of 2023, the number of worker strikes and protests rose in
citing weakening demand for spinning technology.330 2023.334 According to the China Labour Bulletin,
Smaller manufacturers with limited resources more than 700 factory strikes in the first half of
have been the most affected. The managing director 2023 took place, compared to 800 in all of 2022. In
of a manufacturer in Pakistan estimated that as much Pakistan, loss of cotton crops from floods, shifts in
as 30 percent of the country’s textile factories have production and lower exports contributed to over
closed.331 In India, spinning mills have requested one million of its eight million textile workers losing
aid from the government,332 while many operate at jobs. Textile employment levels also fell by tens of
a loss.333 Other manufacturing hotspots such as Sri thousands in key markets such as Bangladesh, Sri
Lanka and Vietnam have entirely shut operations in Lanka, Cambodia and Turkey in 2023.335
some factories. This supply-chain volatility is not expected to
subside in the near term. A McKinsey survey of chief
The Bullwhip Snaps
procurement officers (CPOs) in September 2023
The bullwhip effect has only made more urgent found that 73 percent believe demand volatility
the humanitarian crisis occurring within will be one of the top challenges to affect supplier
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Fashion System
relationships over the next five years.336 However, With sustainability regulations coming into effect
the third quarter of 2024 is the earliest that textile in the EU and elsewhere that mandate companies
factories might see some capacity improvement.337 disclose environmental impacts in their supply
But even then, the consequences of the bullwhip chains, and the push from investors for companies
effect may continue to linger. Layoffs and delayed to disclose data about scope three emissions (that is,
investments may mean the industry is insufficiently indirect emissions),343 the risk may only increase for
prepared to scale up capacity quickly. brands and retailers.
Worker displacement and skills loss may create
Navigating Disruption
major challenges for the industry. In Vietnam,
for example, competition for qualified labour is In the year ahead, brands might consider placing
intensifying with other industries — suppliers to greater emphasis on making their supply chains
Apple, Lego and automotive players are among those more resilient to mitigate future risks. First and
expanding operations and attracting former textile foremost, transparency and communication among
workers in the country.338 Factories short on staff all stakeholders in the supply chain will likely
and dealing with hiring and training new employees be paramount in facilitating better information-
could face longer production timelines. sharing and joint demand forecasting. According to
Brands and retailers not prepared for these shifts McKinsey’s survey, 70 percent of chief procurement
could incur higher expenses to compensate for the officers believe that improving demand transparency
potential delays. For example, they may need to pay with suppliers through systems and processes is
for expedited shipping, overtime work or additional critical in navigating market turmoil.344
warehouse space. Those that try to rush production Cultivating strategic partnerships with key
face other costs, such as increased quality issues that suppliers could also be considered and could include
can damage a company’s reputation with consumers. longer term contracts with not only direct suppliers,
Many companies are rethinking their supply but also tier two, tier three and tier four partners
chains to de-risk manufacturing. According to that are vital to a business. One potential benefit of
McKinsey’s CPO survey, 54 percent of executives such a long-term commitment is that it can provide
expect to increase reshoring or nearshoring in a supplier with cash flow to invest in industrial
2024.339 Others are thinking about rebalancing and sustainability improvements at its facilities,
their sourcing footprint by sourcing from multiple according to Florian Heubrandner, executive vice
countries. However, these approaches are not president of global textiles at Lenzing, a wood-based
without challenges. Finding and contracting new cellulosic fibre manufacturer.
suppliers, or partnering more closely with existing Brands should also continue to actively
strategic ones, can be costly. Companies can also champion workers’ rights. This includes ensuring
run into manufacturing limitations compared to fair wages, job protection, safe working conditions
traditional sourcing hubs or face new regulatory and and opportunities for professional development
compliance factors. for factory workers. Beyond enabling two-way
Another consequence of the slowdown is that communication with suppliers about this, companies
suppliers have fallen behind in critical investments in can take steps on their own. Adidas, among other
new infrastructure for both speed and sustainability. companies, has established a worker hotline to
More than 70 percent of fashion’s greenhouse gas enable workers to voice complaints that it can then
emissions stem from upstream activities, such work to resolve.345 Similar initiatives include PVH’s,
as producing and finishing textiles.340 Yet, textile which includes setting up representative workplace
players say costs are high for upgrading machinery committees for all workers employed by key suppliers
or adopting greener practices.341 Without a steady by 2025.346
stream of orders, they are postponing capital The upheavals of recent years have made clear
expenditure on such initiatives. Unifi, a US-based that fashion companies and their suppliers not only
manufacturer of recycled and synthetic fibres, has depend on each other to succeed, but also endure
delayed machinery replacements from 2024 to 2026 challenges together. 2024 will likely provide further
to offset slowing demand.342 evidence as to why.
101
The State of Fashion 2024
EXECUTIVE INTERVIEW
PVH Corp:
Transforming Supply
Chains Through Trust
and Transparency
By Janet Kersnar
T
“ hey thrive, we thrive” is a with? Why do you work with how much more systematic and
catchphrase that captures them? What’s the value that we granular we need to be when we
David Savman’s approach bring to the table? What’s our look at demand planning, supply
to running PVH’s supply chain. common goal? Are we equally planning, inventory management,
Since leaving H&M in 2022 to vested in what we’re going after? It regardless [of where we are based].
become the chief supply chain becomes much more obvious that Each and every one of us has to be
officer of the US owner of Tommy it is a win-win relationship [when sharper [in all those areas], with
Hilfiger and Calvin Klein, Savman both partners] have answers supply models that are more agile,
has put relationships front and to those questions [that align]. precise and diverse than before
centre across a supply chain that It’s part of a transformation in — everyone needs allocation
relies on around 300 garment the way we think about supply- algorithms that are flexible.
manufacturers in approximately chain partnerships for the last
You’ve mentioned inventory
30 countries, building on PVH 10 years, but the pandemic really
— how should companies
initiatives such as its first supply- accelerated that.
be thinking of inventory
chain financing programme that Even if you run your own
management in the year ahead?
provides suppliers with better company in a good way, there are
financing rates based on their still fluctuations in the market thatI think what the industry needs,
sustainability performance. affects the whole market, right? and what we’re doing a lot at
As he explains, having strong We want to be transparent both in PVH, is [creating a mindset that]
relationships across a supply chain terms of being up-front and candid inventory is the most valuable
“is the way we do business; it gives about what we see changing, but asset we have, not only from a
you a possibility to stand ready also having frequent data flows to financial perspective, but also in
when whatever happens.” make sure we have the same view terms of where capital is employed.
of reality all the time. Of course, … You can’t afford today to not
After the turbulence caused
that’s not super easy on a day-to- make amazing products, at least
by the Covid-19 pandemic,
day basis due to a lot of reasons. not from where we stand. You
how would you characterise
also cannot afford to not be very
the impact on supply-chain In terms of the day to day,
granular in your demand planning,
relationships between brands, what are you doing to ensure
in your inventory planning, in
retailers and their suppliers? the transformation you’ve
your supply models, and really
mentioned continues to happen?
It became clear during the treat your inventory as the most
pandemic which relationships I’ve been in this industry and in precious thing you have. That’s
were really strategically strong, this field for many, many years. I where you put all your effort, your
transparent and reliable, and don’t think I’ve ever spoken to creativity. That’s how your brand
which ones were not. It is also clear suppliers as much as I have in comes to life with the consumer.
that the suppliers that were able to the last 10 months, first [because It’s also how you run a sustainable,
use their relationships with brands of ] being brand new at PVH, but efficient business model around a
and retailers to find more-[long- also to build on what I’m hearing fashion retailer.
term] solutions are the ones now [about] what are their pain points,
Where will the conversations
working with the best [partners] what works for them, what doesn’t
around offshoring, nearshoring
in the market. There are a lot of work for them. How do we do this
and onshoring head?
brands and retailers out there, better? What is it that’s important
[and] it’s much more important for them to know? When do they The important part of this is to ask
for everyone to work with strong actually need to know it? why you do it, and that comes back
business partners from whatever What has surprised me to treating inventory as one of the
side. through all of the conversations most important things you have.
Both suppliers and retailers is seeing that there is still a big To be able to have good inventory,
are more cautious in how each of upside for the fashion retail take care of that inventory, make
us progresses. Who do you work industry to take bigger steps in it available to your consumer and
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The State of Fashion 2024
be responsive, you need to have or not. Probably. [But] it’s what strong strategic relationship, you
production in different parts of the the consumer wants. It’s what trust that what I say is accurate.
world. We are a global company. So, the store associates and your Therefore, you won’t add 20 percent,
it’s going to be nearshore to one [other] staff want. It is what the or you won’t remove 20 percent,
market and far away from another shareholders and the financial from your operations. In contrast,
one. markets want. We all want it to if you don’t trust me and you do
I think that the [terms] move as quickly as possible, so if add upside or remove downside,
nearshoring and onshoring anyone has managed to accelerate the next level will do the same.
are a bit un-modern in a global it, that’s … a positive thing. The problem is when you don’t
company. Does a global brand like No one in this industry wants have this, they’re sitting blind, and
PVH need a multiple country- to hide where our fibres are then if all of a sudden demand
of-origin sourcing strategy to be from. That doesn’t exist. It’s just totally disappears, or triples, they
able to run great availability with a complex thing. It’s how it has struggle to handle it, and this
less inventory? Absolutely. Does built up for hundreds of years. … It will impact their employees. The
it involve asking, ‘Am I going to doesn’t come from bad intention, solution is based on better data
nearshore?’ No. But it’s still a but now when we go back, there and integrated systems, but it’s
valid point that you need a diverse is untangling to do. A lot of them also based on something as simple
sourcing strategy, especially if have already been done, and a lot as trust, and making sure that
you’re a brand active in every part of these technologies will help. you do what you say you’re going
of the world. to, if you do that over and over ...
There’s the critical human
they’re with you on that journey.
For companies like PVH with side of the supply chain that
That builds the possibility for
supply chains that are global, often doesn’t get discussed
them to continue to grow their
a key part of sustainability — as much as it should. What
business. It’s like it’s the absolutely
being able to trace where fibres can executives of retailers
best thing that can happen to us,
and materials are sourced and brands do to uphold
that our suppliers continue to
— is even more complex given social rights in supply chains,
thrive, and invest in innovation,
the amount of information regardless of economic cycles
sustainable solutions, circularity,
that needs to flow through or headwinds that we might be
technology and so on. The day they
multiple supply-chain tiers. facing in 2024?
don’t, then I’m troubled.
Technology advances have
The answer is to run a much more
helped, including the use of This interview has been edited and condensed.
granular, precise supply chain. If I
blockchain. But would you say
go to my biggest suppliers and say,
advances in traceability and
‘Here is how we see it, and we’re
other moves towards more
going to update you, and I’m going
supply-chain sustainability
to do it on each and every level of
would be accelerating now if it
the supply chain,’ I know that [the
weren’t for regulators pressing
impact of any consumer demand
for change?
shifts] is going to be smaller
It’s a tough question to answer. for everyone. If we talk to each
I don’t know if it’s accelerated other often enough and we have a
104
McKinsey
Global
Fashion
Index
The State of Fashion 2024
Resilience Buoyed
by Luxury
The fashion industry demonstrated remarkable
resilience in 2022. The luxury segment in particular
propelled growth through price increases, offsetting
the weaknesses of other segments. However, the
future remains unclear against a backdrop of ongoing
headwinds, from geopolitical tensions, inflationary
pressures and slumping consumer confidence to the
Chinese economy’s slower-than-expected recovery.
KEY INSIGHTS
• After a record 2021, industry economic profit stabilised at similar levels in 2022, with
macro challenges offset by strong revenues and cost discipline which protected
margins.
• Excluding luxury and affordable luxury, however, the industry’s 2022 performance
would have been negative, with the mid-market segment particularly under pressure.
In luxury, there were also clear winners: about 98 percent of the luxury segment’s total
economic profit was generated by the four largest players.
• Value creators outnumbered value destroyers for the second year in a row. However,
there are signs of increased polarisation, with the industry’s “Super Winners”
increasing their share of economic profit from 84 percent to 99 percent.
• In this year’s list of Super Winners, luxury group LVMH rose to the number one spot.
Sportswear players continued to perform strongly amid a reshuffling of the pack, led
by Nike in second place.
106
McKinsey Global Fashion Index
Exhibit 20
YoY economic
profit change, %
0 4 −7 −12 −17 −24 42 24 −14 −198 371 −6
215
203
−79
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
EBITA
11.5 11.5 11.5 11.3 11.1 10.7 10.3 10.5 10.8 10.3 6.2 12.3 11.9
margin, %
N 313 333 342 352 355 359 366 372 382 382 368 362 354
107
The State of Fashion 2024
Exhibit 21
90 52
42 −20%
+36%
23
66 5 4 5 +10%
Mid-market Value/discount
the assets required to generate income, decreased three years (2019-2022) suggests that high levels of
6 percent compared to 2019, despite a significant EP can be largely attributed to margin performance.
increase in revenues of 12 percent. Decision makers McKinsey’s sensitivity analysis shows that margin
were hesitant to commit to significant investments, was twice as important as capital turn in shaping
resulting in a relatively modest 4 percent increase in EP trajectory. A 1.3 percentage point improvement
capital investment since 2019. in margins from 2019 to 2022 was the main driver
The key to the industry’s relatively strong sustaining the current elevated EP levels.
performance in 2022 was pricing-led growth. The
Luxury on Top
luxury segment in particular showed that it can raise
prices without significantly impacting demand.347 In a year of economic challenges and accelerating
Large players were most proficient at managing these inflation, only two segments were able to improve
price rises. However, price adjustments were not on their performance in 2021. Luxury and affordable
restricted to the top end of the market. Companies luxury saw average EP rise 36 percent and 10
including Inditex and Uniqlo have shown that percent respectively — a result reflecting successful
implementing well-managed pricing strategies can repricing strategies and the resilient spending power
effectively support profitability.348 349 of higher-income consumers. Due to the uncertain
Our analysis of industry dynamics over the past environment, shopping behaviours have further
108
McKinsey Global Fashion Index
Exhibit 22
0 2 4 6 8 10 12 14 16 18 20 22 24 26
diverged, with high-income shoppers broadly bridge and value/discount also outperformed their
maintaining their spending on fashion while lower- long-term averages but by smaller amounts.
income consumers cut discretionary spending.350 It is While affordable luxury recorded a 10 percent
worth noting that while affordable luxury improved EP gain in 2022, the segment was unable to improve
its year-on-year EP, the segment only amounts on its 2010-2018 average. Luxury, however, reached
to a small portion of the market. Meanwhile, the new highs, more than quadrupling its long-term
premium/bridge, mid-market and value/discount 2010-2018 average. Luxury now accounts for nearly
segments suffered. half of the industry’s total EP, with an EP index of
In a bell curve pattern, the extremes of premium/ 90. Its performance would have been even more
bridge and value/discount suffered less than the exceptional if online pure players were omitted from
middle ground, seeing 20 percent declines in EP the analysis. These pure players generally posted
compared with a mid-market EP decline of 34 negative or much lower levels of EP. Meanwhile,
percent (including Inditex) and 64 percent (excluding premium/bridge and mid-market produced an EP
Inditex). That said, the mid-market still produced index of 42 and 37 respectively, while value/discount
more EP in aggregate than its long-term average, achieved 30.
recording an EP index level of 37, compared with Among individual luxury companies, LVMH
15 on average between 2010 and 2018. Premium/ posted a record performance, with revenue of €79.2
109
The State of Fashion 2024
Exhibit 23
Top 20% 21–80% Bottom 20% Luxury has experienced extremely rapid
growth in recent years, and its EP is now six
times 2010 levels, accounting for 44 percent
of the industry’s total. This growth trajectory
continued in 2022, with luxury EP growing
36 percent, spurred by record EBITA margins
217 of 25 percent. Still, growth is expected to
173 190
162 stabilise amid macroeconomic headwinds
115 118 125
and slower growth in China.
-3 1 0 −10 7 5
−62 −39 −25 −30 EP in luxury (including publicly listed
−73 −80
−114 companies only) is driven by just four players:
−176 LVMH, Hermès, Richemont and Kering. These
powerhouses accounted for 98 percent of
the segment’s EP in 2022, although the first
signs of growth normalisation are beginning
2016 2017 2018 2019 2020 2021 2022 to emerge in 2023.371 Of the four, Kering
recorded the smallest EP growth.
Source: McKinsey Global Fashion Index
billion (approximately $83 billion) and profit from Value Creation and Destruction
recurring operations of €21.1 billion ($22 billion),
To be sure, the fashion industry has had to contend
both up 23 percent year on year.351 Hermès also
with myriad challenges in recent years. Even before
had an exceptional year, with a 29 percent increase
the pandemic, a relatively small group of players
in revenue.352 These results partially reflected the
was responsible for generating the majority of EP.
primacy of companies that were able to secure higher
The pandemic led to weaker performance across the
prices while maintaining strong demand.
board, albeit with exceptions. Now, there are signs of a
The strong performance of the luxury segment
return to the traditional pattern of polarisation, with
was evident in both margins and revenues. Luxury’s
the top 20 percent of companies driving industry
average adjusted EBITA margin widened from
EP. This group saw a slight increase in overall profit
the pre-pandemic historical average by about 5
contribution of 4 percentage points, accounting for
percentage points, and 1 percentage point from
125 percent of the industry’s EP at the end of 2022.
2021, to 25.2 percent. This was on the back of an
Meanwhile, the bottom 20 percent accounted
18 percent increase in revenues, driven partly by
for most of the industry’s losses, equivalent to an
price increases. Elsewhere, margins held steady or
EP of negative 30 percent compared to negative 25
were slightly narrower. For example, mid-market
percent in 2021. Still, the cohort was significantly
margins contracted to 8.3 percent from 9.7 percent
less value destructive than pre-pandemic, with an
the previous year. Value/discount margins of 9.5
improvement of approximately 50 percentage points
percent were about 2 percentage points lower
since 2019. In the middle, a small amount of EP (5
than pre-pandemic, partly driven by strong price
percent of the distribution) was produced by 60
competition and increases in the cost of goods sold.
percent of companies.
110
McKinsey Global Fashion Index
The long-term trend in the fashion industry Americas.354 Kering was seventh and Tapestry rose
has been that there are more value destroyers than 13 places to 16th.
value creators. In 2021, that started to change as Leisure and sportswear brands saw positive
value destroyers faltered, resulting in bankruptcies, momentum as consumers continued to prioritise
mergers and acquisitions. The proportion of value healthy lifestyles. However, with more people
destroyers fell to 45 percent, compared to 68 percent returning to the office as well as spending time
in 2020, marking the first year since 2014 that outdoors, the picture was slightly more mixed than
creators outnumbered destroyers. In the most recent last year. China’s Anta moved from ninth to 11th
financial year, the new equilibrium remained stable, place. On the flipside, Lululemon rose from 11th to
with destroyers accounting for a share only slightly 10th position, boosted by a net revenue increase
higher than the previous year at 47 percent. Luxury of 30 percent, attributed to product innovation, a
and affordable luxury saw the highest number of focus on consumer experiences and strategic market
new value creators, while the mid-market saw the expansion.355 Retailers including Dicks Sporting
highest number of new value destroyers. Prada is Goods and JD Sports remained on the list, with the
an example of a new value creator, with a 21 percent former holding steady in 12th place, while JD moved
increase in revenues in 2022 driven by growing down four places to 19th.
brand momentum, particularly for youth-focused Elsewhere, the past year saw strong performance
Miu Miu.353 However, mid-market players accounted by off-price multi-brand retailers, including TJX
for about 50 percent of the value destruction in 2022. Companies and Ross. TJX remained in sixth place on
In 2022, the top 20 companies saw EP levels rise the Super Winners, and Ross was ninth, rising from
on aggregate, and the group continued to have an eighth place last year.
outsized impact on overall EP. But of the 99 percent Macy’s was the biggest mover in the group, rising
of EP attributable to the top 20, 81 percent was 321 places to secure the 20th spot on the list. Four
generated by the top 10. That said, value creators other new entrants also made the list, including
outside the top 20 contributed more to EP than they American department store Dillard’s climbing 21
did for most of the past decade. Meanwhile, value places to claim the 13th position. These department
destroyers were proportionately less destructive, stores experienced a strong rebound post-pandemic
with a similar EP level to previous years representing in 2021, reflecting consumers’ eagerness to return
a smaller proportion of total EP. to in-person shopping after lockdowns and social
distancing measures were lifted. However, despite
Super Winners
a range of actions taken by department stores,
It is no secret that fashion is a winner-takes-all including Macy’s restructuring efforts announced
industry, with the top companies dominating in 2020356 and Dillard’s tight inventory control
the global value pool. This year, our list of Super strategy,357 the business model remains challenged,
Winners contains five new entrants, reflecting with many experiencing a growth slowdown or even
shifts in consumer behaviour after the Covid-19 decline in sales during the financial year 2022. New
pandemic. Meanwhile, four of the top seven are entrant Tapestry climbed 13 places to 16th, with
luxury companies, highlighting the importance of performance attributed to the momentum of its
the segment. Also, sportswear saw a recalibration key brands such as Coach and Kate Spade as well
while some retailers rebounded. as the execution of its “acceleration programme”
In the luxury segment, LVMH was the standout to cut costs and improve margins.358 359 Footwear
performer, rising one place to take the top spot, manufacturer Crocs reached 17th place, climbing
achieving significant growth particularly in its from 24th last year, after record 2022 revenues as
fashion and leather goods category in Europe, US and a result of exceptional demand for the Crocs and
Japan. The next-best performing luxury player was Heydude brands.360 Lastly, Signet Jewelers, the
Hermès, which rose from fifth to fourth place due world’s largest diamond jewellery retailer, saw a
to its strong performance in international markets, significant 50 percent increase in fiscal 2022 sales,
while Richemont jumped three places to fifth, driven by a 56 percent growth in brick-and-mortar
with growth driven by momentum in retail and the sales, resulting in an upward move from 33rd to 18th
111
The State of Fashion 2024
Exhibit 24
LVMH1 7,376 +1
Nike 3,801 −1
Hermès 3,084 +1
Kering 2,344 −3
Ross 1,178 +1
Lululemon 1,041 +1
Anta 961 −2
Next 637 −1
Pandora 609 −1
Crocs 554 +7
JD Sports 509 −4
112
McKinsey Global Fashion Index
113
The State of Fashion 2024
Segment Deep Dive: 17 percent growth in the first half of 2023 and
Online Pure Players Hermès 25 percent.364 Outside the Super Winner
list, Prada, Hugo Boss and Moncler posted revenue
After 2021’s highs, the online pure play gains of 20 percent, 22 percent and 24 percent
segment came down to earth with a bump.
respectively.365 However, the luxury industry
In 2022, the online market stagnated or
appears to be experiencing growth normalisation
contracted in some regions, exposing players
driven by signs of a slowdown in the US and tighter
that were previously lauded for their focus
on growth rather than profitability. Amid high
economic conditions in China. LVMH announced its
interest rates and investor demands, online third quarter results in October 2023, resulting in a
pure players have shifted their focus from share price drop of 7 percent, putting the share price
growth and market share gains to improving down almost 25 percent since April. Luxury groups
their bottom lines. Luxury specialists such as Kering and Richemont also felt the impact, falling
MyTheresa and Farfetch faced bottom-line more than 2 percent and 4 percent, respectively.366
challenges, despite the growth of the luxury 367
Sportswear also showed signs of resilience. On,
market. Meanwhile, mass-market businesses Asics and Lululemon reported second quarter 2023
such as Boohoo, Zalando, Asos and About You
revenues of 52 percent, 29 percent and 18 percent
posted negative EP, amid intense competition
respectively.368 Sportswear giant Nike saw better-
from third-generation fast-fashion players
than-expected first quarter results in September
such as Temu and Shein.373 Other headwinds
included inventory pressures, supply chain
2023, indicating that demand remains strong despite
disruptions and high return rates. consumer challenges.369 Meanwhile, travel is high
on consumer agendas, reflecting a post-pandemic
appetite for new experiences. As a result, luggage
some companies from falling into an inventory trap. specialist Samsonite had a good first half, seeing
With year-on-year revenues under pressure in 2022, revenue gains of 40 percent compared to 2022.370
inventories expanded in the third quarter without One reassuring trend is that the industry has
declining materially by the end of the year. been able to maintain its margins, which averaged
15 percent in the first half of 2023 (for unadjusted
On the Horizon
EBITA) — just 0.2 percentage points lower than the
In the coming year, the dampening effect of the year prior. Again, luxury was the primary driver of
economic environment on consumer sentiment will performance, sustaining average margins of more
likely continue. This will put pressure on brands to than 25 percent. In other segments, average margins
deliver value for money, as well as standout customer were around 11 percent. Analysts expect margins
experiences. Meanwhile, China’s slower-than- to hold steady over the remainder of 2023 and into
expected recovery suggests a persistent constraint 2024. However, this comes with a warning that the
on demand. recovery is fragile.
At the time of writing, the macroeconomic Based on revenue and profitability trajectories,
situation is in a state of flux. There are tentative signs and our review of expert analysis, the most likely
that the worst of the post-pandemic effects is abating, path forward is for the industry to hold steady over
and inflation is softening in many economies. the coming period. That means the MGFI cohort will
However, uncertainty looms large; as recent likely broadly maintain EP levels thanks to a strong
geopolitical conflicts unfold, inflation is still high by luxury segment. However, the current uncertain
historical standards and consumer wallets remain economic environment could potentially lead to
squeezed.363 Across the MGFI cohort, revenues grew further deterioration in performance before the end
5 percent year on year in the first half of 2023. Again, of the year, putting struggling players under even
the strongest performers were in the luxury segment, greater pressure, further increasing EP polarisation.
which saw 14 percent growth, while the mid-market,
premium/bridge and value/discount segments
managed just 3 percent.
Among luxury Super Winners, LVMH reported
114
McKinsey Global Fashion Index
Exhibit 25
EP created by value creators, excl. EP from top 20 EP is highly concentrated at the top.
Out of the 99%, 81% is contributed by the top 10
EP created by value destroyers 215 203
94 182
81 201
105 97 85 76 (84%)
100 71 54 (99%)
Total EP = 100
81 95 98 95 117 122 −79
73 94 90 102 (124%)
(81%) (91%) (100%) (111%) (150%)
(73%) (133%) (167%) (134%)
73 93
46 50 48 48 70
44 38 33 36 44 37 19
−19 −30 −39 −48 −53 −61 −69 −62 −67 −59 −68
−78
−172
Share of 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
companies
that are value
destroyers, % 31 29 36 40 47 52 54 53 54 59 68 45 47
Exhibit 26
19.9
20.0 19.8
19.7
19.8
19.5 19.6 19.5 19.6
19.4
19.5 19.3 19.2
19.3
19.0 19.1
19.0 18.8
18.5
18.0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Yearly
average, 19.1 18.9 18.8 19.3 19.4 21.1 19.6 20.7
%
115
The State of Fashion 2024
GLOSSARY
Affiliate marketing Circularity EBITA G20
A process where an affiliate partner, An economic system aiming to An income statement item that is The group of 20 brings together the
for example an online blog, publishes eliminate waste and pollution, arrived at by deducting amortisation world’s developed and emerging
a link in its channel, promoting a lengthen product lifecycles, promote from earnings before interest and economies that form more than 80
product or service from a merchant, the continual use of resources and taxes, which is an alternative measure percent of global GDP. G20 members
such as a retailer. The affiliate earns a minimise resource inputs. of income a company makes from its include Argentina, Australia, Brazil,
commission for providing a specific core operations. Canada, China, France, Germany,
result, typically a sale, to the merchant. Closed-loop recycling India, Indonesia, Italy, Japan, Mexico,
A process whereby textile product EBITA margin Russia, South Africa, Saudi Arabia,
Artificial intelligence (AI) waste (both post-production and post- A measurement of a company’s EBITA South Korea, Turkey, the UK, the US
Computer systems performing tasks consumer) is recycled into new textile as a percentage of its total revenue. and the EU. (Spain is also invited as a
by mimicking the problem-solving products so that the materials remain permanent guest.)
and decision-making capabilities of in constant circulation (garment-to- Eco-modulation
humans, often used to process large garment). The notion of penalising the Gamification
amounts of data for predictive purposes. use of materials perceived to be The practice of incorporating gaming
Computer vision environmentally harmful, while elements and mechanics, such as collecting
Athleisure A subfield of artificial intelligence rewarding the use of those deemed to points or badges, into retail experiences
A hybrid fashion category that in generative AI, which enables the be better. to influence consumer behaviour.
combines athletic with casual, understanding of visual data (e.g.
everyday styles — for example jogging images, videos). It supports visual Economic profit (EP) General Data Protection
bottoms in athletic fabrics. capabilities such as object recognition, A measure defined as currency- Regulation (GDPR)
image classification and anomaly adjusted Net Operating Profit Less The EU’s law on data protection and
Baby boomers detection, enabling use cases like Adjusted Taxes (NOPLAT) minus privacy, implemented in 2018.
Demographic cohort born circa social media analysis and campaign capital charge (Weighted Average
1946-1964, following the “Silent video creation. Cost of Capital, or WACC, multiplied Generation-Z (Gen-Z)
Generation.” by invested capital). Economic Profit The demographic cohort born circa
Consumer sentiment reflects the economic value created by 1996–2012, following the Millennial
Blockchain A measurement of how optimistic a company’s operating activities and generation.
A digital database containing consumers feel about their finances, investments.
encrypted information that can be the economy and purchasing behaviour. Generative AI (gen AI)
simultaneously used and shared Environmental, social and A type of artificial intelligence
within a large, decentralised, publicly Cost of goods sold (COGS) corporate governance (ESG) that describes machine learning
accessible network. An income statement item reporting investing algorithms capable of generating
the total costs of creating a product or An investment strategy that screens text, images or other forms of media.
BoF-McKinsey State of Fashion service that has been sold. potential investments based on Gen AI can be viewed as a sub-branch
2024 Executive Survey environmental, social and corporate within deep learning, which is a sub-
A proprietary annual joint survey from Covid-19 governance criteria, as well as field in artificial intelligence.
The Business of Fashion and McKinsey Coronavirus disease 2019 is an financial performance.
polling international fashion infectious disease caused by Gorpcore
executives and experts about their severe acute respiratory syndrome EU Strategy for Sustainable and Outerwear designed with both fashion
business sentiment, investment plans coronavirus 2 and was classified as Circular Textiles and utility elements, originally a
and industry trends. For the 2024 a pandemic by the World Health The overarching textiles vision of colloquial term for a trail running
survey, 435 respondents took part Organisation on March 11, 2020. the European Union to achieve snack, “Good Ol’ Raisins and Peanuts.”
between August and October 2023. full product circularity by 2030,
Decarbonisation which includes over several specific Greenhouse gas emissions
BoF-McKinsey State of Fashion The reduction or elimination of directives targeting different points of Greenhouse gases vented to the earth’s
2024 Consumer Survey carbon dioxide emissions from a the value chain. atmosphere as a result of human activity;
A proprietary annual joint survey from process, such as textile manufacturing, includes carbon dioxide and equivalents
The Business of Fashion and McKinsey through low-carbon power sources. Extended Producer Responsibility that can cause climate change.
polling consumers from the US, UK (EPR)
and China to understand consumer Deflation An environmental policy approach Greenwashing
sentiment, purchase behaviour and A reduction in the general level of prices. that holds producers responsible for Communication that suggests
brand attitudes. For the 2024 survey, end-of-life consequences of their goods. a company or its products are
2,955 respondents took part between De minimis tax environmentally friendly in a way
August and October 2023. A law set by national tax officials that First-party (1P) data that is misleading, exaggerated or not
sets a minimum value of imported Data collected from customers via a reflected in overall business practices.
Brand marketing goods before certain custom duties brand or retailer’s own channels (such
Marketing focused on top-of-funnel and tax rates are applied. as a website, app or in store), enabling Gross domestic profit (GDP)
conversion, based on long-term businesses to use data in a privacy- As a measure of economic health, it
strategies that involve continuously Direct-to-consumer (DTC) complaint and cost-effective way. is the total monetary or market value
promoting a brand’s story, identity and Selling products directly to the end of all the finished goods and services
reputation through, for example, in- consumer instead of through third- Foundation models (FMs) produced within a country’s borders in
person events or ad campaigns. party retailers, wholesalers and so on. Large deep learning models trained a specific time period.
on vast quantities of unstructured,
Bullwhip effect Discretionary goods unlabelled data that can be used for Gross merchandise value (GMV)
A supply-chain phenomenon in which Goods that consumers deem are not a wide range of tasks out of the box Also known as gross merchandise
small changes in consumer demand essential, such as travel, dining out or adapted to specific tasks through volume, this metric is the total value
magnify moving up the value chain or entertainment, as well as fashion fine-tuning, powering generative AI of sales generated or facilitated
from retailers to manufacturers. and beauty items, including apparel, capabilities. Examples of these models by a company, including through
footwear and accessories. are GPT-4, PaLM, DALL-E 2 and customer-to-customer or peer-to-
California Consumer Privacy Act Stable Diffusion. peer platforms. GMV is calculated
The state law aimed at enhancing data Dry powder before accrued expenses (such as
protection and privacy that went into Cash or liquid securities that private Freight costs associated with advertising and
effect on Jan. 1, 2020. equity and venture capital funds have Goods transported from place to place marketing, delivery costs, discounts
available for investment. by land, sea or air. and returns) are deducted.
116
Hybrid working Off-price channel Reshoring Unstructured data
A flexible way for employees to split A trading format based on discount The practice of returning the Data that lacks a consistent format
their working hours between an office pricing. Off-price retailers or production and manufacturing of or structure (e.g. text, images and
and their homes. retailers operating off-price channels goods to the company’s original country. audio files) and typically require
are typically independent of more advanced techniques to extract
Influencer marketing manufacturers and buy large volumes Selling, general and insights. Gen AI can input and
A type of social media marketing of branded goods directly from them. administrative expenses (SG&A) output unstructured data, which was
based on endorsements and product The model relies on the purchase of An income statement item stating previously difficult.
mentions from influencers. overproduced, or excess, branded all costs not directly tied to making a
goods at a lower price. product or service. Ultra-high-net-worth individual
K-pop A term used to describe an individual
Short for popular music in South Korea. Performance marketing Set-jetting with investable assets in excess of $30
A form of advertising whereby A travel trend where consumers are million.
McKinsey Global Fashion Index affiliates or marketing companies inspired to travel to a destination seen
(MGFI) are only paid for the results achieved in film or on television. Use case
A proprietary and copyrighted through, for example, influencer A targeted application to a specific
McKinsey tool that provides a global marketing and search engine Strategic buyer business challenge that produces one
and holistic benchmark for the entire marketing. Company or investors that typically or more measurable outcomes. For
fashion industry. The MGFI was acquire 100 percent of a company or example, in marketing, generative
first created for The State of Fashion Price parity asset, whose acquisition will drive AI could be used to generate creative
2017 to track industry performance The concept of a product or service synergies to their existing portfolio; in content such as personalised emails.
through three key variables: sales, sold at the same price across all contrast to a private equity buyer who
operating profit and economic profit. channels or regions. looks to grow and sell after a period Value creator
MGFI comprises an extensive list of of time. A company that creates value
public companies spanning market Price segment generates positive economic profit —
segments, product categories and The company segmentation based on Super Winners that is, its operating profit exceeds its
geographies. The analysis of public a Sales Price Index, which provides a The top 20 fashion players by dollar cost of capital (profit above 0).
companies is built with data from range of prices for a standard basket economic profit (based on economic
McKinsey Corporate Performance of products within each segment profit for 2022) according to The State Value destroyer
Analytics Tool (McKinsey CPAT). and company’s home market. of Fashion. A company that destroys value
The companies in the McKinsey generates negative economic profit —
Mergers & acquisitions (M&A) Global Fashion Index and the BoF- Sustainability that is, its dollar cost of capital exceeds
The combining of two or more McKinsey State of Fashion Survey are Within a business context, its operating profit (profit below 0).
companies through various types categorised in six segments, which sustainability refers to businesses
of financial transactions, including are based on a price index across a making decisions in terms of Vertical integration
mergers, acquisitions, consolidations, wide basket of goods and geographies. environmental, social, human A corporate strategy that occurs when
tender offers or the purchase of assets. The segments comprise (from lowest and corporate governance impact one company acquires a producer,
to highest price segment): value/ for the long term and relates to vendor, supplier, distributor or other
Metaverse discount, mid-market, premium/ how a company’s products and related company along the same value
The envisioned future iteration of the bridge, affordable luxury, and luxury. services contribute to sustainable chain.
internet that is made up of 3D virtual development.
spaces linked within a perceived Quiet luxury Virtual sampling
virtual universe. In a broader sense, it A fashion movement embracing Third-party (3P) data A digitised, three-dimensional product
often refers to not just virtual worlds, understated, high-quality clothing Data purchased from external sources development process, enabling
but the full spectrum of virtual reality, as everyday essentials, often without such as aggregators that are not the designers to create virtual samples
augmented reality and the internet. logos. original collectors of the data. The simulating movement, stretch and use.
third parties purchase data from other
Millennials Radio-frequency identification sources across the web to aggregate,
The demographic cohort born circa (RFID) segment and resell it.
1982 to 1995, also referred to as A wireless system of tags that uses
Generation-Y (based on Generation-X, radio waves to identify and track an Traceability
the preceding generation). object, e.g. when tracking items along The ability to identify and monitor
a supply chain. the history, distribution, location
Natural language processing and application of materials, parts
(NLP) Regenerated fibre and finished goods to understand the
A sub-field of artificial intelligence Fibre created from pre-existing fibres sustainability practices relating to a
used to analyse and understand whose cellulose areas are dissolved in product.
human language, and perform tasks chemicals and rebuilt into new fibres
such as sentiment analysis, entity by viscose method. Travel flow
recognition and language translation. The total number of kilometres
Large language models support NLP Regenerative materials travelled by paying airline passengers,
capabilities, powering use cases like Materials that are bio-based, reusable, used as a proxy for travel demand.
document management, chatbots and non-toxic and non-critical. They
virtual assistants. are organic and can be made from Turnaround time
by-products of agricultural processes A term used in fashion to describe the
Nearshoring or can be grown and harvested lead time between a product’s design
The practice of a business moving responsibly. and development to delivery.
its activities or manufacturing to a
geographic location that is closer to Repatriation UN Sustainability Development
the end consumer market. The process of sending money back Goals (SDG)
to one’s home country; in relation A collection of 17 objectives aimed at
to shopping, this refers to when a ending global poverty, protecting the
consumer spends money domestically planet and universally improving the
rather than abroad. quality of life for all, implemented
in 2016.
117
The State of Fashion 2024
END NOTES
1 BoF-McKinsey State of Fashion 24 Pierre-Olivier Gourinchas, Consumer Confidence Indicator 42 Alexandra Stevenson, “New
2024 Survey “Resilient Global Economy Still for EU and euro area”, European Trouble Roils China Evergrande,
Liming Along, With Growing Commission, October, 2023, https:// Fueling Real Estate Crisis Fears”,
2 BoF-McKinsey State of Fashion Divergences”, IMF blog, October economy-finance.ec.europa.eu/ The New York Times, September
2024 Survey; BoF-McKinsey State of 10, 2023, https://www.imf.org/ economic-forecast-and-surveys/ 28, 2023, https://www.nytimes.
Fashion 2023 Survey en/Blogs/Articles/2023/10/10/ business-and-consumer-surveys/ com/2023/09/28/business/china-
resilient-global-economy-still- latest-business-and-consumer- evergrande-trading-halted.html
3 BoF-McKinsey State of Fashion limping-along-with-growing- surveys_en
2024 Survey; BoF-McKinsey State of divergences#:~:text=According%20 43 “World Economic Outlook Update:
Fashion 2023 Survey to%20our%20latest%20 34 “World Economic Outlook Update: Near-Term Resilience, Persistent
projections,well%20below%20 Near-Term Resilience, Persistent Challenges”, International Monetary
4 McKinsey Fashion Growth Forecasts the%20historical%20average. Challenges”, International Monetary Fund, July 2023, https://www.
2024 Fund, July 2023, https://www. imf.org/en/Publications/WEO/
25 “World Economic Outlook Update: imf.org/en/Publications/WEO/ Issues/2023/07/10/world-economic-
5 McKinsey Fashion Growth Forecasts Near-Term Resilience, Persistent Issues/2023/07/10/world-economic- outlook-update-july-2023
2024 Challenges”, International Monetary outlook-update-july-2023
Fund, July 2023, https://www. 44 Sustaining Growth through the
6 “Confronting inflation and low 35 “World Economic Outlook: Recovery and Beyond”, World Bank,
imf.org/en/Publications/WEO/
growth”, OECD Economic Outlook, Navigating Global Divergences”, June 2023
Issues/2023/07/10/world-economic-
September 2023, https://www. International Monetary Fund,
outlook-update-july-2023
oecd.org/economic-outlook/ October 2023, https://www.imf. 45 China Gross Savings Rate, CEIC,
september-2023/ 26 Lisa Shalett, “Why Higher Interest org/en/Publications/WEO/ https://www.ceicdata.com/en/
Rates May Not Go Away”, Morgan Issues/2023/10/10/world-economic- indicator/china/gross-savings-
7 McKinsey Fashion Growth Forecasts rate#:~:text=China%20Gross%20
Stanley, Oct. 11, 2023, https:// outlook-october-2023
2024 Savings%20Rate%20was,of%20
www.morganstanley.com/ideas/
treasury-yields-2023-will-they- 36 “World Economic Outlook: 16.5%25%20in%20Dec%201962.
8 “Confronting inflation and low
keep-rising?subscribed=true&dis= Navigating Global Divergences”,
growth”, OECD Economic Outlook, 46 The Economist, “America’s
em_20231011_wm_5ideasarticle&et_ International Monetary Fund,
September 2023, https://www. pandemic savings are running
mid=515189&et_mkid=&sfmc_ October 2023, https://www.imf.
oecd.org/economic-outlook/ out”, August 21, 2023, https://
id=197145770 org/en/Publications/WEO/
september-2023/ www.economist.com/
Issues/2023/10/10/world-economic-
27 Mark John, “Global central outlook-october-2023 graphic-detail/2023/08/21/americas-
9 BoF-McKinsey State of Fashion
banks unite in ‘higher for longer’ pandemic-savings-are-running-out
2024 Survey
credo”, Reuters, September 37 “Resumption of Federal
22, 2023, https://www.reuters. Student Loan Payments”, National 47 Francois de Soyres, Dylan
10 McKinsey Fashion Growth
com/markets/rates-bonds/ Credit Union Administration, Moore, Julio Ortiz, “Accumulated
Forecasts 2024
global-central-banks-unite-higher- October 2023, https://ncua.gov/ Savings During the Pandemic: An
11 McKinsey Fashion Growth longer-credo-2023-09-21/ regulation-supervision/letters- International Comparison with
Forecasts 2024 credit-unions-other-guidance/ Historical Perspective”, The Federal
28 Jeffrey Condon, Krzysztof resumption-federal-student-loan- Reserve, June 23, 2023, https://
12 “Global Luxury Retail: Identifying Kwiatkowski, Sven Smit, “Global payments www.federalreserve.gov/econres/
and Realising Opportunities”, Savills, Economics Intelligence executive notes/feds-notes/accumulated-
April 18, 2023, https://pdf.euro.savills. summary, August 2023”, McKinsey, 38 Ayelet Sheffey, “Student-loan savings-during-the-pandemic-an-
co.uk/global-research/global-luxury- September 20, 2023, https://www. payments are resuming in 3 months – international-comparison-with-
retail-2023-outlook-.pdf mckinsey.com/capabilities/strategy- and borrowers might not be ready for historical-perspective-20230623.html
and-corporate-finance/our-insights/ the ‘sizeable shock’ to their wallets”,
13 McKinsey Fashion Growth global-economics-intelligence- Business Insider, June 26, 2023, 48 McKinsey ConsumerWise Global
Forecasts 2024 executive-summary-august-2023 https://www.businessinsider.com/ Sentiment Data, August 2023, China
what-will-happen-when-student- n=1,000, US n=4,000, EU n=5,000
14 McKinsey Fashion Growth 29 “Economic forecast for Germany”, loan-payments-resume-sizeable- (France, Germany, Italy, Spain, UK)
Forecasts 2024 European Commission, September shock-2023-6?r=US&IR=T
11, 2023, https://economy-finance. 49 Nicholas R. Lardy, “How serious
15 McKinsey Fashion Growth ec.europa.eu/economic-surveillance- 39 Federal Reserve Bank of New is China’s economic slowdown?”,
Forecasts 2024 eu-economies/germany/ York, “Total Household Debt Peterson Institute for International
economic-forecast-germany_en Reaches $17.06 Trillion in Q2 Economics, August 17, 2023,
16 BoF-McKinsey State of Fashion 2023; Credit Card Debt Exceeds $1 https://www.piie.com/blogs/
2024 Survey 30 “GDP monthly estimate, UK: Trillion”, August 2023, https://www. realtime-economics/how-serious-
August 2023”, Office for National newyorkfed.org/newsevents/news/ chinas-economic-slowdown
17 BoF-McKinsey State of Fashion Statistics, October 12, 2023, research/2023/20230808#:~:text
2024 Survey https://www.ons.gov.uk/economy/ =Credit%20card%20balances%20 50 IMF, “World Economist Outlook,
grossdomesticproductgdp/bulletins/ increased%20by,marking%20a%20 October 2023, https://www.imf.
18 BoF-McKinsey State of Fashion org/en/Publications/WEO/
gdpmonthlyestimateuk/august2023 4.6%25%20quarterly%20increase.
2024 Survey Issues/2023/10/10/world-economic-
31 “Bank rate maintained at 40 McKinsey & Company Strategy outlook-october-2023
19 BoF-McKinsey State of Fashion
5.25% - September 2023”, & Corporate Finance Practice, Risk
2024 Survey 51 McKinsey ConsumerWise Global
Bank of England, https://www. Practice, and the McKinsey Global
bankofengland.co.uk/monetary- Institute, “2023, a Testing Year: Will Sentiment Data, August 2023, China
20 BoF-McKinsey State of Fashion n=1000, US n=4000, EU n=5000
2024 Survey; BoF-McKinsey State of policy-summary-and-minutes/2023/ the Global macro-scenario range
september-2023 widen or narrow?”, McKinsey & (across France, Germany, Italy, Spain,
Fashion 2023 Survey UK)
Company, July 2023
21 BoF-McKinsey State of Fashion 32 “World Economic Outlook:
Navigating Global Divergences”, 41 Nicholas R. Lardy, “How serious 52 “China: Consumer confidence
2024 Survey crisis will have far-reaching
International Monetary Fund, is China’s economic slowdown?”,
October 2023, https://www.imf. Peterson Institute for International effects”, Financial Times, October
22 BoF-McKinsey State of Fashion
org/en/Publications/WEO/ Economics, August 17, 2023, 13, 2023, https://www.ft.com/
2024 Survey
Issues/2023/10/10/world-economic- https://www.piie.com/blogs/ content/bae8f56b-d2f2-489f-b0cb-
23 McKinsey Fashion Growth outlook-october-2023 realtime-economics/how-serious- 8ccc384c40d2?
Forecasts 2024 chinas-economic-slowdown
33 “October 2023: Flash 53 Jeffrey Condon, Krzysztof
118
Kwiatkowski, Sven Smit, “Global 74 Nicole Goodkind, “Kim Kardashian September 8, 2023, https://www. 98 Cathleen Chen, “Climate
Economics Intelligence executive may be the hero the IPO market nytimes.com/2023/09/08/world/asia/ Change Is Making Fashion’s Supply
summary”, McKinsey, July 21, needs”, CNN Business, 20 July 2023 china-hong-kong-floods.html Chain Problems Worse”, Business
2023, https://www.mckinsey. of Fashion, 16 September 2022,
com/capabilities/strategy-and- 75 Carol Ryan, “Heard on the 88 Kristoffer Tigue, “The Climate https://www.businessoffashion.
corporate-finance/our-insights/ Street: Birkenstock’s IPO Is Due Crisis Is Here Now, Experts Warn, as com/briefings/global-markets/
global-economics-intelligence- Next Week. Don’t Mention Crocs.”, Death Tolls From Summer Disasters climate-change-is-making-fashions-
executive-summary-june- The Wall Street Journal, October Mount”, Inside Climate News, August supply-chain-problems-worse/
2023Ryosuke 8, 2023, https://www.wsj.com/ 18, 2023, https://insideclimatenews.
livecoverage/stock-market-today- org/news/18082023/climate-crisis- 99 Kate Whiting, “’The era of global
54 Reserve Bank of India, “Consumer dow-jones-10-06-2023/card/ here-now-experts-warn-as-death- boiling has arrived’ – plus other
Confidence Survey”, October 6, heard-on-the-street-birkenstock-s- tolls-from-summer-disasters-mount/ nature and climate stories to read this
2023, https://m.rbi.org.in/scripts/ ipo-is-due-next-week-don-t-mention- week”, World Economic Forum, July
PublicationsView.aspx?id=22051 crocs--A7lB4KaWDW25EtJVXCYz 89 Christopher Flavelle, “Record 31, 2023, https://www.weforum.org/
Number of Billion-Dollar Disasters agenda/2023/07/europe-wildfires-
55 “The World Bank In India”, The 76 Melissa Eddy and Santul Nerkar, Shows the Limits of America’s nature-climate-crisis/
World Bank, https://www.worldbank. “Birkenstock, the German Sandal Defenses”, The New York Times,
org/en/country/india/overview Maker, Raises $1.48 Billion in Its I.P.O.”, September 12, 2023, https://www. 100 Bella Webb, “Climate change is
New York Times, 11 October 2023 nytimes.com/2023/09/12/climate/ coming for fashion’s supply chains”,
56 McKinsey analysis leveraging CPA billion-dollar-disasters.html Vogue Business, November 10, 2022,
Analytics comparison of Fashion 77 Expert Interviews https://www.voguebusiness.com/
Industry Assets vs. Market Indices, 90 David Lawder, “IMF sees sustainability/climate-change-is-
October 2023 78 Pitchbook drought causing Argentina coming-for-fashions-supply-chains
contraction of 2.5% in 2023”,
57 Expert interviews and McKinsey 79 Dealogic, Eurostat, DG ECFIN, Reuters, July 25, 2023, https:// 101 Shawn Baldwin, “How drought
analysis using Pitchbook, October 2023 Global - April 2023 www.reuters.com/world/americas/ cost America’s cotton industry
imf-sees-drought-causing-argentina- billions”, CNBC, November 23, 2022,
58 Pitchbook, October 2023 80 Sarah Kent, “Is Fashion contraction-25-2023-2023-07-25/ https://www.cnbc.com/2022/11/23/
Sleepwalking Into the Climate how-drought-cost-americas-cotton-
59 McKinsey analysis and expert Crisis?”, The Business of Fashion, 91 Kate Whiting, “’The era of global industry-billions.html
interviews August 7, 2023, https://www. boiling has arrived’ – plus other
businessoffashion.com/articles/ nature and climate stories to read this 102 Jason Judd, J. Lowell Jackson,
60 Expert interviews and McKinsey sustainability/fashion-climate- week”, World Economic Forum, July “Repeat, Regain or Renegotiate? The
Analysis based on Mergermarket & change-crisis-hot-record-investor/ 31, 2023, https://www.weforum.org/ Post-COVID Future of the Apparel
Pitchbook agenda/2023/07/europe-wildfires- Industry”, ILR Institute Cornell
81 “Climate and weather related nature-climate-crisis/ University, July 2021, https://cornell.
61 McKinsey analysis and expert disasters surge five-fold over 50 app.box.com/s/5x56ntii3rmmmbe9o
interviews years, but early warnings save lives – 92 Jessica Whitt, Scott Gordon, “This lam3f5pk5ic1czi
WMO report”, United Nations News, is the economic cost of extreme
62 McKinsey analysis and expert September 1, 2021, https://news. weather”, World Economic Forum, 103 Sarah Kent, “How Much Will
interviews un.org/en/story/2021/09/1098662 January 17, 2023, https://www. Climate Change Cost Fashion?”,
63 Pitchbook weforum.org/agenda/2023/01/ Business of Fashion, September 13,
82 Matt McGrath, Mark Poynting, extreme-weather-economic-cost- 2023, https://www.businessoffashion.
“Climate change: July set to be world’s wef23/ com/articles/sustainability/extreme-
64 McKinsey proprietary analysis warmest month on record”, BBC, July
based on largest PE fund public weather-climate-change-cost-fashion-
27, 2023, https://www.bbc.co.uk/ 93 David Winter, Manuela Kiehl, supply-chain-cornell-schroders/
reports, Mergermarket, Gainpro and news/science-environment-66322608
other publicly available data “The global economic costs of climate
change inaction”, Oxford Economics, 104 Kevin Leung, “A greener future
83 Zeke Hausfather, “State of the December 20, 2022, https://www. for ocean freight”, Economist
65 Mergermarket climate: 2023 now likely hottest oxfordeconomics.com/resource/ Impact, September 14, 2021, https://
year on record after extreme the-global-economic-costs-of- impact.economist.com/ocean/
66 McKinsey proprietary analysis
summer”, Carbon Brief, July 26, climate-inaction ocean-and-climate/a-greener-future-
based on largest PE fund public
2023, https://www.carbonbrief.org/ for-ocean-freight
reports, Mergermarket, Gainpro and
state-of-the-climate-2023-now- 94 McKinsey ConsumerWise Global
other publicly available data
likely-hottest-year-on-record-after- Consumer Sentiment Data, August 2023 105 Jasper Verschuur, Elco E. Koks,
67 S&P Capital IQ, press search, extreme-summer/ Jim W. Hall, “Systemic risks from
NASDAQ 95 Sarah Kent, “Why Fashion Didn’t climate-related disruptions at ports”,
84 Isabella Kwai, “Extreme Weather Show Up for Climate Week?”, The Nature Climate Change, July 20, 2023,
68 McKinsey Analysis leveraging Hits Europe, and It’s Not Over Business of Fashion, September 22, https://www.nature.com/articles/
CPA Analytics data on fashion assets, Yet”, The New York Times, July 28, 2023, https://www.businessoffashion. s41558-023-01754-w
October 2023 2023, https://www.nytimes.com/ com/articles/sustainability/
article/europe-heat-wave-forecast. new-york-climate-week-fashion/ 106 Somini Sengupta, “Climate Risks
69 McKinsey Analysis leveraging html?searchResultPosition=2 Loom Over Panama Canal, a Vital
CPA Analytics data on fashion assets, 96 Jason Judd, Angus Bauer, Sarosh Global Trade Link”, The New York
October 2023 85 Matina Stevis-Gridneff, Niki Kuruvilla, Stephanie Williams, Times, August 25, 2023, https://www.
Kitsantonis, “Greece Battles Its Most “Higher Ground? Fashion’s nytimes.com/2023/08/25/climate/
70 MGFI Analysis 2023 and expert Widespread Wildfires on Record”, Climate Breakdown and its Effect panama-canal-drought-global-trade.
interviews The New York Times, August for Workers”, ILR Global Labor html
23, 2023, https://www.nytimes. Institute; Schroders, September
71 Ermenegildo Zegna Group, FY com/2023/08/23/world/europe/ 13, 2023, https://www.ilr.cornell. 107 McKinsey Travel, Logistics &
2022 Financial Results, April 6, 2023, greece-wildfires-athens.html edu/sites/default/files-d8/2023- Infrastructure Practice, Global Air
https://s29.q4cdn.com/118983938/ 09/Higher%20Ground%20 Traffic Demand scenarios, June 2023
files/doc_financials/2022/q4/ 86 Niki Kitsantonis, Isabella Kwai, Executive%20Summary%20REV%20
Zegna-FY2022-Earnings-Investor- “Extreme Rains Cause Flooding %28v1%29%20%281%29.pdf 108 The Flex Report, Q3 2023, https://
Deck-FINAL-FINAL.pdf in Bulgaria, Greece and Turkey, www.flex.scoopforwork.com/stats
Killing 14”, The New York Times, 97 Prashant Natikar et al., “Effect
72 MGFI Analysis 2023 Sept, 6, 2023, https://www.nytimes. of global warming on silk farming: 109 Steve Deane, “77+ Bleisure
com/2023/09/06/world/europe/ A review”, The Pharma Innovation Travel Statistics”, Stratosjects, 2022,
73 Gabrielle Fonrouge, “Shein opens greece-turkey-floods-bulgaria.html Journal, January 1, 2023, https:// https://www.stratosjets.com/blog/
up about forced labor, data privacy www.thepharmajournal.com/ bleisure-travel-statistics/
as it looks to clear key hurdles before 87 Chris Buckley, “Storms Deluge archives/2023/vol12issue3/
possible U.S. IPO”, CNBC, 19 October Hong Kong and Other Southern PartAN/12-3-445-572.pdf 110 Roger Sands, “Bleisure Travel
2023 Chinese Cities”, The New York Times, Rapidly Increasing At Hotels And
119
The State of Fashion 2024
Resorts”, Forbes, June 9, 2022, louis-vuitton-pool-zuma-mykonos/ resorts”, WWD, June 1, 2023, 145 Evelyn Cheng, “China’s
https://www.forbes.com/sites/ https://wwd.com/business-news/ domestic tourism is finally
rogersands/2022/06/09/bleisure- 123 Razorfish and Vice Media Group, retail/saks-brings-its-fifth-avenue- back to pre-pandemic levels”,
travel-rapidly-increasing-at-hotels- “Razorfish Study Finds 47 Percent club-personal-service-to-luxury- CNBC, Oct 9, 2023, https://
and-resorts/?sh=5da4a4ec902b of Travelers Believe Spending a Lot resorts-1235664105/ www.cnbc.com/2023/10/09/
of Money on a Trip Could Dilute chinas-domestic-tourism-is-finally-
111 “How Global Luxury Travel Trends a More Immersive, Authentic 134 Madeleine Rotheby, “This back-to-pre-pandemic-levels.html
Will Impact Fashion”, Business of Experience”, Business Wire, June summer, fashion is all about the
Fashion, July 4, 2023, https://www. 29, 2022, https://www.businesswire. return of the resort”, i-D, Aug. 15. 146 McKinsey Consumer Sentiment
businessoffashion.com/articles/ com/news/home/20220629005320/ 2023, https://i-d.vice.com/en/article/ Q3 2023
luxury/how-global-luxury-travel- en/Razorfish-Study-Finds-47-of- qjvzkb/this-summer-fashions-all-
trends-will-impact-fashion/ Travelers-Believe-Spending-a-Lot- about-the-return-of-resort 147 Alison Ackroyd, “Top tourism
of-Money-on-a-Trip-Could-Dilute- trends spotted during China’s
112 The BoF-McKinsey State of a-More-Immersive-Authentic- 135 Alexis Bennett Parker, “Out of Golden Week”, Alizala, Oct 10,
Fashion 2024 Consumer Survey Experience Office: These Brands Are Made for 2023, https://www.alizila.com/
Vacation”, Vogue, April 27, 2023, top-tourism-trends-during-china-
113 Dan Rang, “Paris returns to 124 Harrods, https://www.harrods. https://www.vogue.com/article/ golden-week-travel-festival-fliggy/
pre-Covid tourist numbers”, com/en-gb/restaurants/prada-caffe vacation-dress-brands
Tourism Review, Jun. 6, 2023, 148 “Big-Spending Chinese Shoppers
https://www.tourism-review.com/ 125 Andrea Jiménez, “World’s 136 Marc Bain, “What Zimmermann Are Splurging on Luxury at Home, Not
paris-reports-excellent-tourist- first Fendi beach club opens in Did Right”, The Business of Abroad Anymore”, Bloomberg News,
numbers-news13302 Marbella”, Sur, July 4, 2023, Fashion, Aug. 11, 2023, https:// May 2, 2023, https://www.bloomberg.
https://www.surinenglish.com/ www.businessoffashion. com/news/articles/2023-05-02/
114 Noah Vickers, Jonathan Prynn, malaga/marbella-san-pedro/ com/briefings/luxury/ rich-chinese-shoppers-buy-luxury-at-
“London tourism roaring back amid worlds-first-fendi-beach-club-opens- what-advent-and-zimmermann-got- home-not-abroad-after-covid
visitor surge”, Evening Standard, marbella-20230703095619-nt.html right-with-1-billion-deal/
Aug. 1, 2023, https://www.standard. 149 Jennifer Weil, “DFS is to
co.uk/news/london/london-tourism- 126 “Loro Piana brings Italian 137 Cathaleen Chen, “How to open seven star luxury retail and
visitors-economy-international- elegance to La Réserve à la Plage Take a Brand From Local to entertainment destination in Hainan”,
arrivals-summer-b1097836.html de Saint-Tropez”, Chic Riviera, 31 Global”, The Business of Fashion, WWD, October 2023, https://
May, 2023, https://chicriviera.com/ June 10, 2022, https://www. wwd.com/business-news/retail/
115 The BoF-McKinsey State of en/2023/05/31/loro-piana-apporte- businessoffashion.com/articles/ dfs-lvmh-open-seven-star-luxury-
Fashion 2024 Consumer Survey lelegance-italienne-a-la-reserve-a-la- retail/farm-rio-global-expansion- retail-entertainment-destination-
plage-de-saint-tropez/ contemporary-womenswear/ hainan-1235853046/
116 “The New Normal: Unexpected
Travel Trends in 2023”, Expedia, 127 Mimosa Spencer, “Dior Expands 138 Tamison O’Connor, “Luxury 150 Casey Hall, “As travel resumes,
https://www.expedia.com/ Dioriviera Beach Collection With seizes vacation dressing boom”, The China’s luxury shoppers ask Paris or
see/2023traveltrends-expedia?mc Pop-Ups in China, US”, WWD, Apr. Business of Fashion, May 2, 2022, Hainan?”, Reuters, January 2023,
icid=cp.2023traveltrends-expedia. 5, 2021, https://wwd.com/feature/ https://www.businessoffashion.com/ https://www.reuters.com/business/
trends-exp exclusive-dior-expands-dioriviera- articles/luxury/luxury-seizes-the- retail-consumer/travel-resumes-
beach-collection-with-pop-ups-in- vacation-dressing-boom/ chinas-luxury-shoppers-ask-paris-or-
117 “Expedia Summer Travel Forecast china-u-s-1234792649/ hainan-2023-01-05/
2023”, Expedia, April 11, 2023, 139 Robert Williams, “Loewe’s Brand
https://www.prnewswire.com/ 128 L’Officiel Singapore, “Dioriviera Within a Brand: Is This the New Way 151 Martin Moodie, “DFS unveils
news-releases/expedia-summer- heads to Malaysia their first pop-up to Do Diffusion?”, The Business of stellar boutique line-up as
travel-forecast-flight-searches-up-25- store”, June 10, 2023, https://www. Fashion, July 16, 2020, https://www. Chongqing Jiangbei International
interest-surging-for-international- lofficielsingapore.com/fashion/ businessoffashion.com/articles/ Airport inaugurates Starry
destinations-301794475.html dioriviera-heads-to-malaysia-first- luxury/loewe-jonathan-anderson- Galleria”, Moodie Davitt Report,
pop-up-store-desaru paulas-ibiza-lvmh-acquired/ September 4 2023, https://
118 Anny Polyzogopoulou, “Film- www.moodiedavittreport.com/
Induced Tourism: The Case of 129 Gordon Ng, “Heed the Call of 140 Andrea Bossi, “Loewe crowned dfs-unveils-stellar-boutique-line-up-
Game of Thrones and Dubrovnik”, a Dioriviera Summer”, Female, the world’s hottest fashion brand”, as-chongqing-jiangbei-international-
By Arcadia, 22 January, 2019, 3 July, 2023, https://www. Fashionista, July 19, 2023, https:// airport-inaugurates-starry-galleria/
https://www.byarcadia.org/post/ femalemag.com.sg/gallery/fashion/ fashionista.com/2023/07/
film-induced-tourism-the-case-of- dioriviera-christian-dior-summer- lyst-index-top-popular-brands- 152 Casey Hall, “As travel resumes,
game-of-thrones-and-dubrovnik capsule-collection-2023/ products-2023-q2-loewe China’s luxury shoppers ask Paris or
Hainan?”, Reuters, January 2023,
119 Andrew Smart, “Japanese 130 “Dioriviera heads to Malaysia 141 Alison Cohn, “Mango’s first https://www.reuters.com/business/
clothing brand Uniqlo to open their first pop-up store”, L’Officiel designer collaboration is a summer retail-consumer/travel-resumes-
first Scottish Store”, The National, Singapore, 10 June, 2023, https:// vibe,” Harper’s Bazaar, May 22, chinas-luxury-shoppers-ask-paris-or-
2 August, 2023, https://www. www.lofficielsingapore.com/fashion/ 2023 https://www.harpersbazaar. hainan-2023-01-05/
thenational.scot/news/23696139. dioriviera-heads-to-malaysia-first- com/fashion/designers/a43958907/
japanese-clothing-brand-uniqlo- pop-up-store-desaru simon-miller-mango-collaboration/ 153 McKinsey analysis of China
open-first-edinburgh-store/ personal luxury market and expert
131 Kevin Rozario, “Coach Airways 142 Orin Carlin, “You can interviews, May 2023McKinsey
120 “Chanel Opens Its First Pop-Up May Be a Short-Lived, But Valuable, literally swim in a Louis Vuitton
Boutique in Scotland”, Homes & Flight of Fancy”, Forbes, July 30, pool this summer”, Hello, 154 McKinsey analysis, August 2023
Interiors, 16 June, 2023, https:// 2023, https://www.forbes.com/ Aug. 8, 2023, https://www.
homesandinteriorsscotland. sites/kevinrozario/2023/07/30/ hellomagazine.com/hfm/499657/ 155 Alison Ackroyd, “Top tourism
com/2023/06/ coach-airways-may-be-a-short-lived- louis-vuitton-pool-zuma-mykonos/ trends spotted during China’s
chanel-pop-up-boutique-scotland/ but-valuable-flight-of-fancy Golden Week”, Alizala, Oct 10,
143 Madeleine Rotheby, “This 2023, https://www.alizila.com/
121 “The brand new Louis Vuitton 132 Brad Packer, “Four Seasons Hotel summer, fashion is all about the top-tourism-trends-during-china-
Café by Timeo in Taormina”, L’Officiel Houston Partners With Vivrelle return of the resort”, i-D, 15 August, golden-week-travel-festival-fliggy/
Ibiza, 3 August, 2023, https://www. to Offer Guests Complimentary 2023, https://i-d.vice.com/en/article/
lofficielibiza.com/travel/louis- On-Demand Luxury Accessories”, qjvzkb/this-summer-fashions-all- 156 McKinsey – BOF Consumer
vuitton-cafe-by-timeo-taormina-bar Four Seasons, Mar. 6, 2023, about-the-return-of-resort Survey, September 2023
https://press.fourseasons.com/
122 Orin Carlin, “You can houston/hotel-news/2023/ 144 Peden Bhutia, “The emergence of 157 China aviation market”,
literally swim in a Louis Vuitton vivrelle-partnership/ a new Chinese traveler”, Skift, March OAG, September 2023,
pool this summer”, Hello, 8 2023, https://skift.com/2023/03/15/ https://www.oag.com/
August, 2023, https://www. 133 David Moin, “Saks extends its the-emergence-of-a-new-chinese- china-aviation-market-flight-data
hellomagazine.com/hfm/499657/ brand of personal service to luxury traveler/
120
158 Casey Hall, Sophie Yu, Joyce Marketing Hub, October 10, 2023, 184 Leila Register, ”‘Tube Girl’ 195 “VF Corporation Reports
Lee, “China lifts bans on group tours https://influencermarketinghub.com/ inspires unapologetic self-expression First Quarter Results”, VF Corp,
to US, Japan, and other markets”, influencer-marketing-benchmark- among women on TikTok”, NBC August 1, 2023, https://www.vfc.
Reuters, August 2023, https://www. report/ News, October 7, 2023, https:// com/news/press-release/1818/
reuters.com/world/asia-pacific/ www.nbcnews.com/pop-culture/ vf-corporation-reports-first-quarter-
china-adds-more-destination- 174 Amy He, Nicky Zink, Lindsey tube-girl-inspires-unapologetic-self- results-and-maintains
countries-outbound-group- Roeschke, Claire Tassin, Kevin expression-women-tiktok-rcna118358
tourism-2023-08-10/ Tran and Emily Moquin, “How 196 Pei Li, Manuel Baigorri and
Brands Can Succeed at Influencer 185 Alexandra Sternlicht, “The world’s Dong Cao, “Anta Sports Weighs IPO
159 McKinsey – BOF Consumer Marketing”, Morning Consult, most followed TikToker gets paid as of Wilson Racket Maker Amer”,
Survey, September 2023 September 2023, https://pro. much as $750K per post, but to reach Bloomberg News, Dec. 7, 2022,
morningconsult.com/analyst-reports/ his greatest business goal Khaby Lame https://www.bloomberg.com/news/
160 Alison Ackroyd, “Top tourism influencer-marketing-trends-report is binge-watching American cartoons”, articles/2022-12-07/anta-sports-is-
trends spotted during China’s Fortune, Sept. 14, 2022, https:// said-to-weigh-ipo- of-wilson-racket-
Golden Week”, Alizala, Oct 10, 175 Kristen Barta, Nazanin fortune.com/2022/09/14/how-khaby- maker-amer?leadSource=uverify%20
2023, https://www.alizila.com/ Andalibi, “Constructing Authenticity lame-plans-expand-business-that- wall
top-tourism-trends-during-china- on Tiktok: Social Norms and Social gets-750k-dollars-for-tiktok-post/
golden-week-travel-festival-fliggy/ Support on the “Fun” Platform”, 197 Pamela N. Danziger, “On, The $1
October 2021, https://dl.acm.org/doi/ 186 “What’s Next 2023 Trend Report”, Billion Swiss Running-Shoe Company,
161 McKinsey – BOF Consumer pdf/10.1145/3479574 TikTok, December 15, 2022, https:// Declares Cyclon Its Sustainability
Survey, September 2023 newsroom.tiktok.com/en-us/ Incubator”, Forbes, Apr. 4, 2023,
176 Arielle Feger, “TikTok screen time whats-next-2023-trend-report https://www.forbes.com/sites/
162 “Global Blue releases the monthly will approach 60 minutes a day for pamdanziger/2023/04/04/on-the-1-
tax free shopping business update for US adult users”, Insider Intelligence, 187 Tom Marshall, “People and billion- swiss-running-shoe-company-
August 2023”, Global Blue, August March 2, 2023, https://www. Nature Survey: How has COVID-19 declares-cyclon-its-sustainability-
2023, https://www.globalblue.com/es/ insiderintelligence.com/content/ changed the way we engage with incubator/?sh=59960e0f645a
about-us/media/global-blue-releases- tiktok-screen-time-will-approach-60- nature?”, Natural England, May 18,
the-monthly-tax-free-shopping- minutes-day-us-adult-users 2022, https://naturalengland.blog.gov. 198 Dani James, “Hoka to Hit $2B
business-update-for-august-2023 uk/2022/05/18/people-and-nature- in Sales as DTC Channel Grows”,
177 Salvador Rodriguez, Meghan survey-how-has-covid-19-changed- Retail Dive, May 30, 2023, https://
163 “Global Blue releases the monthly Bobrowsky, Jeff Horwitz, “Instagram the-way-we-engage-with-nature/; www.retaildive.com/news/
tax free shopping business update for Stumbles in Push to Mimic TikTok, hoka-earnings-two-billion-sales-dtc-
August 2023”, Global Blue, August Internal Documents Show”, The 188 Gary Gerard, “Winnebago Survey channel-grows/651515/
2023, https://www.globalblue.com/es/ Wall Street Journal, September 12, Shows Growing Outdoor Activity”,
about-us/media/global-blue-releases- 2022, https://www.wsj.com/articles/ RVBusiness, May 30, 2023, https:// 199 Hoka One One, “Moncler x
the-monthly-tax-free-shopping- instagram-reels-tiktok-meta- rvbusiness.com/winnebago-survey- HOKA® Takes Mountain-Ready
business-update-for-august-2023 facebook-documents-11662991777 shows-growing-outdoor-activity/ Footwear To A Whole New Level”,
Cision PR Newswire, Nov. 1, 2021,
164 Casey Hall, Mimosa Spencer, 178 Ben Smith, “How TikTok Reads 189 “People and Nature Survey: https://www.prnewswire.com/
“Fewer luxury shoppers but bigger Your Mind”, The New York Times, How has COVID-19 changed the news-releases/moncler-x-hoka-
spenders as Chinese return to December 5, 2021, https://www. way we engage with nature?” takes-mountain-ready-footwear-to-a-
Europe”, Reuters, May 2023, nytimes.com/2021/12/05/business/ Natural England, May 18, 2022, whole-new-level-301412702.html
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retail-consumer/fewer-luxury- uk/2022/05/18/people-and-nature- 200 Jil Sander, https://
shoppers-bigger-spenders-chinese- 179 Callie Holtermann, “They’re Over survey-how-has-covid-19-changed- www.jilsander.com/en-pl/
return-europe-2023-05-05/ Being Real”, The New York Times, the-way-we-engage-with-nature/ arc%E2%80%99teryx-x-jil-sander-
April 12, 2023, https://www.nytimes. fall%2Fwinter-2021-collection/
165 McKinsey interview with com/2023/04/13/style/bereal-app. 190 Jason Wang, “The Great Outdoors: project62b.html
Jean-Marc Bellaiche, September 2023 html China’s Appetite for Adventure
Sports Booms”, Jing Daily, September 201 “MONCLER X ADIDAS
166 McKinsey China Luxury 180 Melissa de Witte, “Gen Z are 18, 2023, https://jingdaily.com/ ORIGINALS IS SO PUFFING
Consumer Survey, 2022 not ‘coddled.’ They are highly china-adventure-sports-booms/ GOOD”, High Snobiety, October 2023,
collaborative, self-reliant and https://www.highsnobiety.com/p/
167 McKinsey China Luxury pragmatic, according to new Stanford- 191 “China Outdoor Market Trends”, moncler-adidas-collab-release/
Consumer Survey, 2022 affiliated research”, Standford MyMyPanda, July 17, 2023, https://
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168 McKinsey analysis, May 2023 news.stanford.edu/2022/01/03/ meets-china-outdoor-market-trends/ OYSHO United States,” accessed Sept.
know-gen-z/ 14, 2023, https://www.oysho.com/us/
169 McKinsey China Luxury 192 Sabine Becker, Victor V. Duran, hiking-clothes-women-n4967
Consumer Survey, 2022 181 Ellyn Briggs, “TikTok Is Officially “Sporting Goods 2023 – The need
the Influencer Platform”, Morning for resilience in a world in disarray”, 203 Free People Movement. “Hiking
170 Blair Feehan, “2023 Social Media
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retail/our%20insights/sporting%20
benchmark-report/#title-all-industry 182 Arielle Feger, “5 charts to help you 204 “Introducing Merrell’s new SS23
goods%202023%20the%20need%20
craft your 2024 TikTok marketing for%20resilience%20in%20a%20 lifestyle collection”, Merrell, February
171 Blair Feehan, “2023 Social Media
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com/blog/social-media-industry-
com/content/5-charts-help-you- 193 “Dicks Sporting Goods to Acquire introducing-merrells-new-ss23-
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craft-your-2024-tiktok-marketing- Moosejaw”, PR Newswire, Feb 22, lifestyle-collection/
172 Sara Lebow, “Gen Z has a 1-second commerce-strategies 2023, https://www.prnewswire.com/
news-releases/dicks-sporting-goods- 205 Daniel-Yaw Miller, “66ºNorth
attention span. That can work to
183 Tanya Chen, Geoff Weiss, “As most to-acquire-moosejaw-301753328.html Taps Kei Toyoshima in Fashion Push”,
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is Alex Earle?”, Insider, December Lifestyle Market”, SBG Media, Dec louis-vuitton-chanel-bottega/
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28, 2022, https://www.insider.com/ 28, 2022, https://sgbonline.com/
who-is-alix-earle-tiktok-influencer- the-2022-year-in-review-ma-activity- 206 “Prada Linea Rossa”, Prada,
173 Werner Geyser, “The State
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of Influencer Marketing 2023:
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121
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207 “FANCY A GORE-TEX COFFEE case-studies/technology/ generated-marketing-campaign/ 243 Koivisto, Mika and Grassini,
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High Snobiety, September 2023, learning-emerging-technology/ 230 “Heliot Emil, Spring/ outperform artificial intelligence in
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208 Daniel-Yaw Miller, “The McKinsey & Company, March 8, spring-2024-ready-to-wear/ articles/s41598-023-40858-3
Gorpcore Empire behind Salomon 2023, https://www.mckinsey.com/ heliot-emil#gallery-collection
and Arc’Teryx,” The Business of Industries/Retail/Our-Insights/ 244 Poggi, Sofia, et. al, “How Retailers
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businessoffashion.com/articles/retail/ of-fashion Stop Talking About AI”, The Business Generative AI?”, IDC Europe Blog,
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brand-growth/ 220 “The state of generative AI in www.businessoffashion.com/articles/ com/how-retailers-and-brands-are-
7 charts”, CBInsights, August 2, technology/fashion-execs-cant-stop- taking-advantage-of-generative-ai/
209 Daniel-Yaw Miller, “Here 2023, https://www.cbinsights.com/ talking-about-ai/
Comes the Gorpcore Backlash”, The research/generative-ai-funding-top- 245 Poggi, Sofia, et. al, “How Retailers
Business of Fashion, June 26, 2023, startups-investors/ 232 “Desigual Unveils On-Demand and Brands are Taking Advantage of
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com/articles/retail/ 221 “Microsoft and OpenAI extend Intelligence”, Medium, July 15, July 18, 2023, https://blog-idceurope.
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210 Sam Cole, “Unpacking blog/2023/01/23/microsoftandop on-demand-collection-crafted-by-
FW23 with Roa’s creative enaiextendpartnership/ artificial-intelligence-d33c0abcecd4 246 Lousie Matsakis, Meaghan
director Patrick Stangbye”, High Tobin and Wency Chen, “How
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roa-fw23-patrick-stangbye-interview/ Start-Up Anthropic”, The New York assistant: AI fashion maven AiDA”, The Guardian, December 21,
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211 Daniel-Yaw Miller, “‘Sportstyle’ www.nytimes.com/2023/09/25/ www.reuters.com/technology/ com/fashion/2021/dec/21/
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Resale Market”, The Business of deal.html new-assistant-ai-fashion-maven- game-and-reinvented-fast-fashion
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businessoffashion.com/articles/retail/ 223 Marc Bain, “Putting AI Shopping 247 Vion, “Temu now tops
sportstyle-footwear-is-taking-over- Assistants to the Test”, The Business 234 Rrik Brynjolfsson, “The Turing charts across Europe, North
the- sneaker-resale-market/ of Fashion, 10 May, 2023, https:// Trap: The Promise & Peril of America and ANZ”, Momentum
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212 Peter Verry, “How Salomon technology/putting-ai-shopping- Stanford Digital Economy thelowdown.momentum.asia/
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213 “SALOMON AND MM6 MAISON assistant-powered-chatgpt customer reviews experience with Boohoo websites, accessed Aug. 22, 2023
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FUNCTIONAL FITS”, Hypebae, 225 Marc Bain, “Putting AI Shopping www.aboutamazon.com/news/ 250 Lousie Matsakis, Meaghan
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214 “Rihanna used the Super Bowl feature”, June 2023, https:// com/fashion/2021/dec/21/
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gq-magazine.co.uk/fashion/article/ T-Shirt, So Retailers Are Making
rihanna-salomon-margiela-super- AI Do It”, Forbes, May 27, 2023, 237 Holger Harreis, Theodora 251 CustomerGlu, “Fast Fashion
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215 Daniel-Yaw Miller, “Can On Set its-hard-to-rave-about-a-plain-white- future of fashion”, McKinsey & www.customerglu.com/blogs/
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com/case-studies/retail/ 227 Marc Bain, “The Complete the-future-of-fashion 252 Xie Kangyu, “拼多多“低价爆款”
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216 12-month interest in “Generative businessoffashion.com/reports/ html
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217 Krystal Hu, “ChatGPT sets record 228 “Moncler Genius AI 240 Adobe Firefly company website, a Crowded Market”, Bloomberg
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user-base-analyst-note-2023-02-01/ 229 Marc Bain, “What Really Went www.clo3d.com/en/
Into Casablanca’s AI-Generated 254 “Who is Temu?”, Momentum
218 Marc Bain, “The Complete Marketing Campaign”, The 242 Interview with Norma Kamali, Works, February 2023, https://
Playbook for Generative AI Business of Fashion, 12 May, 2023, fashion designer and brand owner, and momentum.asia/product/
in Fashion”, The Business of https://www.businessoffashion. Nima Abbasi, Partner of Maison Meta who-is-temu/
Fashion, 20 June, 2023, https:// com/articles/technology/ in September 2023
www.businessoffashion.com/ what-really-went-into-casablancas-ai- 255 John Deighton, “How SHEIN
122
and Temu Conquered Fast Fashion – of Lax U.S. Trade Laws”, June 14, newsroom/news/news-detail/ 290 Doug Stephens, “How to Win in
and Forged a New Business Model”, 2023, https://www.cassidy.senate. hugo-boss-with-record-year-2022 Retail: Less Science, More Art”, The
Harvard Business School, Apr. 25, gov/newsroom/press-releases/ Business of Fashion, August 11, 2023,
2023, https://hbswk.hbs.edu/item/ cassidy-baldwin-introduce-bill-to- 279 Luke Leitch, “Ermenegildo Zegna https://www.businessoffashion.com/
how-shein-and-temu-conquered-fast- stop-china-from-taking-advantage-of- and Fear of God Are Trying to Rewrite opinions/retail/how-to-win-in-retail-
fashion-and-forged-a-new-business- lax-us-trade-laws the ‘Rules’ of Menswear”, Vogue, less-science-more-art/
model March 2, 2020, https://www.vogue.
267 “PayPal: Temu to the rescue – or com/slideshow/ermenegildo-zegna- 291 Cappasity, “How to make your
256 Maria Williams, “Temu and Shein: maybe not”, The Financial Times, fear-of-god-collaboration store hyperphysical with immersive
A deep dive into their differences”, October 2, 2023, https://www.ft.com/ technologies”, Medium, September 29,
Fashion Week Daily, June 9, 2023, content/e7877670-c7c0-46ed-9ab5- 280 Robert Williams, “How 2022, https://cappasity.com/how-to-
https://fashionweekdaily.com/ 7f1288f432c4 Zegna Is Adapting to Menswear’s make-your-store-hyperphysical-with-
temu-and-shein-a-deep-dive-into- Transformation”, The Business of immersive-technologies/
their-differences/ 268 Jing Yang, “Fashion Giant Shein Fashion, April 6, 2022, https://www.
Raises $2 Billion but Lowers Valuation businessoffashion.com/articles/ 292 James Parkes, “Jacquemus creates
257 Sadie Bargeron, “How China’s by a Third”, The Wall Street Journal, luxury/how-zegna-is-adapting-to- surrealist interpretation of his own
Shein Conquered Global Social May 18, 2023, https://www.wsj.com/ menswears-transformation/ bathroom for Selfridges pop-up”,
Media”, Jing Daily, Apr. 9, 2021, articles/fashion-giant-shein-raises- Dezeen, May 11, 2022, https://www.
https://jingdaily.com/how-chinas- 2-billion-but-lowers-valuation-by-a- 281 Tamison O’Connor, “Ermenegildo dezeen.com/2022/05/11/jacquemus-
shein-conquered-global-social-media/ third-1f8c316b Zegna Sidesteps Luxury’s US le-bleu-selfridges-retail-interiors/
Slowdown”, The Business of
258 Tracy Wen Liu, “Temu Is Losing 269 Mohamed Dabo, “Shein to open Fashion, July 27, 2023, https://www. 293 Limei Hoang, “Hyperphysical
Millions of Dollars to Send You 30 stores across UK”, Retail Insight businessoffashion.com/articles/ Stores Are The Next Big Thing.
Cheap Socks”, Wired, May 26, 2023, Network, May 18, 2023, https://www. luxury/ermenegildo-zegna-sidesteps- But Are They Here To Stay?”,
https://www.wired.co.uk/article/ retail-insight-network.com/news/ luxurys-us-slowdown/ Luxury Society, May 24, 2022,
temu-is-losing-millions-of-dollars-to- shein-30-stores-across-uk/ https://www.luxurysociety.
send-you-cheap-socks 282 Joyce Li, “New Balance Year com/en/articles/2022/05/
270 Stefan Van Rompaey, “Shein Over Year Sales Have Increased 115% hyperphysical-stores-are-next-big-
259 Scott Peterson, “Temu, Shein and Forever 21 join forces”, Retail in 2022”, Hypebeast, February 16, thing-are-they-here-stay
and Tiktok Shop are reaching deep Detail, August 25, 2023, https:// 2023, https://hypebeast.com/2023/2/
into their pockets to penetrate www.retaildetail.eu/news/fashion/ new-balance-year-over-year-sales- 294 H&M, “H&M Teams Up with
Western markets”, OMR, October shein-and-forever-21-join-forces/ report Disney and Artist Trevor Andrew to
10, 2023, https://omr.com/en/daily/ Create a Limited-Edition Streetwear
temu-tiktok-investing-billions 271 James Davey, “Shein buys 283 Mike DeStefano, “How New Capsule Collection and Immersive Art
Missguided brand from Britain’s Balance Reinvented Itself”, Complex, Installation at H&M Williamsburg”,
260 Chavie Lieber, “How Brands Get Frasers”, Reuters, October 30, 2023, https://stories.complex.com/ July 22, 2023, https://www.
Customers Addicted to Shopping”, https://www.reuters.com/markets/ new-balance-reinvention/ prnewswire.com/news-releases/
The Business of Fashion, June 23, deals/shein-buys-missguided-ip- hm-teams-up-with-disney-and-artist-
2021, https://www.businessoffashion. mike-ashleys-frasers-2023-10-30/ 284 Joyce Li, “New Balance Year trevor-andrew-to-create-a-limited-
com/articles/technology/ Over Year Sales Have Increased 115% edition-streetwear-capsule-collection-
how-brands-get-customers-addicted- 272 Vidhi Choudhary, “Shein bets on in 2022”, Hypebeast, February 16, and-immersive-art-installation-at-
to-shopping/ third-party marketplace, pop-ups to 2023, https://hypebeast.com/2023/2/ hm-williamsburg-301883118.html
grow its following in the U.S.”, Modern new-balance-year-over-year-sales-
261 Chavie Lieber, “How Brands Get Retail, May 23, 2023, https://www. report 295 Chloe Mills, “Store gallery: Inside
Customers Addicted to Shopping”, modernretail.co/technology/shein- PrettyLittleThing’s new ‘pink haven’
The Business of Fashion, June 23, bets-on-third-party-marketplace-pop- 285 Jonathan White, “Why is showroom”, RetailWeek, April 13, 2023,
2021, https://www.businessoffashion. ups-to-grow-its-following-in-the-u-s everyone buying New Balance https://www.retail-week.com/fashion/
com/articles/technology/ sneakers? The ‘dad shoe’ is right store-gallery-inside-prettylittlethings-
how-brands-get-customers-addicted- 273 Tiffany Ap, “Temu’s Ambitions on trend, has had high-profile new-pink-haven-showroom/7043536.
to-shopping/ Are Bigger Than Beating Shein”, The collaborations and was worn at article
Business of Fashion, Mar. 20, 2023, the Fifa World Cup”, South China
262 “Case Study: Quantifying Temu’s https://www.businessoffashion.com/ Morning Post, January 16, 2023, 296 Imran Amed, “The BoF
Market Entrance with Credit Card articles/retail/temus-ambitions-are- https://www.scmp.com/lifestyle/ Podcast | Why Fashion, Media and
Transaction Data”, Earnest, March 8, bigger-than-beating-shein/ fashion-beauty/article/3206550/ Entertainment Are Converging”,
2023, https://www.earnestanalytics. why-everyone-buying-new-balance- The Business of Fashion, August 25,
com/temu-clv-matches-walmart/ 274 Tiffany Ap, “How Shein Wound Up sneakers-dad-shoe-right-trend-has- 2023, https://www.businessoffashion.
in the Luxury Fashion Business”, The had-high-profile-collaborations com/podcasts/workplace-talent/
263 Jennifer Wills, “Saying farewell Business of Fashion, Sept. 28, 2023, the-bof-podcast-why-fashion-media-
to a throwaway fashion industry”, https://www.businessoffashion.com/ 286 Lyst, “The Lyst Index: Fashion’s and-entertainment-are-converging/
European Commission, October articles/retail/shein-marketplace- Hottest Brands and Products”, Q2
19, 2021, https://ec.europa.eu/ designer-luxury-listings/ 2023, https://www.lyst.com/data/ 297 Robert Williams, “LVMH Inks
research-and-innovation/en/ the-lyst-index/q223/ Blockbuster Olympics Deal”, The
horizon-magazine/saying-farewell- 275 Amazon Ads and Twitch Ads. Business of Fashion, July 24, 2023,
throwaway-fashion-industry “Anatomy of Hype”, July 25, 2023, 287 Doug Stephens, “How to Win in https://www.businessoffashion.
https://advertising.amazon.com/ Retail: Less Science, More Art”, The com/articles/luxury/
264 Jenna Benchetrit, “How the en-gb/library/guides/global-research- Business of Fashion, August 11, 2023, lvmh-inks-blockbuster-olympics-deal/
Shein influencer trip marked a on-fans-and-fan-engagement https://www.businessoffashion.com/
turning point in the brand-sponsored opinions/retail/how-to-win-in-retail- 298 “LVMH has become a Premium
vacation trend”, CBC, June 28, 2023, 276 BoF-McKinsey State of Fashion less-science-more-art/ Partner of the Paris 2024 Olympic and
https://www.cbc.ca/news/business/ 2024 Survey Paralympic Games and will share its
shein-influencer-trip-marketing- 288 Diana Pearl, “The Essential Brand creative excellence and craftsmanship
trend-1.6890922 277 Diana Pearl, “The Essential Brand Marketing Guide”, The Business for key celebratory moments during
Marketing Guide”, The Business of Fashion, September 20, 2023, the Olympic and Paralympic Games”,
265 Krystal Hu and Arriana of Fashion, September 20, 2023, https://www.businessoffashion. LVMH, July 24, 2023, https://
McLymore, “Fast-fashion giant Shein https://www.businessoffashion. com/case-studies/marketing-pr/ www.lvmh.com/news-documents/
plans Mexico factory”, Reuters, com/case-studies/marketing-pr/ brand-marketing-strategy-guide- press-releases/lvmh-has-become-
May 24, 2023, https://www.reuters. brand-marketing-strategy-guide- fashion-beauty-jacquemus-coach-hill- a-premium-partner-of-the-paris-
com/business/retail-consumer/ fashion-beauty-jacquemus-coach-hill- house-home-dae-hair/ 2024-olympic-and-paralympic-
fast-fashion-giant-shein-plans- house-home-dae-hair/ games-and-will-share-its-creative-
mexico-factory-sources-2023-05-24/ 289 Emily Pang, “Tiffany & Co’s excellence-and-craftsmanship-for-
278 Hugo Boss, “Hugo Boss With Rebranding”, Mash Mag, https:// key-celebratory-moments-during-
266 “Cassidy, Baldwin Introduce Bill Record Year 2022”, Mar. 9, 2023, www.uscmashmag.com/tiffany-cos- the-olympic-and-paralympic/
to Stop China from Taking Advantage https://group.hugoboss.com/en/ rebranding
123
The State of Fashion 2024
299 “Pinault Buys Majority Stake in Textile Recycling in Europe — Turning fast-fashion-2023-08-23/ facing-cash-crunch
Talent Agency CAA”, The Business Waste Into Value”, McKinsey, July
of Fashion, September 7, 2023, 14, 2022, https://www.mckinsey. 322 The New York Fashion Act, 334 Marrian Zhou, “Factory strikes
https://www.businessoffashion. com/industries/retail/our-insights/ https://www.thefashionact.org/ flare up in China as economic
com/articles/luxury/ scaling-textile-recycling-in-europe- woes deepen”, Nikkei Asia, August
pinault-buys-majority-stake-in-caa/ turning-waste-into-value 323 UK Green Claims Code, https:// 28, 2023, https://asia.nikkei.
greenclaims.campaign.gov.uk/; “An com/Business/Business-trends/
300 Jacob Gronholt-pedersen, “EU 310 Olivia Rockeman, “A slew Energy Sector Roadmap to Carbon Factory-strikes-flare-up-in-China-as-
wants all textile waste rules in place of countries are asking fashion Neutrality in China”, IEA, September economic-woes-deepen
by 2028, commissioner says,” Reuters, companies to pay for recycling 2021, https://www.iea.org/reports/
June 27, 2023, https://www.reuters. programs as clothing waste an-energy-sector-roadmap-to-carbon- 335 “Bangladesh: Over 300 factories
com/sustainability/eu-wants-all- becomes overwhelming”, neutrality-in-china incl. garment factories close, leaving
textile-waste-rules-place-by-2028- Fortune, March 30, 2023, https:// over 44000 workers unemployed”,
commissioner-2023-06-27/ fortune.com/2023/05/30/ 324 Sarah Kent, “The United Business and Human Rights Resource
fashion-waste-recycling-programs- Nations to Fashion: Stop Pushing Centre, https://www.business-
301 European Commission, epr-proposed-laws/ Overconsumption”, The Business humanrights.org/en/latest-news/
“Communication from the of Fashion, June 28, 2023, bangladesh-over-300-factories-incl-
Commission to the European 311 European Commission, “Circular https://www.businessoffashion. garment-factories-close-leaving-over-
Parliament: EU Strategy for Economy for Textiles: Taking com/articles/sustainability/ 44000-workers-unemployed/
Sustainable and Circular Textiles”, Responsibility to Reduce, Reuse, fashion-marketing-sustainability-
March 30, 2022, https://eur-lex. and Recycle Textile Waste and greenwashing-un-unep-charter/ 336 McKinsey CPO Survey 2024,
europa.eu/legal-content/EN/TXT/ Boosting Markets for Used Textiles”, October 2023
HTML/?uri=CELEX:52022DC0141 July 5, 2023, https://ec.europa.eu/ 325 United Nations Environment
commission/presscorner/detail/en/ Programme and UN Climate 337 12 McKinsey internal expert
302 European Commission, ip_23_3635 Change’s Fashion Industry Charter interviews
“How is the EU making fashion for Climate Action, “The Sustainable
more sustainable?”, https:// 312 Lidia Luttin, “Full Overview of the Fashion Communication Playbook”, 338 Mark Barnes, “Vietnamese
environment.ec.europa.eu/topics/ EU Textile Strategy and Regulations”, June 2023, https://www.unep.org/ Garment Makets Hit Snag: Omen or
circular-economy/reset-trend/ Carbonfact, October 2, 2023, https:// interactives/sustainable-fashion- Opportunity?”, Vietnam Briefing,
how-eu-making-fashion-sustainable_en www.carbonfact.com/blog/policy/ communication-playbook/ November 11, 2022, https://www.
eu-regulations-for-textile-brands vietnam-briefing.com/news/
303 Sandy Ong, “Asian garment 326 Hau L. Lee, V. Padmanabhan, vietnamese-garment-makers-hit-
makers call for more help from 313 Helen Reid, “New EU Seungjin Whang, “The Bullwhip snag-omen-or-opportunity.html/
brands to adapt as Europe calls time sustainability reporting rules are Effect in Supply Chains”, MIT Sloan
on fast fashion”, Reuters, August a challenge, says Puma,” Reuters, Management Review, April 15, 1997, 339 McKinsey CPO Survey 2024 of
23, 2023, https://www.reuters. September 6, 2023, https://www. https://sloanreview.mit.edu/article/ 34 global Chief Procurement Officers,
com/sustainability/society-equity/ reuters.com/sustainability/ the-bullwhip-effect-in-supply-chains/ October 2023
asian-garment-makers-call-more- reuters-impact-new-eu-sustainability-
help-brands-adapt-europe-calls-time- reporting-rules-are-challenge-says- 327 Colleen Baum, Michael Hauer, 340 Anna Granskog, Libbi Lee, “The
fast-fashion-2023-08-23/ puma-2023-09-06/ Aniket Joglekar, Alessandro Turco, fashion industry can reduce emissions
“Thinking beyond markdowns across the entire value chain”,
304 Sandy Ong, “Asian garment 314 Norton Rose, “Directive on to tackle retail’s inventory glut”, McKinsey & Company, October 19,
makers call for more help from Green Claims”, May 2023, https:// McKinsey & Company, May 8, 2020, https://www.mckinsey.com/
brands to adapt as Europe calls time www.nortonrosefulbright.com/en/ 2023, https://www.mckinsey.com/ capabilities/sustainability/our-insights/
on fast fashion”, Reuters, August knowledge/publications/95a13d01/ industries/retail/our-insights/ sustainability-blog/the-fashion-
23, 2023, https://www.reuters. green-claims thinking-beyond-markdowns-to- industry-can-reduce-emissions-
com/sustainability/society-equity/ tackle-retails-inventory-glut across-the-entire-value-chain
asian-garment-makers-call-more- 315 Trustrace, “About Us: Traceability
help-brands-adapt-europe-calls-time- for Responsible Supply Chains”, 328 UN Comtrade Export Analysis, 341 Jaee Nikam, “Gaps, challenges
fast-fashion-2023-08-23/ https://trustrace.com/about-us September 2023 and drivers for environmentally
sustainable textile and garment
305 Ellen MacArthur Foundation, 316 McKinsey analysis, August 2023 329 McKinsey internal expert manufacturing in India”, Stockholm
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Design”, June 6 2022, https://www. 317 Kering, https://www.kering.com/ https://www.sei.org/publications/
ellenmacarthurfoundation.org/news/ en/news/mil-a-laboratory-for-more- 330 “Swiss textile machinery firm environmentally-sustainable-textile-
an-introduction-to-circular-design sustainable-materials/ Rieter to cut at least 300 jobs”, garment-manufacturing-india/
Swiss Info, July 20, 2023, https://
306 European Commission, 318 Sarah Kent, “Would You Buy a www.swissinfo.ch/eng/business/ 342 Jared Paben, “Despite textiles
“Ecodesign for Sustainable Mushroom Handbag?” The Business swiss-textile-machinery-firm-rieter- slump, Unifi ups domestic RPET
Products Regulation”, https:// of Fashion, May 23, 2022, https:// to-cut-at-least-300-jobs/48675726 sales”, Plastics Recycling, August 29,
commission.europa.eu/energy- www.businessoffashion.com/articles/ 2023, https://resource-recycling.
climate-change-environment/ sustainability/would-you-buy-a- 331 “Pakistan’s economic woes leave com/plastics/2023/08/29/
standards-tools-and-labels/products- mushroom-handbag/ textile industry in tatters”, The despite-textiles-slump-unifi-ups-
labelling-rules-and-requirements/ Economic Times, August 6, 2023, domestic-rpet-sales/
sustainable-products/ecodesign- 319 Renewcell Annual Report 2022, https://economictimes.indiatimes.
sustainable-products-regulation_en https://www.renewcell.com/en/ com/news/international/world-news/ 343 Oliver Pike, “What Companies
financial-reports-and-presentations/ pakistans-economic-woes-leave- Within and Outside the EU Can
307 European Commission, textile-industry-in-tatters/ Expect of New EU ESG Regulations,”
“Green Claims Directive”, https:// 320 Sarah Kent, “Recycler Renewcell articleshow/102466381.cms Thomson Reuters, May 4, 2023,
environment.ec.europa.eu/topics/ Replaces CEO Amid Weak Sales”, The https://www.thomsonreuters.com/
circular-economy/green-claims_en Business of Fashion, October 16, 2023, 332 “Textile mills under crisis, yarn en-us/posts/esg/csrd-esg-regulations/
https://www.businessoffashion.com/ production suspended”, The Times
308 Elena Pappas, “Latest Trend news/sustainability/renewcell-ceo- of India, July 17, 2023, https:// 344 McKinsey CPO Survey 2024 of
Keeps Clothes Out of Landfill”, replace-textile-recycling/ timesofindia.indiatimes.com/ 34 global Chief Procurement Officers,
European Commission, October videos/news/tn-textile-mills-under- October 2023
20, 2021, https://ec.europa. 321 Sandy Ong, “Asian garment crisis-yarn-production-suspended/
eu/research-and-innovation/ makers call for more help from videoshow/101817453.cms 345 Adidas, https://www.adidas-
en/horizon-magazine/ brands to adapt as Europe calls time group.com/en/sustainability/
latest-trend-keeps-clothes-out-landfill on fast fashion”, Reuters, August 333 “Indian Textile Exports Shrink, social-impacts/supply-chain/#/
23, 2023, https://www.reuters. Mills Facing Cash Crunch”, Maritime training-and-empowering-suppliers/
309 Saskia Hedrich, Jonatan Janmark, com/sustainability/society-equity/ Getaway, July 17, 2023, https://
Moa Strand, Nikolai Langguth and asian-garment-makers-call-more- www.maritimegateway.com/ 346 PVH, “Advance Human Rights”,
Karl-Hendrick Magnus, ”Scaling help-brands-adapt-europe-calls-time- indian-textile-exports-shrink-mills- https://www.pvh.com/responsibility/
124
human-rights CNBC, February 4, 2020, https:// press-releases/excellent-first-half-for- www.bloomberg.com/news/
www.cnbc.com/2020/02/04/ lvmh-july-2023/#:~:text=Profit%20 articles/2023-09-28/nike-rises-
347 Tanya Klich, “Louis Vuitton Raises macys-to-close-125-stores-sees-480- from%20recurring%20 after-reporting-its-inventory-glut-is-
Prices Worldwide Due To Increased million-in-restructuring-costs-to- operations%20for,at%20 easing?utm_source=website&utm_
Costs And Inflation”, Forbes, Feb 2000-corporate-jobs.html %E2%82%AC8%20481%20million; medium=share&utm_campaign=email
15, 2022, https://www.forbes.com/ Hermès, “Excellente performance
sites/tanyaklich/2022/02/15/ 357 Walter Loeb, “Dillard’s des ventes et des résultats au 1er 370 Samsonite, “Samsonite
louis-vuitton-raises--prices- Reports Year End 2022 Results”, semestre”, Jul.28, 2023, https://assets- International S.A. Announces Results
worldwide-due-to-increased-costs- Forbes, February 21, 2023, finance.hermes.com/s3fs-public/ for the Six Months Ended June 30,
and-inflation/?sh=1fecb6946878 https://www.forbes.com/ node/pdf_file/2023-07/1690487668/ 2023”, August 16, 2023, https://
sites/walterloeb/2023/02/21/ hermes_20230728_cp_ corporate.samsonite.com/en/press-
348 Corina Pons, “Inditex profit jumps dillards-reports-year-end-2022- resultatspremiersemestre_vf.pdf releases.html
as Zara owner lifts prices”, Reuters, results/?sh=23504555115c
Dec. 14, 2022, https://www.reuters. 365 Prada Group, “PRADA 371 Pamela N. Danziger, “Luxury
com/business/retail-consumer/ 358 Tapestry, “TAPESTRY, INC. S.P.A. APPROVES RESULTS Brands See Drop In U.S., Where
inditex-9-month-profit-jumps- REPORTS FISCAL 2022 FOURTH AS OF 30 JUNE 2023”, 27 Aspirational Consumers Put New
increases-fashion-prices-2022- QUARTER AND FULL YEAR July, 2023, https://www. Purchases On Hold”, Forbes, July
12-14/#:~:text=MADRID%2C%20 RESULTS”, August 18, 2022, https:// pradagroup.com/en/news-media/ 29, 2023, https://www.forbes.com/
Dec%2014%20 tapestry.gcs-web.com/news-releases/ news-section/23-07-27-prada- sites/pamdanziger/2023/07/29/
(Reuters),weakening%20global%20 news-release-details/tapestry- group-financial-results-h1-2023. luxury-leaders-sales-drop-in-us-as-
demand%20for%20clothing. inc-reports-fiscal-2022-fourth- html; Hugo Boss, “First Half Year -aspirational-consumers-put-new-
quarter-and-full-year#:~:text=In%20 Report 2023”, Jul.19, 2023, https:// purchases-on-hold/?sh=47607a07415c
349 Walter Loeb, “Uniqlo Will Raise Fiscal%202022%2C%20 group.hugoboss.com/en/investors/
Prices As Japan Shifts Attitude On Tapestry%20returned,cost%20of%20 publications/results; Moncler Group, 372 Anta Sports “ANTA SPORTS
Holding Prices”, Forbes, Jan. 13, %2438.08%20per%20share. “GROUP H1 2023 REVENUES PRODUCTS LIMITED ANNUAL
2022 https://www.forbes.com/sites/ REACH OVER 1.1 BILLION EUROS REPORT 2022”, 2022, https://
walterloeb/2022/01/13/uniqlo-will- 359 Maliha Shoaib, “Tapestry raises (+24% cFX) MONCLER BRAND manager.wisdomir.com/files/394/2
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The Business of Fashion is a next-generation media company recognised around the world for its
authoritative, analytical point of view on the global fashion industry. Serving members in more
than 125 countries, BoF combines independent, agenda-setting journalism with practical business
advice, online learning, career-building tools and immersive events and experiences designed to
open, inform and connect the global fashion community.
Brian Baskin
Deputy Editor
[email protected]
126
For questions on the report or further discussions, please contact
a member of McKinsey’s global consumer leadership team:
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The State of Fashion 2024
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