Year 2016, saw a major slump in businesses of many, luxury fashion brands too experienced slow growth, with 2017 just round the corner, everybody’s hope has inflated expectant of a better business environment and a pickup in sales in the coming year.
A joint report by McKinsey and Business of Fashion, says that the shocks in the global economy caused by the volatility of the Chinese Stock market, terrorist attacks in France, the Brexit vote in the United Kingdom have made 2016 tough for the industry.
The report entitled, ‘The State of Fashion,’ states that the industry which has grown at 5.5 per cent annually, has witnessed consumers being more demanding, more discerning, and less predictable in their purchasing behaviour. It says that these changes are influenced by new technologies and have impacted its growth.
In spite of the uncertainties, findings by McKinsey shows that fashion companies are hopeful they can improve their performance through a combination of organic growth and leveraging new technologies.
According to the report, successful companies will invest more to nurture local clientele and 2017 will be the year of organic growth by deepening relationships with existing clients, rather than through geographic, channel, and store-network expansion.
It adds, “And digital innovation will go behind the scenes: digitisation will be the key to supply-chain efficiency, lowering procurement costs, and the enhancement of sourcing opportunities. Some 40 per cent of executives we interviewed expect conditions for the fashion industry to improve in 2017, compared with the 19 per cent who reported improving conditions in 2016.
It says, “Athletic wear is set to become the absolute category champion, maintaining 6.5 to 7.5 per cent sales growth, although it will be unable to reproduce the double-digit growth of the past. The affordable luxury segment seems likely to continue benefiting from consumers trading down from luxury, while signs point to the continued growth of the value segment as large global players expand internationally.
“They should bear in mind the three trends that we believe will shape the 2017 fashion industry: the global economy, consumer behaviour, and the fashion business model.
