This is a trend summary of the recent 2020 BOF McKinsey and Company report.
Firstly, the mood for 2020 is not positive, as only 9 percent of respondents think conditions for the industry will improve this year, compared to 49 percent who said the same last year. “Challenging,” “uncertain” and “disruptive” were the most frequently used words to describe the industry compared to last year’s more neutral “changing,” “digital” and “fast.”
We are moving into challenging times. And people are nervous.
The three biggest opportunities for the industry from the survey were; 1-Sustainability, 2-Digitisation and 3-Innovation.
Sustainability has been a topic bubbling away as an undercurrent for several years but in 2020 it becomes the number one force in all of the fashion industry. FIB cannot stress this highly enough. If you do not embrace sustainability then you will be cast aside.
Today the waves of massive social movements are sweeping the globe and for the first time for the fashion industry, sustainability topped the list of the biggest challenges facing the industry, and it was also named the biggest opportunity; the rise of Extinction Rebellion and the demonstrated ability of Greta Thunberg to mobilise her generation make this ever-more relevant.
Alongside sustainability and digitisation, the third major opportunity for the industry next year, as cited by our survey respondents, was innovation.
FIB says Innovation can take many guises, you can innovate in sourcing, in production, in collaboration, in design, in marketing, but the warning is clear, failure to innovate will mean grave risks.
No wonder then, given the investment needed to meet these challenges, that small and medium-sized players are particularly nervous about what lies ahead.
The 10 fashion industry themes that will set the agenda in 2020:
1. On High Alert
Continued caution is advised for the year ahead as mounting underlying turmoil could disrupt relations among both developed and emerging market economies. Indicators of recession risk are spurring companies across industries to build a resiliency playbook and plan for other macro risks such as geopolitical instability and the inflammation of trade tensions.
2. Beyond China
China will continue to provide exciting opportunities and play a leading role in the global fashion industry, but the colossal market is proving harder to crack than brands anticipated. As some successful players become over-reliant on China and others struggle, companies should consider spreading their risk by expanding to other high-growth geographies.
3. Next Gen Social
As traditional engagement models struggle on established social media platforms, fashion players will need to rethink their strategy and find ways to maximise their return on marketing spend. Attention-grabbing content will be key, deployed on the right platform for each market, using persuasive calls-to-action and, wherever possible, a seamless link to checkout.
4. In the Neighbourhood
Consumer demand for convenience and immediacy is prompting retailers to complement existing brick-and-mortar networks with smaller format stores that meet customers wherever they are and reduce friction in the customer journey. The winning formula will feature in-store experiences and localised assortments in neighbourhoods and suburbs beyond the main shopping thoroughfares.
5. Sustainability First
The global fashion industry is extremely energy-consuming, and is the the 2nd most polluting and wasteful sector in the world, being eclipsed only buy the fossil fuel industry. Despite some modest progress, fashion hasn’t yet taken its environmental responsibilities seriously enough. 2020, fashion players need to swap platitudes and promotional noise for meaningful action and regulatory compliance while facing up to consumer demand for transformational change.
6. Materials Revolution
Fashion brands are exploring alternatives to today’s standard materials, with key players focused on more sustainable substitutes that include recently rediscovered and re-engineered old favourites as well as high-tech materials that deliver on aesthetics and function. We expect R&D to increasingly focus on materials science for new fibres, textiles, finishes and other material innovations to be used at scale.
7. Inclusive Culture
Consumers and employees are putting increasing pressure on fashion companies to become proactive advocates of diversity and inclusion. More companies will elevate diversity and inclusion as a higher priority, embed it across the organisation and hire dedicated leadership roles, but companies’ initiatives will also come under increasing scrutiny in terms of sincerity and results.
8. Cross-Border Challengers
Established fashion brands and retailers will face growing competition from new Asian challengers, as manufacturers and SMEs step out of their traditional roles and sell directly to global consumers. Expect greater competition from hitherto unknown players in the Asian supply chain who design popular items to sell at affordable prices using cross-border e-commerce platforms.
9. Unconventional Conventions
Traditional trade shows must respond to the increase of direct-to- consumer activity, shorter fashion cycles and digitisation by embracing new roles and fine-tuning their target audience. In a bid to differentiate themselves — or even just to survive — more of these events will add B2C attractions or launch new services and experiences to improve relationships with their traditional B2B audience.
10. Digital Recalibration
Valuations of digital fashion players have reached dizzying levels and, despite a slew of high-profile IPOs and private firms achieving unicorn status, investor sentiment is taking a turn for the worse. Investor apprehension is growing over the path to profitability for some digital players, from online pure play retailers and marketplaces, to direct-to-consumer brands and other digital-first business models.
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