Is there still room for optimism in fashion retail after 2024? Executives don’t foresee much improvement, research suggests McKinsey. Yet there remains untapped potential for those who dare to challenge the status quo and follow these ten trends.
1. Asia, much more than China
With China’s economic growth slowing, international fashion brands are looking to other Asian markets, such as India, Japan and South Korea. India notably offers an unprecedented opportunity with its young, digital and rising-wage consumers, according to 67% of fashion executives. Multinationals like H&M et Mango are investing heavily in the region, often in collaboration with local partners like Reliance Retail to capture greater market share together.
2. Redistribution of world trade
China is also becoming less attractive in terms of production, due to rapidly increasing labor costs and the Sino-US trade conflict. With several hotbeds of war and Trump in power, geopolitical tensions promise to further complicate supply chains in 2025. Since 2015, there have been five times more trade barriers and supply chain disruptions, with 3,000 trade restrictions imposed in 2023 alone.
Efficient, flexible and digital supply chains are becoming essential. Relocation and strategic collaborations with suppliers are gaining ground. Over the past five years, reshoring investments have increased by 20% in the US and 8% in the EU. Companies like Look et Sailor are relocating their production to countries such as Turkey and Portugal. At the same time, brands are investing in technologies like blockchain to improve transparency and traceability in their supply chains.
3. The silver generation, a treasure
It’s not just the young generation Z and Alpha who deserve attention: the silver generation, aged over 50, should not be underestimated. They will account for 48% of global spending growth in 2025, according to McKinsey calculations. Fifty-year-olds already hold 72% of the wealth in the United States and are buying more and more fashion products.
Timeless designs, functionality and brand consistency are the keys to success in this segment. Luxury brands like Gucci et Burberry are turning again to classic collections and timeless elegance, following the examples of Chanel et Hermesespecially now that young, aspirational luxury buyers are retreating.
4. Bargain hunting
Consumers will continue to look for bargains and good value in 2025, driven by inflation and macroeconomic pressure. Already 41% of fashion shoppers say they shop at second-hand stores (online or offline), but it’s even more striking that one in three adults in the United States admit to deliberately purchasing counterfeit versions of luxury goods or premium.
The State of Fashion study cites Vinted et The RealReal as players that will continue to thrive, along with outlet stores and other bargain sellers. However, all brands must clearly communicate their value for money to retain their customers.
5. AI as an ideal customer advisor
Artificial intelligence is transforming the way consumers discover products. Knowing that 74% of customers abandon online shopping due to too many choices, AI could help 82% of customers spend less time researching products. Generative AI is already enabling platforms like Zalando to make personalized recommendations, while the platform Alibaba Wenwen records a 30% higher click-through rate thanks to its personalized content. Personalization improves customer experience and increases conversion rates.
6. Sportswear on the move
Competition between established brands like Nike et Adidas and emerging challengers are intensifying. Innovation, the use of digital channels and collaboration with influencers are crucial to gaining market share in this growing sector. New Balance is, according to McKinsey and BoF, a good example of a brand that successfully collaborates with local influencers and athletes to strengthen its image and visibility, while gaining market share against dominant players.
7. Online platform disruption
After the pandemic, online marketplaces are facing falling stock prices and rising acquisition costs. Platforms must redefine their value in the ecosystem to stay relevant. The State of Fashion describes how platforms like ASOS et Farfetch form strategic partnerships to expand their reach. For example, Farfetch collaborates with Alibaba and Richemont to access the Chinese market, while ASOS invests in technology partners to improve logistics and customer focus.
8. Stocks to count
The fashion industry lost between $70 billion and $140 billion in 2023 in excess inventory, representing between 2.5 billion and 5 billion items. With increasing uncertainty and instability (including even weather due to climate change), this will not automatically improve. On the contrary, in 2025, margin pressure and sustainability regulations will put even more emphasis on planning.
Just by purchasing different sizes inaccurately, brands lose an average of 20% of their profits each month. When European ecodesign laws prohibit, from 2026, the destruction of unsold products, these costs will increase further. Fortunately, technology and data can help. For example, Dry reported 20% increased accuracy in its inventory forecasts using AI-driven demand planning. ASOS is also experimenting with “test and response” for its own-brand products: the platform starts with small quantities and waits for market feedback before ordering more.
9. The human dimension in store
Physical stores are making a comeback. Brands are focusing on improving customer interactions by training store staff, as this improves loyalty and drives sales. 75% of people who walk into a store say they are willing to spend more if they receive high-quality service. Companies like Nordstrom are therefore investing in customer-focused training for their employees, including personal style consulting courses and the effective use of customer feedback to improve the in-store experience.
10. Collaboration for sustainability
63% of brands are behind on their CO2 emissions reduction targets for 2030. Despite this weakened focus on sustainability due to economic challenges, the theme remains essential. Innovations in circular fashion, stricter regulation and above all collective action are necessary according to the report to meet the expectations of consumers and governments. Stella McCartneyfor example, focuses on the development of leather based on mycelium, while Patagonia continues to invest in recycled materials and repair programs to extend the life of clothing.
“The logic of the past is outdated”
So what will 2025 look like for fashion? Only 20% of managers expect growth, while 41% expect stability and 39% expect deterioration. Consumer confidence and willingness to purchase are the biggest concerns, with 80% of consumers planning to spend the same or less on clothing in 2024.
“The industry is seeking a new normal in a post-COVID world that is more uncertain and unstable than ever. ‘The State of Fashion 2025’ highlights that the logic of the past is outdated. The fashion industry needs new growth strategies,” concludes Imran Ahmed of The Business of Fashion.
