What is the State of Fashion?

The State of Fashion 2023 is an annual report, prepared by The Business of Fashion (BOF) and McKinsey & Company, which aims, primarily, to inform fashion industry executives and brands the incoming trends, challenges and issues in the coming year, and the main actions to prioritize them to succeed.

The State of Fashion 2023: what is it about?

The State of Fashion 2023 is the seventh annual report, it is divided into 10 themes and the unofficial title is Resilience in the Face of Uncertainty.

The seventh annual report reveals the industry is heading for a global slowdown, characterized by macroeconomic and geopolitical tensions, as well as the climate emergency and a decrease in consumer confidence and purchasing power.

So what will be the challenges and points that brands will have to prioritize in order to survive and remain top of mind to their consumers?

Let’s look at the 10 fashion industry themes that will set the agenda in 2023.

1. Global Fragility

Geopolitical tensions, inflation, and climate change create a situation of uncertainty and fragility in consumers, who have less purchasing power and can reconsider their buying priorities.

Therefore, fashion leaders will require sharpened strategies to remain attractive to customers, considering moving supply chains locally to reduce risks and cut costs.

2. Regional Realities

In 2023 it will probably be more difficult than ever understanding where to invest globally.

Therefore it is necessary that fashion brands can re-evaluate regional growth priorities and rethink their strategies, so they are more tailored to the countries in which they operate or cooperate with.

3. Two-Track Spending

As we have already said, one of the most delicate but crucial points reported concerns customers and their purchasing power.

Leaving aside the wealthiest, who will continue to spend in the luxury field, the rest of the population, depending on several factors, including disposable income levels, will cut, reduce or postpone discretionary purchases, such as those related to clothing, and prefer more essential goods.

A part of the population, less inclined to dig into their wallets, will seek out bargains, increasing demand for resale, rental, and off-price.

Therefore, Fashion executives should adapt their business models to remain appealing to their customers, protect customer loyalty and avoid diluting their brands.

4. Fluid Fashion

Gender fluid fashion will gain great attraction in mainstream markets, as brands need to reflect the change demanded by Gen Z on this topic.

The change will also have to be reflected in terms of design and marketing strategies (to grow, most brands will need to diversify channel mix with a balance of wholesale, third-party marketplaces and DTC), both online and in-store.

5. Formalwear Reinvented

In the post-pandemic, hybrid work remains widespread and workers no longer have two separate wardrobes: one for the office and one for elegant or important occasions.

Therefore, it is necessary for formalwear to occupy a new space in the minds and wardrobes of customers, embracing the concept of versatility.

Resale and rental can be two great opportunities for brands, as we said previously.

6. DTC Reckoning

While brands of all types and price segments have incorporated direct-to-consumer digital channels into their promotion strategy, the rising costs of doing digital marketing and e-commerce adjustments have questioned the feasibility of the DTC model, which is at risk in 2023.

Therefore, to continue to grow in the next year, brands will have to diversify their mix of channels, therefore including wholesale, third-party marketplaces, and DTC of course.

7. Tackling Greenwashing

The sustainability claims of brands will come under the microscope even more due to the incoming laws.

If brands want to avoid greenwashing, they should demonstrate that they are making significant progress towards sustainability and being compliant with all legal requirements.

8. Future-Proofing Manufacturing

Garment manufacturers are reconfiguring global production spurred by ongoing supply chain disruptions and intensifying geopolitical tensions.

Enabled by enhanced digitization, they have an opportunity to lean into vertical integration near shoring and small batch production.

9. Digital Marketing Reloaded

As digital marketing become less effective and more costly, brands will need to create creative campaigns and different channels, such as retail media networks and the metaverse to achieve greater ROI and deepen community-led customer engagement.

10. Organisation Overhaul

Fashion Executives need a new vision for what the organization of the future will look like, focusing on attracting and retaining top talents, as well as elevating teams and senior positions to align with strategic objectives for growth foreign.

Conclusions

To sum up The State of Fashion 2023, we could say that the world is characterized by geopolitical tensions, as well as the climate emergency and a decrease in consumer confidence.

To stay in the minds of consumers, especially those of Gen Z, who will be the new customers in the future, it is necessary to offer products aligned with the themes they talk about and their needs, also dictated by the new post-pandemic normality.

To do this, it will also be necessary to rethink marketing strategies, creating a new channel mix that makes it possible to be more convincing with customers, but also to cut costs.

Another fundamental step will be to think and act locally, bringing your supply chains closer.
In this way, the environmental impact will also be reduced, especially regarding logistics and transport consumption.
Furthermore, there will be a way to pay more attention to workers, and protect their working and economic conditions, thus ensuring greater responsibility and social sustainability.

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To download The State of Fashion 2023 annual report click here.