The report pointed to economic conditions as one factor that is likely to impact the industry in 2019. Issues and uncertainty surrounding trade and tariffs, an inevitable plateau following an extended period of growth, and rising U.S. interest rates are just a few factors suggesting economic conditions will worsen in 2019. As a result, companies in the fashion and apparel industry are likely to focus on agility and throughput – establishing nimble processes in order to increase productivity.
According to the report, India will continue its rise in the industry and gain a firmer foothold. The authors state, “India is increasingly a focal point for the fashion industry, reflecting a rapidly growing middle-class and increasingly powerful manufacturing sector. These, together with strong economic fundamentals and growing tech-savvy, make India too important for international brands to ignore.”
Significant economic growth is projected for India between 2018 and 2022 – nearly 8 percent per year. During the same time period, India’s middle class is expected to grow by 19.4 percent, surpassing China, Mexico and Brazil.
Trump administration policies in 2018 proved to be disruptive for global trade; transforming value chains and revealing new opportunities. As the report notes, “The axes of global trade are shifting.” Industry leaders will begin looking for opportunities in areas demonstrating economic growth or renewed vitality, such as the Global South or parts of the developing world, especially when looking to fill a void left by a key trade partner such as the U.S.
End of Ownership
The rise of the “Gig Economy” and transformation of e-commerce, combined with unique preferences among key consumer groups such as Millennials, has given birth to a shift toward renting apparel or purchasing previously-owned clothing. As the report notes, “Across many categories, consumers have demonstrated an appetite to shift away from traditional ownership to newer ways in which to access product.”
In the younger segments of the population – particularly Millennials and Gen Z – a company’s ethos and values matter nearly as much as the product it offers. According to the report, “Nine in ten Generation Z consumers believe companies have a responsibility to address environmental and social issues.” Representing approximately $350 billion worth of purchasing power in the U.S. alone, Gen Z and Millennials will wield a significant amount of influence in the industry in 2019, and companies will be wise to take note of this trend.
Now or Never
This will be a pivotal year for the fashion and apparel industry in terms of technology, in order to keep pace with – and adapt to – consumer preferences and the current state of e-commerce. McKinsey & Company and Business of Fashion state that in 2019 the major players in the industry will “integrate commerce functionality into social media, enabling direct-to-product journeys.”
At the same time consumers are “getting woke” and seeking more information about the brands they support, fashion and apparel companies have been among the many targets of unprecedented data breaches. In order to effectively counter skepticism and distrust, companies will need to take what would have previously been considered extreme measures to provide transparency – disclosing material costs, mark-up, sourcing and more.
A buzzword now firmly established in the lexicon of tech companies, disruption seems to be the standard that companies that wish to remain relevant are striving for in today’s marketplace. According to the report, self-disruption specifically will be a high priority for industry executives in 2019, who identified it as their number one trend. Those who take the initiative to self-disrupt will benefit and “win new generations of customers.”
In an online marketplace that is growing increasingly crowded, it will be critical for companies to separate themselves from the pack and highlight what differentiates them from the rest of the field in order to remain competitive. As the authors state, companies must “continue to innovate by adding profitable value-added services and focusing on new technologies.”
In the age of automation, 2-hour delivery and instant gratification, apparel brands must adapt. Companies must utilize technology and data to condense their development timelines and even produce in small runs. As a result, the report predicts that more companies will begin to offer on-demand services in 2019.