It is no surprise that the last 2 years have been nothing short of a whirlwind and have challenged the fashion industry in unprecedented ways. Due to the pandemic, consumer behavior changed drastically, supply chains were disrupted, and ¾ of the world’s fashion companies saw their economic profits drop by about 90%. But as we enter 2022, the industry is beginning to see the light at the end of the tunnel.
Mckinsey in collaboration with BoF is once again taking a look at the future with its State of Fashion Report for the year 2022 based on extensive research and industry insights.
Here’s a low down on the 10 key trends that will set the agenda in 2022 for the fashion industry.
1. Uneven recovery in the fashion industry
The Mckinsey report states that the fashion industry is all set to recover during 2022. Countries with strong health and economic systems will tend to recover better for obvious reasons. To counteract the uneven recovery, international fashion companies will have to be precise and rigorous in their investment decisions and look for alternatives to reduce market risks and have a more flexible supply chain.
China has been the first one to reach pre-pandemic sales levels with USA close behind, Europe, however, lags behind and will need the return of international tourism to recover.
2. The supply chain chaos must be overcome
The fashion industry is dependent on a complicated web of global supply chains that are seeing unprecedented levels of disruption. The industry is faced with rising transport costs, supply chain shortages, logistical logjams, etc that are adding new levels of complexity. Companies need to adopt modern, cutting-edge supply chains to strengthen production capacity and protect access to raw materials.
3. Focus on domestic spending in 2022
Since travel and tourism are only expected to fully recovery between 2023 & 2024 and travel has been the key driver of luxury spending, companies need to capitalize on this consumer shift from foreign to domestic spending. Travel and tourism are only expected to fully recover between 2023 & 2024. Therefore, luxury players should engage with their domestic consumers as much as they can, work on their duty-free networks and invest in clienteling for local channels.
4. Identifying Customer preferences through data-driven product development
For the past 2 years, there has been enough focus on the likes of loungewear and athleisure. The projected spend will more likely fall on the pent-up demand for garments related to social liberties outside the home. To anticipate this demand, brands should majorly focus on data-driven development to adjust their inventory accordingly.
5. Tapping into the “Metaverse” Mindset
As the hype around Metaverse cascades into virtual goods and with GenZ spending an average of 8 hours a day in front of screens, the fashion leaders will have to find new digital ways to appeal to the younger cohorts. Exploring the possibility of nonfungible tokens, NFTs, Crypto fashion, gaming, etc will help capture these untapped value streams.
6. Social Commerce for digital shopping experiences
Social shopping is becoming increasingly popular with brands, consumers, and investors alike. The use of social media to discover and buy fashion gained momentum for a seamless shopping experience. Although the applications may differ in some countries, the focus on tailored in-app purchases, live streaming, and augmented reality try-on should be the utmost priority for many brands.
7. Recyclable textiles for greener production
One powerful way for the fashion industry to reduce its environmental impact is through closed-loop recycling or circular fashion. This system is beginning to be implemented at scale, promising to limit extractive production and reduce textile waste. In order to significantly reduce its level of environmental damage, the industry will have to also eliminate the use of toxic chemicals, decarbonize the supply chain and reduce emissions.
8. Using digital product passports
In an attempt to boost authentication, transparency, and sustainability, brands are using a range of technologies to store and share product information with consumers and partners. This will also help to tackle the issue of counterfeit products. Therefore, setting standards that support full supply chain traceability is imperative to protect industry transparency.
9. Increased digital security for cyber defences
As the digitization of businesses reaches new dimensions, companies are increasingly faced with cyberattacks and the improper handling of customer data. With the increasing sophistication of cybercrime, brands need to act immediately to shore up their defenses and invest in digital security.
10. Revise work philosophy to retain employees
Companies that are relying on their brand appeal to attract and retain employees will have to up their game as the competition from both within and outside the industry is extremely high. Companies need to revise their philosophy and ensure that their employees are represented in an increasingly flexible and digitized environment
Conclusion
The main takeaway that we draw from the 2022 report is that more than ever, companies have their work cut out to manage the demands of digital, sustainability, and the supply chain. Sustainability is at the forefront of the consumer’s priority and fashion agenda. Due to the increased digitization in every aspect of the fashion industry, the sector must unlock growth and align with the new needs of consumers.
