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Judged purely by the top line, the fashion industry’s outlook for 2025 appears to be a continuation of the sluggishness seen in 2024: revenue growth is expected to stabilize in the low single digits (exhibit). While luxury has led in value creation in recent years, the McKinsey Global Fashion Index forecasts that in 2024 , it is nonluxury that will drive the entirety of the increase in economic profit for the first time since 2010 (excluding the COVID-19 pandemic). (McKinsey & Company, 2024)

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The Sustainability Curve – Key Insights from the State of Fashion 2025 Report

The Sustainability Curve section highlights the ongoing struggle for scaling sustainable innovations in the fashion industry. While innovative materials and processes are emerging, many face barriers in mass adoption, and the industry's sustainability impact continues to grow.

Key Challenges in Scaling Sustainability Innovations

1. Sustainable Innovations Are Struggling to Scale

Companies like Circulose (https://circulo.se/en/) and Bolt Threads (https://boltthreads.com/) are pioneering recyclable and bio-based materials, but high costs and limited production capacity make scaling difficult.

TomTex (https://www.tomtex.com/product/series-m), a biomaterial company, is now expanding beyond fashion to secure larger order volumes and commercial viability.

2. Rising Apparel Consumption & Carbon Footprint

By 2030, global apparel consumption is projected to rise by 63% to 102 million tonnes.

By 2050, the fashion industry could account for over one-quarter of the world’s carbon budget.

The current linear fashion model (take-make-waste) is unsustainable at this growth rate.

3. Supply Chain & Emissions Challenges

Tier-2 production (fabric production & treatment) contributes 45-65% of fashion’s Scope 3 emissions.

75% of fashion brands fail to involve suppliers in sustainability efforts, limiting impact.

Long-term supplier collaboration is critical to reducing emissions, yet most brands operate on short-term contracts.

Solutions for Scaling Sustainability

1. Stronger Brand-Supplier Partnerships

Brands must commit to long-term supplier relationships to drive renewable energy adoption and emissions reduction.

Initiatives like the Renewable Energy Initiative (https://globalfashionagenda.org/renewable-energy-initiative/) and the Future Supplier Initiative (https://futuresupplierinitiative.com/) aim to improve supplier sustainability standards.

2. Industry-Wide Collaboration & Strategic Commitments

The fashion industry needs collective action to scale sustainable solutions across the supply chain.

Brands must consolidate sustainability commitments and share best practices to accelerate change.

3. Investment in Circular & Scalable Innovations

Companies like Circulose, Bolt Threads, and TomTex need industry support to achieve commercial viability.

Fashion brands should partner with sustainable material startups to integrate innovations into mainstream production.

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Industry Outlook and Global Economy According to the State of Fashion

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Industry Outlook and Global Economy According to the State of Fashion

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Goal is to highlight key trends.

1. Global Economy

Trade Reconfigured: Rising costs, evolving trade policies, and sustainability targets push fashion brands to diversify sourcing, especially in Asia, and explore nearshoring.

5x increase in trade barriers since 2015 (~3,000 new restrictions in 2023).

US apparel and textile imports are diversifying away from China at the fastest rate since 2010, down 6% in 2023 vs 2019

Asia’s New Growth Engines: China’s slowdown and shifting consumer preferences make India and Japan key markets for international fashion brands.

63% of fashion executives see APAC (Asia-Pacific) as a region with strong growth potential in 2025.

2. Consumer Shifts

Discovery Reinvented: Consumers are overwhelmed with choices, reducing engagement and conversion rates. AI-powered curation and product discovery will shape the future of fashion retail.

50% of fashion executives believe AI will be key for consumer product discovery.

Silver Spenders: While brands have traditionally targeted younger shoppers, the growing “Silver Generation” (50+) has high spending power. Engaging them can drive incremental growth.

72% of total US wealth is held by those aged over 55.

Value Shift: Rising prices and economic pressures continue to push consumers toward cost-conscious shopping behaviors like resale, off-price retail, and dupes.

70% of consumers plan to shop from outlets or off-price retailers in the next year, even if they can afford full-price items.

3. Fashion System

The Human Side of Sales: Strong in-store experiences remain crucial, with store associates playing a key role in reconnecting with customers. High-quality service enhances spending.

75% of shoppers spend more when receiving good in-store service.

Marketplaces Disrupted: After a boom, online non-luxury marketplaces now struggle with business model challenges and declining demand.

77% drop in online fashion marketplace share prices between January 2021 and September 2024.

Sportswear Showdown: Sportswear growth continues, with new challenger brands capturing market share through strong storytelling and innovative branding.

57% of profits in 2024 are generated by challenger brands.

Inventory Excellence: Excess stock and stockouts remain major challenges, forcing brands to adopt tech-driven inventory management and agile supply chains.

2.5B-5B items of excess stock were produced in 2023, worth $70B-$140B.

The Sustainability Collective: Sustainability remains fragmented, with consumer reluctance to pay for eco-friendly products slowing progress. Industry-wide collaboration is essential.

40% of Bangladesh’s power is projected to come from renewable energy by 2041, driven by collective sustainability efforts.

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Fashion executives interviewed in our annual BoF-McKinsey State of Fashion Executive Survey were equally negative as last year. Only 20% expect consumer sentiment to improve in 2025, while 39% believe industry conditions will worsen.

The regional drivers of revenue and economic profit are likewise undergoing significant changes. The industry will benefit particularly from falling inflation and increased tourism in Europe, the resilience of high-net-worth individuals in the United States, and new growth engines in Asia (to offset uncertainty about consumer spending in China, which is still recovering from the pandemic). China will remain the region's center of gravity, but as the country is buffeted by macroeconomic headwinds, brands will shift their focus to other Asian countries, particularly Japan, Korea and India. (McKinsey & Company, 2024)

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Key Insights on Evolving Consumer Trends and Industry Strategies

1. Localization and Broadened Offerings

Brands are localizing go-to-market strategies and diversifying price ranges.

Focus is on brand positioning to attract value-conscious shoppers.

2. Resale and Off-Price Growth

Expansion in resale and off-price segments driven by consumer demand for value.

Premium brands need to justify their pricing through enhanced customer value.

3. In-Store Experience Revival

Consumers are returning to physical stores at prepandemic levels.

Retailers must enhance the in-store experience with well-trained and inspiring staff.

4. Challenges for Pure-Play Marketplaces

Pure-play luxury marketplaces face difficulties amidst the shift back to physical retail.

Mass online marketplaces are struggling with falling demand and rising acquisition costs.

5. AI-Driven Product Discovery

Shoppers face challenges in finding products on massive online platforms.

AI-powered tools like curation, content, and search improve product discovery and drive purchases.

6. Courting the Silver Generation

The over-50 demographic is growing in both population and fashion spending.

Brands can benefit by targeting this often-overlooked consumer cohort.

7. Challenger Brands on the Rise

Newer, innovative brands are outperforming traditional incumbents in many categories.

Particularly in sportswear, smaller players are rapidly gaining market share.

(McKinsey & Company, 2024)

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How Gen Z is Shaping Sustainable Luxury Fashion

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How Gen Z is Shaping Sustainable Luxury Fashion

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Generation Z, the "Sustainable Generation"

Eco-Conscious Preferences: 62% of Gen Z prefers buying from sustainable brands and is willing to pay more for ethically made products, showcasing their commitment to a greener future.

Social Media as a Catalyst: Growing up with social media, Gen Z uses it as a powerful tool to demand transparency and accountability from brands, influencing entire industries to rethink their environmental, social, and governance (ESG) practices.

Driving the Resale Revolution

Sustainability Meets Luxury: Platforms like Vestiaire Collective, Rebag, StockX, and The RealReal thrive due to Gen Z’s demand for sustainable options. These resale platforms bridge the gap between luxury and eco-friendliness, creating a win-win for consumers and brands.

eBay’s Imperfects Initiative: Reflecting this shift, eBay collaborates with brands to sell slightly flawed high-street and luxury products, reducing waste and promoting circular fashion.

Pandemic's Role in Changing Perspectives

The pandemic reshaped spending habits and fashion views. Nearly two years of lockdowns prompted consumers to value sustainability and rethink their relationship with fashion.

From Greenwashing to Accountability

Calling Out Greenwashing: Social media has empowered Gen Z to spotlight brands that make false sustainability claims. This generation demands actions, not just words.

The Tesco Example: Campaigns like Tesco’s pledge to recycle plastic highlight how brands can fall short, emphasizing the need for genuine efforts and accountability.

The Pressure on Brands

With Gen Z set to become the largest consumer group, brands must step up their sustainability efforts. It’s no longer enough to claim eco-consciousness—retailers must prove their impact and adapt to this generation’s expectations for a better, more sustainable future.

In summary, Gen Z’s influence is reshaping the luxury fashion industry, pushing it towards more sustainable and ethical practices. For brands, meeting these demands is not just a trend but a necessity for staying relevant.

(Hope, 2022)

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Key Trends in Fashion Industry Economic Profit Growth

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Key Trends in Fashion Industry Economic Profit Growth

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Key Trends in Fashion Industry Economic Profit Growth

1. Mid-Market Growth Leading the Industry

Mid-market saw a sharp decline (-31%) from 2021 to 2022, but is rebounding strongly with a +38% increase expected in 2024.

The segment is the primary driver of non-luxury fashion growth.

2. Luxury Market Volatility

Luxury experienced strong +35% growth in 2022, reaching its peak in 2023.

However, it is projected to decline by -19% in 2024, signaling a slowdown in the segment.

3. Premium/Bridge Struggles but Stabilizing

The segment declined -24% from 2021 to 2022 but is showing signs of recovery with a +9% increase projected for 2024.

Still remains below 2021 levels.

4. Value/Discount Segment Shows Modest Growth

Declined -18% from 2021 to 2022 but is recovering with +14% growth projected in 2024.

Growth driven by price-sensitive consumers amid economic pressures.

Overall Insights

Non-luxury segments (mid-market & value/discount) are driving industry profits.

Luxury growth has peaked and is showing signs of contraction.

Economic pressures continue influencing consumer spending, benefiting mid-market and value-driven brands.

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1. Volume, rather than price, to drive modest growth in 2025

2. Localisation: 50% go-to-market model and value proposition, primarily
through pricing, fulfilment channels and assortment.

3. 65% also plan to alter their assortments to include various options across price points to appeal to a wide range of consumers to gain market share.

4. Reduced focus on cost improvements.
Sustainability takes a backseat.

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Generative AI in Fashion (2025):

50% of fashion executives see product discovery as the key use case for generative AI.

AI's accuracy continues to improve, with GPT-4o being 15-20% more accurate than its predecessors.

Customer Experience:

82% of customers want AI to assist in reducing the time spent researching products.

74% of customers walk away from online purchases due to the overwhelming volume of choices (choice paralysis).

80% of customers are dissatisfied with online search, hindering purchases.

Stock Management:

ASOS:

Plans a 30% reduction in stock intake by Q1 2024, focusing on fewer but more relevant brands.

Another 16% reduction in stock planned by the end of 2024.

ChatGPT-powered shopping assistants and personalized recommendations are being used to improve engagement and lower costs.

AI-Powered Shopping Experiences:

Increased demand for AI-powered shopping experiences due to greater accuracy and commercial success stories.

Retailers with vast product data are driving change in content curation.

Social Media & Fashion Shopping:

Douyin (TikTok):

Holds a 15% e-commerce market share in China, with transaction volume growing by 256% in 2023.

Social commerce in the US and UK expected to almost double by 2027.

TikTok:

Focus on predictive algorithms for content discovery.

Tools for faster, quality content creation by brands.

43% of users expected to purchase via the platform by 2027.

Pinterest:

AI-driven investments in in-app commerce to increase shoppability.

Posts with shoppable products have 300% higher engagement.

These trends highlight a shift towards AI-driven product discovery, personalized shopping experiences, and the continued rise of social commerce platforms in fashion retail.

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What to Expect as New Sustainability Rules Shape the Fashion Industry

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What to Expect as New Sustainability Rules Shape the Fashion Industry

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1. New Laws Across the Industry

Global Scope: Over 16 pieces of legislation related to fashion were under discussion in the EU by late 2023, with the first rules coming into force in 2024. Similar initiatives are underway in the US, UK, and China.

Key Focus Areas: The regulations target every stage of fashion, from product design to marketing, production, and waste management.

2. Key Changes to Expect

Product Design

Eco-Friendly Standards: The EU’s Ecodesign for Sustainable Products Regulation (ESPR) will require all products sold in the EU to meet standards for recyclability, durability, and repairability by 2025.

Digital Product Passports: Brands will need to provide detailed information about a product’s materials and environmental impact to consumers.

Marketing

Crackdown on Greenwashing: The EU’s Green Claims Directive demands that sustainability claims be clear, accurate, and independently verified. France has already mandated carbon labeling on clothing.

Waste Management

Recycling and Collection: By 2025, all EU countries must implement textile collection programs. Companies will also face fees for producing unsustainable goods, encouraging eco-friendly production.

Banning Unsold Stock Destruction: Rules will prohibit brands from destroying unsold products.

Reporting Requirements

Standardized Sustainability Reports: Companies must provide clear, comparable data on their environmental and social impact under the Corporate Sustainability Reporting Directive (CSRD).

Due Diligence Mandates: The Corporate Sustainability Due Diligence Directive will require companies to monitor environmental and human rights standards across their supply chains.

3. Challenges for Brands

Supply Chain Traceability: Many brands lack visibility into their supply chains. Technologies like blockchain may help track materials more efficiently.

Redesigning Products: Designers will need to use sustainable materials and avoid combinations that hinder recycling. Circular design principles, like longevity and repairability, will become essential.

Decarbonizing Production: Reducing emissions in garment manufacturing will require energy-efficient processes and sustainable sourcing.

4. New Opportunities

Resale and Recycling: Brands are partnering with resale platforms like The RealReal and developing in-house programs for rental, repair, and resale.

Innovative Materials: Companies like Renewcell are leading fiber-to-fiber recycling initiatives, producing materials from used textiles to close the loop on waste.

Digital Tools for Design: 3D sampling and material libraries can make sustainable design more accessible while reducing waste in production.

5. Global Impact

Ripple Effect: While the EU leads the charge, these regulations will influence countries worldwide, especially in Asia, where most of the EU’s textiles are produced.

US and UK Initiatives: In the US, the New York Fashion Act focuses on supply chain accountability. In the UK, the Green Claims Code addresses misleading marketing.

Conclusion

As sustainability regulations reshape the fashion industry, brands must overhaul their business models. From design to waste management, companies that prioritize transparency, innovation, and circular practices will be better positioned to thrive in this new landscape. For businesses that fail to adapt, the road ahead could be much harder.

(BOF TEAM and MCKINSEY & COMPANY, 2024)

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• In 2025, people aged 50 and older will drive 48% of
incremental growth in global spending.
• In China, the number of people over 50 will grow by 5%
from 2020 to 2025 to reach 38% of the total population.
• Those aged 55 and over in the US accounted for 72% of
the population’s wealth in 2024.

Gen Z :

1. financially squezed - spending less because of increased prices.

2. least loyal consumer in the cohort. - genz in india nd china shifting to cheaper brands.

3. Feel overwhelmed because of their exposure to brands.

Silver Generations:

Longer life expectancies and declining birth rates are pushing the global population of people older than 50 to grow faster than any other cohort.

1. The Silver Generation is disproportionately wealthier and spends more on fashion.

2. Defies age-related stereotypes. Half of women in their 50s say they are now more style-conscious than in their 20s.

Experiences matter
• They are not trend-driven
• Functionality comes first
• Value is more important than price
Understanding the Silver Generation to capture their spend.

Understanding the Silver Generation to capture their spend
• They are slower to embrace omnichannel
• Stores are a key destination for discovery (In China, also Wechat)
• Multi-brand retail is preferred (Not department stores except in China)
• Resale is low on the agenda

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• Fashion customers consistently adopt cost-conscious shopping behaviours, with 64% of US shoppers trading down
• Over 70% of customers plan to purchase from outlets or off-price retailers in the next 12 months, even if their discretionary budget increases.
• Nearly one in three US adults say they intentionally bought a dupe of a premium or luxury product. Half say they bought it for cost savings, while 17% would continue to purchase dupes even if they could afford the original item.

Value and mid-market shoppers:
• tend to buy from outlets or off-price retailers
• search for the best price for an item

Premium shoppers:
• are more likely to leverage “buy now, pay later” services
• use resale platforms to save

Premium customers embrace certain trade-down behaviours even more than customers from other segments; a more significant share say they have purchased a cheaper replica, or “dupe,” of the product they wanted comparing
to value and mid-market shoppers.
Fashion customers are looking to spend less and spend smarter.

Affordability is propelling growth for off-price retailers, outlets and resale.

The threats dupes pose to luxury brands.

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1. Aspirational Luxury Consumers (ALCs) Driving Market Demand

ALCs account for 50% of the luxury fashion market’s value, but steep price increases have pushed many out of traditional luxury.

They are seeking unique, high-quality, and accessible alternatives, creating opportunities for mass and mid-market brands.

2. Rise of High-End High-Street Collaborations

Mass-market brands are elevating their appeal through designer collaborations, exclusive capsule collections, and luxury-level craftsmanship.

Example: H&M Studio, Zara Studio, & Other Stories Savoir Collection.

3. Elevating Everyday Essentials

Consumers are prioritizing quality, well-designed staples over fast fashion or trend-driven items.

Quiet luxury aesthetics and elevated basics (e.g., minimalist tote bags, high-end casual footwear) are growing in demand.

4. Celebrity Influence and the Recessionary Red Carpet

42% of aspirational luxury consumers take fashion inspiration from celebrities.

Affordable brands like Gap, H&M, and Mango are dressing celebrities for major events, shifting perceptions of accessible luxury.

5. Challenges for Traditional Luxury Brands

Price mark-ups are under scrutiny, with backlash over extreme price hikes.

Consumers are questioning luxury value propositions, and brands must rethink entry-level pricing strategies.

6. Rise of Independent and Niche Luxury Brands

Indie designers are emerging as an alternative to mainstream luxury brands, offering unique and more affordable designs.

Platforms like Dover Street Market are promoting independent labels as a fresh alternative.

7. Luxury Brands Must Adapt to Economic Pressures

High-end brands need to offer lower entry-price products, embrace collaborations, and reconsider their pricing structures.

Brands like Hermès thrive by offering a range of accessible yet high-quality small luxury items.

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India looks set to be the luxury market’s next growth driver. Here’s how brands can make their mark.

India’s luxury landscape is at a crucial juncture. With a booming economy, the world’s largest population and a dynamic, youthful demographic, the country has been dubbed the next luxury hub, especially at a time when luxury consumption in China is declining as spending softens.

1. Expansion of Global Luxury Brands in India

Market Growth Projections

As of 2024, India's luxury market is valued at approximately $17 billion and is projected to more than triple, reaching upwards of $85 billion by 2030.

knowledge.insead.edu

Entry and Expansion of International Brands

Several international luxury brands have recently entered or expanded their presence in India:

Louis Vuitton: Opened its largest store in India, spanning over 7,000 square feet.

voguebusiness.com

Aquazzura: Launched a flagship store, marking its commitment to the Indian market.

voguebusiness.com

Chanel: Expanded its presence with significant events and initiatives.

voguebusiness.com

Development of Luxury Retail Spaces

The establishment of high-end retail spaces is facilitating the entry of luxury brands:

Galeries Lafayette: Set to open its first luxury department store in Mumbai in 2025, followed by another in New Delhi in 2026.

en.wikipedia.org

2. E-Commerce and Direct-to-Consumer (DTC) Expansion

Online Sales Growth

Online sales in the luxury market are expected to reach $91 billion by 2025, presenting significant opportunities for brands to offer premium products through digital channels.

shopify.com

Brand Initiatives

Luxury brands are enhancing their online presence in India:

Chanel: Launched a dedicated e-commerce platform in India, focusing on fragrances, beauty products, and eyewear, aiming to reach clients across 27,000 postcodes.

voguebusiness.com

3. Changing Indian Luxury Consumer Behavior

Demographic Shifts

The luxury consumer base in India is diversifying:

Younger Generations: Brands like Mercedes-Benz are expanding into smaller cities to cater to younger, well-traveled business owners who are increasingly investing in luxury goods.

reuters.com

Demand for Sustainable Luxury

There is a growing focus on sustainable luxury, with consumers favoring brands that embrace eco-friendly practices.

wcrcleaders.com

4. The Rise of Indian Luxury Brands

Global Recognition

Indian luxury brands are gaining international acclaim:

Lovebirds: An Indian contemporary fashion label known for its minimalist designs has expanded its global presence, retailing in prestigious stores like Harvey Nichols and Neiman Marcus.

voguebusiness.com

Strategic Partnerships

Collaborations are enhancing the reach of Indian luxury brands:

Aditya Birla Fashion and Retail: Entered into a strategic partnership with French luxury department store Galeries Lafayette to open stores in Mumbai and Delhi.

en.wikipedia.org

5. Future Outlook

Market Potential

India is poised to become a key market for luxury brands:

Economic Growth: Projected to be the fastest-growing economy in 2025, with luxury goods sales expected to treble by 2030.

forbes.com

Strategic Focus: One in five fashion executives identifies India as a focus market for 2025, with 67% viewing it as a promising area for growth.

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The "Human Side of Sales" is a pivotal theme highlighted in the "State of Fashion 2025" report by McKinsey & Company and The Business of Fashion. As consumers return to physical retail spaces, differentiating the in-store experience becomes essential for brands aiming to reignite demand for in-person shopping. Central to this strategy is the empowerment of store associates, who play a crucial role in connecting with customers and enhancing their shopping experience.

businessoffashion.com

In-store sales growth of 1 to 2% on average across key markets in 2025

Today, 70% of retail sales are digitally influenced.
Stores are more of a destination for conversion and building brand loyalty.

54% of apparel shoppers prefer clothing in brick-and-mortar locations versus online.

In-store sales growth of 1 to 2% on average across key markets in 2025

Today, 70% of retail sales are digitally influenced.
Stores are more of a destination for conversion and building brand loyalty.

54% of apparel shoppers prefer clothing in brick-and-mortar locations versus online.

Empowering Store Associates

Investing in the training and development of sales staff is paramount. Well-trained associates can provide personalized assistance, foster meaningful customer interactions, and inspire purchases. The report emphasizes that customer and employee experiences are inextricably linked; satisfied and empowered employees are more likely to deliver exceptional service, leading to increased customer satisfaction and loyalty.

businessoffashion.com

Enhancing the In-Store Experience

To set themselves apart, retailers are focusing on creating unique and engaging in-store environments. This includes organizing intimate, invite-only events and offering limited product exposures to cultivate a sense of exclusivity and personal connection. Such strategies not only attract customers but also encourage them to spend more time and money in-store.

voguebusiness.com

Balancing Technology and Human Interaction

While technology, such as AI-powered curation and virtual try-ons, is increasingly integrated into the retail experience, the human touch remains irreplaceable. Consumers value genuine human-like interactions, and retailers are striving to balance automation with personalized service. This approach ensures that while efficiency is achieved through technology, the warmth and personal connection provided by human associates are preserved.

voguebusiness.com

RFID - RFID enhances the human side of sales by automating tasks, freeing up store associates to focus on customer interactions. It improves inventory management with real-time tracking, enables self-checkout for faster transactions, and helps prevent counterfeiting in luxury fashion. By reducing manual work, RFID allows staff to offer a more personalized and engaging shopping experience.

Key Takeaways – Human Side of Sales (State of Fashion 2025)

1. Empowering Store Associates – Well-trained and engaged staff enhance customer experience, driving loyalty and sales. Investing in their development is key.

2. Enhancing In-Store Experience – Personalization, exclusive events, and immersive shopping environments make physical retail more attractive.

3. Balancing Technology & Human Interaction – While AI and automation improve efficiency, human connection remains irreplaceable for customer satisfaction.

4. RFID’s Role in Retail – RFID streamlines inventory management, enables self-checkout, and frees up staff to focus on customer service. For luxury brands, it also helps in counterfeit prevention.

5. Customer & Employee Experience are Linked – Happy, well-supported employees lead to better customer interactions and higher sales.

Bottom Line:

Retail success in 2025 relies on blending human engagement with smart technology, ensuring sales staff focus on personalized service rather than operational tasks.

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The "Marketplaces Disrupted" section of the "State of Fashion 2025" report examines the significant challenges and transformations facing online fashion marketplaces. Following a surge during the COVID-19 pandemic, these platforms are now experiencing a severe market correction, with share prices declining by an average of 77% between January 2021 and September 2024.

retailtimes.co.uk

Key Challenges:

Increased Competition: Emerging players like Shein and Temu have gained substantial market share by offering vast product selections at competitive prices, intensifying competition and pressuring traditional marketplaces.

retailtimes.co.uk

Rising Customer Acquisition Costs: As the online market becomes more saturated, the expenses associated with attracting and retaining customers have escalated, impacting profitability.

High Return Rates: The convenience of online shopping has led to increased return rates, posing logistical challenges and additional costs for retailers.

Strategic Responses:

To navigate this disrupted landscape, online fashion marketplaces are adopting several strategies:

Prioritizing Profitable Orders: Focusing on high-margin products and loyal customer segments to enhance profitability.

Exploring New Revenue Streams: Diversifying offerings by providing B2B services, such as logistics and technology solutions, to other retailers.

Modernizing Technology Infrastructure: Investing in advanced technologies, including artificial intelligence, to improve operational efficiency and personalize customer experiences.

These measures aim to address the existential challenges posed by the current market dynamics and position online fashion marketplaces for sustainable growth in the evolving fashion industry.

Sources

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Latin America:

US Fashion Companies Shifting to USMCA

65% sourced from USMCA (mainly Mexico) in 2023, up from 40% in 2020

Mexico-US shipping: $5,000 per container (5-10 days) vs $18,000 from China (60 days)

Guatemala's Growing US Exports

+10% apparel & textile exports (2020-2023)

Higher manufacturing costs (5-10x Vietnam) but 3x faster shipping

Turkey’s Rising Global Role

Textile production share doubled in 20 years

6% of Europe’s textile & apparel imports (2023), surpassing Vietnam

25% of European brands consider Turkey a key sourcing location

Key Advantages of Turkey

Better supply chain traceability

Faster order fulfillment → 50 days vs. 150-170 days in Asia-Pacific

Transit time: 7 days on average

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China's Deaceleration:

1. China’s economic deceleration, changing consumer preferences and the return of international travel are making growth in the country highly challenging.

2. Apparel sales increased only 1.3% in the first half of 2024 compared to the same period a year prior. This growth is about half that of 2019 levels.

3. Consumer confidence and residential property transactions have
neared all-time lows.

As China’s sizeable GDP growth slows, so will its fashion market’s growth.

India:

India will be a focus, particularly for high-street players.

India’s Growing Fashion Market: Opportunities & Challenges

1. 1. Economic Growth & Consumer Market

India is projected to become the 4th-largest economy by 2025, growing at a 7% annual rate, outpacing other major economies.

This rapid expansion positions India to become the 3rd-largest consumer market by 2027, making it a key focus for global brands.

2. Non-Luxury Market Growth

The middle class and digitisation are the main drivers of growth in the non-luxury segment.

India has 430 million middle-class consumers, a number larger than the combined middle-class populations of the US and Western Europe.

By 2050, India's middle class is expected to reach 1 billion, with much of this growth occurring in tier-2 and tier-3 cities, creating vast opportunities for affordable and mid-tier fashion brands.

3. Luxury Market Growth

India’s ultra-high-net-worth individual (UHNWI) population (people with over $30M in assets) is expected to grow 50% from 2023 to 2028, making it the fastest-growing UHNWI market in the world.

The aspirational luxury consumer base—which drives about half of global luxury sales—is set to expand from 60 million in 2023 to 100 million by 2027, presenting a lucrative opportunity for luxury brands.

A 20% tax on international luxury purchases (above $8,400/INR 700,000) is shifting luxury spending from abroad to domestic markets.

The luxury retail sector is growing, with high-end malls and department stores like Jio World Plaza and Galeries Lafayette expanding in tier-1 cities.

India's young population (66% under 35, totaling 808M people) is shaping the market, with digitisation accelerating trend-focused fashion adoption.

Challenges & Considerations for Fashion Brands

1. Infrastructure Challenges

High-quality retail spaces remain scarce, particularly in tier-2 and tier-3 cities, limiting physical expansion for premium and luxury brands.

Logistics and last-mile delivery issues pose hurdles for brands looking to ensure a seamless shopping experience, requiring substantial investment.

2. Local Consumer Preferences

Indian culture strongly influences fashion, with significant regional variations in style preferences.

Indian consumers spend 44% of their fashion budget on jewellery (compared to the global average of 13%) but only 40% on apparel (compared to the global average of 52%).

Local brands dominate the apparel market, especially in traditional wear, and their influence is growing with the rise of domestic fast-fashion players.

In 2023, 9 out of the top 20 apparel brands in India were homegrown, making it essential for global brands to localise their offerings.

3. Regulatory Barriers

Strict local sourcing regulations and high regional taxes create challenges for international brands looking to enter or expand in India.

Japan:

Japan’s luxury boom is expected to continue into 2025, fuelled by strong international and domestic spend.

1. The yen’s weakness made Japan a major international shopping destination in 2024. The currency hit a 38-year low against the dollar in July 2024.

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could live stream shopping become mainstream

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could live stream shopping become mainstream

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With 97 per cent of Gen Z consumers citing social media as their top source of shopping inspiration, the door is open to opportunities that combine convenience with connection.

live streaming: a subsector of e-commerce that has already taken off in regions like China, generating over $150 billion in the market in 2022, per Euromonitor. In fact, live streaming is expected to make up 20 per cent of e-commerce sales within the next two years.

Live streaming sits at the intersection of e-commerce and entertainment for an engaging audience experience that showcases products in real time. Unlike the bygone era of teleshopping, live streams make use of influencers and other popular figures to move away from forced infomercials and towards more authentic endorsements. For Bonnie Zhao, general manager at AliExpress UK, entertainment is a central component to commerce. “It captures people’s attention, creates emotional connections, and enhances the overall shopping experience,” says Zhao.

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Ethical Dissonance in Shopping Behaviour 

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Ethical Dissonance in Shopping Behaviour 

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Moral Injury

Consumer sentiment

STEPIC forecasts: Eco-Accountability, Geopolitical Tensions, Polarised Consumption

Moral injury results from taking part in or witnessing behaviours that go against your morals, and as we forecast in STEPIC Drivers 2026, it will continue amid a polycrisis as people compromise their values to fit their living standard. Examples could include buying fast fashion because the sustainable alternative is too expensive, or commuting via a car due to a lack of public transportation. In a 2022 LATAM survey, 47% said they strongly agree that it's more difficult to act responsibly because of higher living costs.

Some scientists and mental health professionals believe moral injury is an invisible epidemic that impacts millions. “It’s really clear to us that it is all over the place,” says physician Dr Wendy Dean, President and Co-Founder of the US-based nonprofit Moral Injury of Healthcare. “It’s social workers, educators, lawyers.” However, the data surrounding moral injury outside of these professions is varied as most people aren’t aware of the affliction. We do know that those affected by moral injury are predicted to have higher rates of depression.

Why will moral injury rise in 2026? Amid a global cost-of-living crisis and lack of access to sustainable products and services, many are falling below the ‘green line’ (the financial point people feel they need to reach to live as sustainably as they would like) and the Self-Sufficiency Standard (a standard devised by the US-based Center for Women’s Welfare, defined as “the income working families need to meet their basic necessities without public or private assistance”). https://www.wgsn.com/insight/article/654d997e580e1f7200bc20a9#page4

Challenges in Sustainable Fashion Amid Moral Injury

1. Economic Constraints and Accessibility

Sustainable fashion often comes with a higher price tag due to ethical production practices and quality materials. This premium pricing makes it less accessible to a broader audience, leading many to choose more affordable, less sustainable options.

retailasia.com

2. Psychological Conflict

Consumers aware of the negative impacts of fast fashion may experience guilt or cognitive dissonance when purchasing such products due to financial constraints. This internal conflict can deter them from making sustainable choices.

link.springer.com

3. Limited Availability in Emerging Markets

In developing regions, sustainable fashion options are often scarce, and when available, they are typically unaffordable for the average consumer. This scarcity exacerbates the reliance on fast fashion, further entrenching unsustainable consumption patterns.

phys.org

Strategies to Mitigate Moral Injury in Sustainable Fashion

1. Innovative Cost-Reduction Approaches

Brands can explore upcycling, utilizing deadstock fabrics, and adopting efficient production methods to lower costs without compromising sustainability. For instance, luxury brands like Miu Miu and Coach have embraced upcycling to create premium products from existing materials.

voguebusiness.com

2. Mainstreaming Sustainable Practices

Integrating sustainable practices into mass-market fashion can make eco-friendly clothing more accessible. Brands like H&M's Conscious Collection aim to offer sustainable options at more affordable prices, bridging the gap between ethics and affordability.

retailasia.com

3. Promoting Second-Hand and Circular Fashion

Encouraging the purchase of second-hand clothing and participation in clothing rental services can provide cost-effective sustainable alternatives. Platforms like Depop and Poshmark facilitate the resale of pre-owned fashion, extending the lifecycle of garments.

en.wikipedia.org

4. Consumer Education and Awareness

Educating consumers about the true cost of fast fashion and the benefits of sustainable choices can influence purchasing decisions. Highlighting the long-term value and durability of sustainable garments can justify the initial investment.

nokillmag.com

5. Policy Interventions and Support

Government incentives, such as tax breaks for sustainable brands or subsidies for eco-friendly materials, can reduce production costs and retail prices. Implementing regulations against greenwashing ensures that consumers can trust sustainability claims, fostering informed decision-making.

retailasia.com

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Moral Injury as a Consumer Trend in Sustainable Fashion

1. The Rise of Ethical Dissonance in Shopping Behavior

Consumers want to make ethical choices but often cannot afford them. This creates a psychological gap between intention and action, leading to a rise in "green guilt"—a term used to describe the discomfort consumers feel when they purchase unsustainable products due to financial limitations.

Polarized consumption will continue, where affluent consumers embrace sustainable luxury brands, while lower-income groups turn to fast fashion for affordability. (Source: Vogue Business)

2. Affordability vs. Sustainability Becomes a Key Discussion in Fashion

Cost-of-living crises globally will force consumers to compromise on their values, leading to a greater push for budget-friendly sustainable alternatives.

Second-hand shopping, rental fashion, and resale platforms (Depop, ThredUp, Poshmark) will gain mainstream adoption, especially among Gen Z and Millennials. (Source: Business of Fashion)

3. The Shift from Luxury Sustainability to Mass-Market Adoption

While luxury brands like Stella McCartney and Gucci have pioneered sustainable practices, the next phase will focus on affordable, scalable solutions in the mass market.

Retailers like H&M, Zara, and Uniqlo are investing in "conscious collections" and circular business modelsto reduce waste while maintaining affordability. (Source: Retail Asia)

4. Consumer Demand for Transparency and Ethical Pricing

Brands will face increased pressure to justify their pricing structures, leading to clearer communication on sustainable production costs.

More companies will implement tiered pricing models, allowing consumers to choose between standard, sustainable, or luxury sustainable products. (Source: McKinsey)

5. Rise of “Regret Spending” and Green Guilt Marketing

Expect marketing strategies that address moral injury directly, offering sustainable products at competitive prices while educating consumers on cost-per-wear and durability benefits.

The emergence of “regret spending” trends, where consumers actively seek brands that help them make guilt-free purchases, will increase demand for affordable eco-conscious fashion. (Source: Ethical Consumer)

Conclusion: The Future of Moral Injury in Fashion

Moral injury will shape purchasing behaviors, forcing brands to rethink their sustainability messaging and pricing strategies.

The shift from premium sustainability to affordable eco-fashion will become a defining characteristic of the industry by 2026.

Resale, repair, and rental models will gain momentum as consumers look for alternatives to fast fashion while maintaining financial stability.

Moral injury isn’t just a concept—it’s an emerging fashion trend that will push brands to bridge the gap between sustainability and accessibility. The brands that can balance ethics with affordability will likely lead the market transformation.

instead do ethical resonance in shopping behaviour

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​India's emergence as a significant luxury market is the result of several interrelated factors:​

1. Economic Growth and Rising Affluence

India's robust economic development has led to a substantial increase in personal wealth. The number of high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) has grown notably, expanding the consumer base for luxury goods and services. ​(amitkapoor, 2024) (Bernardo, 2024)

2. Expanding Middle Class

The burgeoning middle class, with increasing disposable incomes, has shown a growing appetite for luxury products. This demographic shift has broadened the market for premium goods beyond the traditional elite. (Bernardo, 2024)

3. Globalization and Cultural Aspirations

Greater exposure to global lifestyles through travel, media, and the internet has heightened the desire for luxury brands among Indian consumers. Luxury items are increasingly viewed as symbols of status and personal success. ​(Bernardo, 2024)

4. Entry of Global Luxury Brands

Recognizing India's potential, numerous international luxury brands have entered the market, often tailoring their offerings to local tastes. For instance, brands like Louis Vuitton and Chanel have opened flagship stores, and collaborations such as Tod's with Indian designer Rahul Mishra have been well-received. ​(Sujata Assomull, 2024)

5. Growth in Luxury Retail Infrastructure

The development of high-end retail spaces, such as DLF Emporio and The Chanakya in Delhi, has provided platforms for luxury brands to establish a presence in India, enhancing accessibility for consumers. (ET Online, 2024)

6. Influence of the Wedding Industry

India's opulent wedding industry, valued at approximately $130 billion, significantly drives demand for luxury products, including jewelry, fashion, and hospitality services. ​(Sujata Assomull, 2024)

7. Digitalization and E-commerce

The rise of digital platforms has made luxury goods more accessible to a broader audience. E-commerce initiatives by companies like Tata CLiQ Luxury have expanded the reach of premium brands across the country. ​(Wright Research, 2018)

8. Urbanization and Younger Demographics

Rapid urbanization and a youthful, tech-savvy population have contributed to evolving consumer preferences, with younger generations more inclined toward luxury consumption. This shift is evident in the increasing demand for luxury automobiles and fashion among younger consumers. ​(Shah, 2025)

Collectively, these factors have positioned India as a burgeoning market for luxury goods and services, attracting global brands and redefining consumer behavior in the country.​

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Can India make up for China’s fading luxury appetite?

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Can India make up for China’s fading luxury appetite?

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As China's economy slows, global luxury brands are facing a new reality. Once heavily reliant on China's strong demand, they are now seeing a decline in sales.

According to the Economist Intelligence Unit (EIU), China's retail market is expected to grow by only 4% in 2025, half of its 2019 level. Factors such as a struggling property market and demographic shifts are reducing consumer spending. (Economist Intelligence Unit, 2024)

Luxury giants like Kering and LVMH are already feeling the impact. Kering’s revenue dropped 16% in Q3 2024, with Gucci experiencing a 25% decline in sales across Asia-Pacific (Kering, 2024). Similarly, LVMH reported a 16% YoY drop in Q3 revenue for Asia (excluding Japan).

Shifting Consumer Behavior
Younger Chinese consumers are becoming more cautious with their spending. Many now prefer buying luxury goods abroad, especially in Japan, or opting for secondhand luxury items (Booker, 2024). This change challenges brands that have heavily invested in China, particularly in lower-tier cities. (Jing Daily, 2024)

India: The New Luxury Hotspot?
As China’s retail growth slows, India's retail sector is projected to grow at 5% annually, making it an attractive alternative for luxury brands. India’s young population (average age 28.2 years compared to 39 in China) and growing middle class create new opportunities for global luxury brands. (Jing Daily, 2024)

A June 2024 report by BDA Partners predicts that India’s luxury sector will more than triple by 2030, driven by rising incomes and increasing discretionary spending.

What’s Next for Luxury Brands?
China's luxury market still holds potential, but its future depends on factors like youth employment and government stimulus efforts. If these improve, brands may regain local consumer enthusiasm. Otherwise, China could face stagnation similar to Japan, pushing luxury brands further toward India and other emerging markets. (Jing Daily, 2024)

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Strategies for the Fashion Industry to Address These Trends

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Strategies for the Fashion Industry to Address These Trends

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1. Mass & Mid-Market Brands: Elevate High-Street Luxury

Introduce premium capsule collections with high-quality materials and craftsmanship.

Partner with renowned designers for limited-edition collaborations.

Leverage celebrity endorsements and red-carpet placements.

2. Luxury Brands: Reframe Entry-Level Pricing & Value Perception

Expand entry-level offerings beyond accessories (e.g., scarves, belts, small leather goods).

Use alternative materials to reduce costs while maintaining luxury appeal (e.g., LV’s denim bags).

Explore high-low collaborations (e.g., Nike x Jacquemus, Balenciaga x Under Armour).

3. All Brands: Invest in Elevated Everyday Essentials

Focus on timeless, versatile wardrobe staples with premium execution.

Market these pieces as long-term investments rather than disposable fashion.

4. Leverage Celebrity and Influencer Marketing

Align with public figures who reflect modern luxury aspirations.

Promote accessibility by showcasing affordable luxury pieces in high-profile settings.

5. Support Independent & Niche Luxury Brands

Retailers should promote indie designers as part of a modern, accessible luxury strategy.

High-end brands can embrace independent creative talent to bring fresh perspectives.

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1. Physiological Needs (Basic Necessities: Clothing & Comfort)

Elevating Everyday Essentials – Consumers prioritizing high-quality, well-designed staples over fast fashion align with the need for comfortable, functional clothing.

2. Safety Needs (Financial Stability & Value for Money)

Challenges for Traditional Luxury Brands – Consumers scrutinizing extreme price hikes seek financial security and justifiable value, making them more selective.
Luxury Brands Must Adapt to Economic Pressures – Luxury brands reconsidering pricing structures cater to buyers who want financial stability without compromising on status.

3.  Love & Belonging (Social Influence & Community Affiliation)

Celebrity Influence and the Recessionary Red Carpet – With 42% of aspirational luxury consumers taking inspiration from celebrities, their purchasing decisions are influenced by a desire for social belonging and acceptance.
Rise of Independent and Niche Luxury Brands – Indie designers gaining popularity signal consumers seeking authenticity and connection with unique fashion communities.

4.  Esteem Needs (Status, Prestige & Recognition)

Aspirational Luxury Consumers Driving Market Demand – ALCs who can no longer afford traditional luxury seek alternative status symbols in high-end high-street brands and independent designers.
Rise of High-End High-Street Collaborations – Wearing exclusive, well-crafted pieces from Zara Studio or H&M Studio allows consumers to experience prestige without luxury price tags.

5.  Self-Actualization (Expression & Personal Fulfillment)

Rise of Independent and Niche Luxury Brands – Consumers supporting independent designers are driven by personal expression and a desire to stand out.
Luxury Brands Must Adapt to Economic Pressures – Brands like Hermès offering accessible luxury through small items allow consumers to express their aspirational identity while maintaining financial balance.

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Security-First Strategizers

Ultra-high-net-worth individuals (UHNWIs) prioritize wealth security due to geopolitical instability.

Increased migration to tax-friendly countries (UAE, US, Singapore).

Growing interest in alternative investments (private equity, real estate, art).

Demand for high-security homes, armored vehicles, and trained security pets.

Strategies: Personalized Security Services: Offer high-end protection, including armored vehicles and elite-trained security personnel.

Values-Led Luxurians

Younger UHNWIs and women are reshaping luxury spending with purpose-driven investments.

High interest in sustainability and ethical investing, but reluctance to compromise luxury lifestyles

Strategies: Sustainable Luxury Brands, Create luxury experiences and events tailored to women-led philanthropy.

Elite Individualists

The wealthiest consumers want one-of-a-kind experiences and hyper-personalized luxury.

Shift away from traditional luxury branding toward cultural creativity and artistic collaborations.

Strategies: One-of-a-Kind Fashion & Collectibles: Offer hyper-personalized clothing, accessories, and limited-edition art.

Sporting Socialites

Luxury and sports are merging as affluent consumers embrace athleticism and fandom.

Growing presence of UHNWIs in premium sports ownership, sponsorships, and elite training programs.

High-end sports events offer VIP experiences with gourmet dining and private access.

Strategies: Exclusive Sporting Partnerships, Offer high-end hospitality at major sporting events

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The global luxury goods market is projected to generate $418.89 billion in revenue by 2028. This report highlights six key themes shaping the future of luxury, using WGSN’s STEPIC framework: Society, Technology, Environment, Politics, Industry, and Creativity.

Opportunities :

Luxury brands face macroeconomic challenges like geopolitical tensions and rising living costs, affecting aspirational shoppers. To stay competitive, brands must focus on:

1. Exclusive Experiences: Offering unique, personalized events in emerging markets like Saudi Arabia and Singapore.

2. Engaging Younger Audiences: Millennials and Gen Z will drive 80% of luxury purchases by 2030, while the younger Gen Zalpha generation is already influencing beauty trends. Early loyalty-building through authentic campaigns and virtual experiences is crucial.

Market Highlights:

Luxury goods market expected to grow at 3.22% CAGR (2024–2028).

Luxury fashion, the largest segment, will hit $131.7 billion by 2028.

Very Important Clients (VICs) contribute 30% of luxury brand revenues.

Key Themes

1. Society: Attract High-Net-Worth Clients (HNWIs)

Luxury consumers increasingly seek priceless experiences beyond material value.

Strategies:

Host hyper-exclusive events in cities like Singapore and Saudi Arabia.

Build loyalty through bespoke products, exceptional service, and fostering tight-knit communities.

Examples:

Bottega Veneta opened a private residence in Venice for VICs.

Gucci’s London flagship introduced a salon concept for made-to-measure items.

Louis Vuitton launched a VIC-exclusive boutique, The Apartment, in Singapore.

2. Technology: Enhance Experiences with Digital Tools

Technology boosts customer service, personalization, and loyalty.

Strategies:

Gamify loyalty programs with features like NFTs or access to exclusive events.

Use AI to provide tailored recommendations and improve workflows.

Examples:

Hugo Boss launched a loyalty app with blockchain-enabled features.

Michael Kors introduced Shopping Muse, an AI-powered shopping assistant.

Zegna debuted Zegna X, an AI tool for customization.

3. Environment: Prepare for Sustainability Regulations

Sustainability is critical to long-term success.

Strategies:

Build systems to track supply chain metrics and meet environmental goals.

Align with regulations like the EU’s anti-deforestation policies.

Offer ESG-focused investment options for affluent clients.

Examples:

Kering eliminated deforestation from its supply chain and set clear sustainability goals.

Moncler runs on 100% renewable energy and ranks among the most sustainable companies.

Lotus aims for a fully electric product range by 2028 and carbon neutrality by 2038.

4. Politics: Manage Trade Tensions

Geopolitical issues are reshaping supply chains and product strategies.

Strategies:

Diversify supply chains across multiple regions.

Adapt product focus to mitigate tariff risks.

Examples:

Chanel and Brunello Cucinelli invested in Italian natural fibre suppliers.

Apple moved some iPhone production from China to India.

5. Industry: Win Younger Generations

Millennials, Gen Z, and Gen Zalpha are shaping the future of luxury.

Strategies:

Develop digital marketplaces and social campaigns that resonate with younger buyers’ values.

Use virtual platforms like Roblox to create memorable campaigns for Zalphas.

Examples:

Loewe used playful TikTok content to connect with younger audiences.

Coach partnered with Roblox for a digital collection and immersive experiences.

Rabanne named musician Troye Sivan as its global makeup ambassador to highlight LGBTQIA+ representation.

6. Creativity: Protect Artisanal Craftsmanship

Preserving craftsmanship is key to maintaining cultural relevance and quality.

Strategies:

Support local artisans with fair wages and partnerships.

Showcase craftsmanship through in-store experiences and installations.

Examples:

Loewe’s Seoul flagship features handmade Spanish tiles and curated artworks.

Bottega Veneta continues to spotlight its dedication to artisanal skills.

Conclusion

The luxury market’s future depends on a balance of heritage, technology, and sustainability. By embracing innovation and prioritizing younger generations while staying true to craftsmanship, brands can build enduring loyalty and stay competitive in a changing world.

(Brey, 2024)

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1. Consumer, Influencer, and Retailer Dynamics

Retail Strategies Under Pressure:

High street brands rely on discounts to compete with consumer-led resale platforms like Vinted and Depop.

This commoditization risks diluting brand value, a strategy unsustainable in the long term.

Influencer Clashes:

Eco-conscious influencers criticize fast fashion, while platforms like Instagram and TikTok also showcase budget-friendly "hauls" from brands like Primark and Shein.

2. Rise of Sustainable and Pre-Loved Fashion

Resale Revolution:

Platforms like Vinted reframe second-hand clothing as "pre-loved," enhancing appeal through seller narratives.

These platforms allow fast fashion to adopt qualities of slow fashion, extending its lifecycle.

Sustainability Challenges:

Consumers often prioritize affordability over ethics, as seen in the ongoing success of fast fashion giants.

Some brands, like Lucy and Yak and Nudie Jeans, innovate with upcycling and repair services.

3. Inclusivity and Representation

Breaking Barriers:

Fluidity in identity challenges ageism, sizeism, sexism, and ableism in fashion.

Independent brands like Good American and Never Fully Dressed lead with inclusive designs and versatile sizing.

Retailer Innovations:

Adjustable and gender-inclusive clothing is gaining popularity, but ableism remains underexplored.

Growing demand for sensory-friendly and accessible apparel is an opportunity for future development.

4. Identity in a Digital World

Shifting Style Confidence:

Online personas allow greater freedom in self-expression, contrasting with the pressures of real-world identity.

The digital realm challenges traditional fashion norms, influencing younger generations’ style preferences.

Personal Style as Expression:

According to Rachel Zoe, "Style is a way of saying who you are without having to speak."

As dress codes evolve post-pandemic, aligning virtual and real identities will shape fashion’s future.

The Road Ahead: Opportunities for Fashion Brands

Adapting to Change:

Brands must engage with consumers meaningfully on issues of sustainability, inclusivity, and identity.

Marketing as Change Agents:

Insight teams and marketers can lead by connecting with people on values that matter.

Evolving Landscape:

Fashion remains a canvas for self-expression, transcending societal norms and even digital worlds.

For further insights and strategies, download our latest report in the Finding the Future series. (www.kantar.com, 2024)

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The "Sportswear Showdown" section of the "State of Fashion 2025" report highlights the intensifying competition between established sportswear giants and emerging challenger brands. This dynamic is reshaping the industry landscape, with several key takeaways:

1. Challenger Brands Gaining Market Share

Economic Profit Shift: Challenger brands are projected to generate over half of the sportswear segment's economic profit in 2024, a significant increase from 20% in 2020.

businessoffashion.com

Revenue Growth: These brands have achieved an 18% annual revenue growth between 2020 and 2024, outpacing incumbents by 14 percentage points.

businessoffashion.com

2. Strategies Driving Challenger Success

Visible Innovation: Brands like Hoka and On have introduced distinctive designs, such as oversized midsoles and unique sole technologies, capturing consumer attention.

businessoffashion.com

Niche Market Focus: Companies like Lululemon have targeted specific segments, such as women's athletic wear, addressing gaps overlooked by larger competitors.

businessoffashion.com

Cultural Marketing: Engaging with local communities and leveraging grassroots marketing have enhanced brand authenticity and loyalty.

businessoffashion.com

3. Incumbent Brands' Response

Strategic Collaborations: Established companies are forming partnerships to regain market relevance. For instance, Nike's collaboration with Kim Kardashian's Skims aims to attract a younger, fashion-conscious female demographic.

thescottishsun.co.uk

Leadership Changes: Nike appointed Elliott Hill as the new CEO to revitalize product innovation and reconnect with consumers, addressing previous strategic missteps.

wired.com

4. Market Outlook

Continued Growth: The sportswear market is expected to outpace the broader fashion industry, with projected growth rates higher in key regions such as China, the U.S., and Europe.

businessoffashion.com

Evolving Consumer Preferences: A shift towards health and wellness, along with the blending of fashion and activewear, is driving increased demand for sportswear products.

businessoffashion.com

In summary, the sportswear industry in 2025 is characterized by a competitive landscape where challenger brands are rapidly gaining ground through innovation and targeted marketing, prompting established players to adapt strategically to maintain their market positions.

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​The "Inventory Excellence" section of the "State of Fashion 2025" report addresses the persistent challenges fashion brands face with inventory management, particularly the issues of excess stock and stock-outs. In 2023, the fashion industry produced an estimated 2.5 to 5 billion items of excess stock, valued between $70 billion and $140 billion. (Briggs, 2024)

Getting the Fashion "Inventory Equation" Right – Challenges & Impact

The State of Fashion 2025 report highlights the inventory management crisis in the industry, where brands struggle to balance excess stock and stock-outs due to rapidly changing demand patterns and supply chain inefficiencies.

Key Challenges in Fashion Inventory Management:

1. Rapid Trend Cycles

Fashion trends can fluctuate by up to 300% in search volume within a year, making demand forecasting highly unpredictable.

Short-lived trends increase the risk of overproduction or stock shortages.

2. Unpredictable Seasonality

Climate change disrupts traditional seasonal shopping patterns.

Temperature fluctuations make it harder for brands to sell weather-dependent products (e.g., winter coats or summer dresses).

3. Lengthy Supply Chains

The complex routing of goods between manufacturers, brands, and retailers leads to long lead times.

Limited supply chain flexibility prevents brands from responding quickly to shifting consumer demand.

4. Product & Channel Complexity

Shoppers now buy fashion across multiple channels (online, in-store, resale, social commerce, etc.).

Managing sizes and colors across these diverse touchpoints is challenging, especially without a centralized stock system.

The Impact: Excess Stock & Stock-Outs

Excess Stock Problem

In 2023, the fashion industry’s excess inventory was valued between $70B and $140B.

This leads to massive discounting, reduced margins, and waste in unsold products.

Stock-Out Issues

Out-of-stock sizes are shoppers’ top complaint, as brands fail to accurately predict demand across different size ranges.

Inaccurate size purchasing causes an average 20% profit loss due to missed sales opportunities.

Sustainability Regulations & Proactive Inventory Optimisation

The State of Fashion 2025 report highlights how sustainability regulations are forcing fashion brands to rethink their inventory strategies. Over-stocking, once a go-to solution for maximizing sales, is now under scrutiny due to regulatory and environmental concerns.

Rising Regulatory Pressure on Fashion Inventory

1. Ecodesign for Sustainable Products Regulation (EU) – July 2024

Requires brands to report unsold textiles starting in 2025.

Illegal to destroy unsold stock by early 2026.

Pushes brands to improve waste reduction and circularity strategies.

2. California’s Extended Producer Responsibility (EPR) for Textiles – August 2024

First U.S. state to enforce responsibility for textile waste.

By 2030, brands must submit a plan for collecting, repairing, and recycling garments.

Encourages brands to move toward recycling and reuse models instead of mass production.

Proactive Solutions for Inventory Optimisation

To meet regulatory and sustainability demands, brands are shifting towards data-driven, flexible inventory models:

1. Data-Driven Planning & Forecasting

AI-powered analytics tools like o9, Nextail, and Blue Yonder help automate demand forecasting and inventory allocation.

These solutions can reduce overall inventory levels by 5–15% and improve stock-outs by 15–25%, making inventory more efficient.

2. Dynamic Open-to-Buy Adjustments

In-season purchasing enables brands to react to actual demand instead of overproducing.

Strategies like “test and react” and “on-demand” models allow brands to produce in small quantities first, analyze demand, and then scale production, reducing excess stock risk.

3. Network Optimisation with Digital Twins

Advanced analytics and digital twin technology simulate inventory scenarios across sales channels.

Helps brands redistribute stock more efficiently based on real-time demand, reducing waste and improving stock availability.

Key Takeaways:

1. Emphasis on End-to-End Planning: To mitigate margin pressures and comply with sustainability regulations, brands are focusing on comprehensive planning across the supply chain. ​fashionpress.it

2. Adoption of Advanced Technologies: Companies are implementing data-driven tools to enhance demand forecasting and supply chain agility, aiming to reduce overproduction and inventory mismatches. ​k3btg.com

3. Sustainability Considerations: With increasing regulatory pressures, brands are compelled to report excess stock levels and develop recycling initiatives, aligning inventory management with environmental goals. ​k3btg.com

4. Agile Supply Chains: Developing responsive supply chains enables brands to adapt swiftly to market demands, minimizing both excess inventory and stock shortages. ​timesofinnovation.com

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