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1、The State of Fashion 20242The State of Fashion 2024ACKNOWLEDGEMENTSThe authors would like to thank ngeles Garca-Manso,Olivia White and Liann Wu from McKinseys London and New York offices respectively for their critical roles in delivering this report.We would also like to thank Abhishek Goel for his
2、 significant contribution to the MGFI article again this year.A special thanks to all members of The Business of Fashion and the McKinsey communities for their contributions to the research and participation in the BoF-McKinsey State of Fashion 2024 Executive Survey and the BoF-McKinsey State of Fas
3、hion 2024 Consumer Survey,especially the many industry experts who generously shared their perspectives during interviews.In particular,we would like to thank Nima Abbasi,David Allemann,Ana Andjelic,Rachel Arthur,Jean-Marc Bellaiche,Olivier Bialobos,Frederic Court,Cyril Foiret,Gstaad Guy,Mun-il Han,
4、Florian Heubrandner,Norma Kamali,Erwan Rambourg,David Savman,Tony Wang and Andrew Wyatt.The wider BoF team has also played an instrumental role in creating this report in particular,Marc Bain,Brian Baskin,Nick Blunden,Sheena Butler-Young,Cathaleen Chen,Jael Fowakes,Fred Galley,Olivia Howland,Vikram
5、Kansara,Sarah Kent,Daniel-Yaw Miller,Alex Negrescu,Tamison OConnor,Diana Pearl,Anna Rawling,Darcey Sergison,Arunima Sharma,Charlene Teressa,Amy Warren,Robert Williams,Anouk Vlahovic,Josephine Wood and Robb Young.We would like to thank the following McKinsey colleagues for their special contributions
6、 to the report creation and in-depth articles:Ekaterina Abramicheva,Tera Allas,Sarah Andr,Magdalena Balcerzak,Mosa Barlass,Tom Bauer,Larissa Blau,Pamela Brown,Marc Canal,Matthew Chapman,Becca Coggins,Daniel Crohmal,Federico Cucinelli,Lindsay Delevingne,Sandrine Devillard,Gilles Djayep,Linda Dommes,V
7、ictor Duran,Erik Eklw,Guenter Fuchs,Ezra Greenberg,Gizem Gnday,Fiona Hampshire,Holger Harreis,Colin Henry,Steve Hoffman,Sara Hudson,Julia Huang,Daniel Hui,Julian Hgl,Patricio Ibez,Jonatan Janmark,Younghoon Kang,Dale Kim,Patrick Klinkoff,Simona Kulakauskait,Krzysztof Kwiatkowski,Nikolai Langguth,Mad
8、Lapuerta,Benjamin Lau,Leila Le Merle,Bridget Lousa,Karl-Hendrik Magnus,Siddhant Malhotra,Ignacio Marcos,Dunja Matanovic,Dominik Matuszewski,Jessica Moulton,Karin stgren,Gizem Ozcelik,Jesko Perrey,Roger Roberts,Dmitrii Rykunov,Amaury Saint Olive,Steve Saxon,Kandarp Shah,Marie Strawczynski,Saga Stugho
9、lm,Alex Sukharevsky,Kimberly Te,Alexander Thiel,Martha Torres,Alexis Trittipo,Jonathan Woetzel,Alexis Wolfer,Meri Yrjnen,Jackey Yu,Isabell Zang,Rebecca Zhang and Daniel Zipser.Wed also like to thank David Wigan for his editorial support,Amy Vien for her creative input and direction and Diana Ejaita
10、for the cover illustration.5The State of Fashion 2024CONTENTS10 Executive Summary12 Industry Outlook20 Global Economy Theme 01.Fragmented Future In-Depth:The Tumultuous Path to an Exit Theme 02.Climate Urgency34 Consumer Shifts Theme 03.Vacation Mode In-Depth:How Chinas Tourists Will Return in 2024
11、Theme 04.The New Face of Influence Gstaad Guy:Catering to the 1%with Social Media Wit Theme 05.Outdoors Reinvented On:Capitalising on the Perennial Sportswear Boom60 Fashion System Theme 06.Gen AIs Creative Crossroad In-Depth:Driving Growth Through Generative AI:An Executive Playbook Theme 07.Fast F
12、ashions Power Plays Musinsa:Taking the K-Fashion Ecosystem Global Theme 08.All Eyes On Brand Dior:Balancing Tradition,Innovation and Scale Theme 09.Sustainability Rules Rachel Arthur:How the UN Wants Brands to Sell Sustainability Theme 10.Bullwhip Snaps Back PVH Corp:Transforming Supply Chains Throu
13、gh Trust and Transparency112 McKinsey Global Fashion Index7Achim BergAchim Berg is a senior partner in McKinseys Frankfurt office.He is one of the co-founders of McKinseys Apparel,Fashion&Luxury group and was its global leader from 2016 until September 2023.Achim is active in all relevant sectors in
14、cluding clothing,textiles,footwear,athletic wear,beauty,watches and jewellery,accessories and retailers,spanning from value to luxury segments.As a global fashion industry and retail expert,he supports clients on a broad range of strategic and top management topics,as well as on operations and sourc
15、ing-related issues.Imran AmedImran Amed is one of the global fashion industrys leading writers,thinkers and commentators,and is founder,chief executive and editor-in-chief of The Business of Fashion(BoF),a modern media company and the authoritative voice of the global fashion and luxury industries.I
16、mran holds an MBA from Harvard Business School and a B.Com from McGill University.He was born in Canada and holds British and Canadian citizenship.Previously,Imran was a management consultant at McKinsey&Co.Anita BalchandaniAnita Balchandani is a senior partner in McKinseys London office,and leads t
17、he UK Consumer Practice while she is also part of the global Apparel,Fashion&Luxury group.She brings deep expertise in sectors such as fashion,luxury,beauty,specialty retail and e-commerce.Anita works with consumer and retail businesses as well as PE houses across Europe and North America in shaping
18、 growth agendas,driving digital transformation and designing winning operating models.Felix RlkensFelix Rlkens is a partner in McKinseys Berlin office,and leads McKinseys Apparel,Fashion&Luxury group in EMEA.He works with apparel,sportswear and pure-play fashion e-commerce companies in Europe and No
19、rth America on a wide range of topics including strategy,operating model and merchandising transformations.David BarreletDavid Barrelet is an associate partner in McKinseys Munich office,and is part of the leadership of McKinseys Apparel,Fashion&Luxury group in EMEA.He works with fashion brands,reta
20、ilers and suppliers across Europe and Asia on a variety of topics including growth strategies,go-to-market transformations and M&A.Gemma DAuriaGemma DAuria is a senior partner in McKinseys Milan office and has taken over the leadership of McKinseys global Apparel,Fashion&Luxury practice.She has work
21、ed in North America,Europe and the Middle East supporting organisations in the retail,fashion and luxury sectors in driving transformations for higher performance and health,including building capabilities and developing leadership capacity.CONTRIBUTORS8Asina de BrancheAsina de Branche is a partner
22、at McKinseys Beijing office and leads McKinseys Apparel,Fashion&Luxury group in China.She is an expert in apparel transformations bringing holistic impact by deployment of critical value-enhancing recipes into organisations including full brand repositioning,network restructuring,assortment efficien
23、cy optimisation and organisational change amongst others.Marc BainThe technology correspondent atThe Business of Fashion,Marc Bain reports on the innovations reshaping the global fashion industry and writes a weekly tech newsletter.In his career as a reporter,including several years as the fashion r
24、eporter at Quartz,he has covered all aspects of the industry,from garment workers to the runway,and in 2021 received an award in business journalism.Hannah CrumpAs associate director of strategy at The Business of Fashion,Hannah Crump contributes to the execution of special editorial projects,rangin
25、g from case studies to in-depth market reports.She partners with industry experts to develop,edit and produce data-driven research and analysis for professionals in the global fashion industry.Jolle GrunbergJolle Grunberg is a partner in McKinseys New York office and is part of the Apparel,Fashion&L
26、uxury group in the Americas.She focuses on growth strategy,international expansion of brands and commercial transformation in the US and Europe.Before re-joining McKinsey,Jolle served 20 years as a C-suite leader of well-known fashion and footwear brands,most recently as global president at Wolverin
27、e Boston Brands(Sperry,Saucony,Keds)and as the CEO of Lacoste Americas.Janet KersnarAs executive editor at The Business of Fashion in London,Janet Kersnar has a multifaceted content role.With more than 25 years of experience as a business journalist at leading publishing houses including The Economi
28、st Group,Janet is a member of BoFs senior leadership team and is part of BoF Insights,a fashion industry think tank.Ewa StarzyskaEwa Starzyska is an engagement manager in McKinseys London office and is part of the Apparel,Fashion&Luxury group in EMEA.She works with fashion and luxury companies as we
29、ll as investors across Europe,on topics such as e-commerce,strategy,merchandising,value creation and M&A.9With clouds brewing on the horizon,recent years might provide a sense of how the fashion industry will ride out 2024.The industry has shown its resilience in recent years,having achieved more th
30、an double the levels of economic profit in 2022 than in all years between 2010 and 2020 except for one,yet by 2023 the industry was facing challenges that were both persistent and deepening.On a regional basis,Europe and the US experienced slow growth throughout the year,while Chinas initially stron
31、g performance decelerated in the second half.Though the picture for luxury was more positive than the rest of the market in the first half of 2023,consumers appetite to shop for fashion was diminishing across the board by the second half,leading to slowing sales and uneven performance.Even luxury be
32、gan to feel the heat after a lengthy period of growth that benefitted the entire industry.Looking to 2024,fashion leaders are anticipating further headwinds and are uncertain about prospects for the year ahead.Indeed,the word most often mentioned by executives in the BoF-McKinsey State of Fashion 20
33、24 Executive Survey was“uncertainty.”Consumer confidence will remain fragile,although for different reasons in key markets of the US,Europe and China.As a whole,the fashion industry is predicted to achieve year-on-year retail sales growth of between 2 percent and 4 percent in 2024.Aside from economi
34、c challenges,one pressure point that cannot be ignored in the year ahead is the climate crisis.After numerous extreme weather events in 2023,leading companies are likely to bolster their resilience to climate impacts in 2024.Inaction is no longer an option:extreme climate events are already placing
35、the lives and livelihoods of fashion workers in danger and could put at risk an estimated$65 billion of apparel exports by 2030.How should fashion companies prepare?With cost-saving tactics mostly exhausted,the focus is expected to be on growing sales,underpinned by new pricing and promotion strateg
36、ies,rather than volume increases across the industry,net intent to raise prices is more than 50 percent,according to the BoF-McKinsey Executive Survey.Cost pressures are predicted to abate,with less than 20 percent of executives expecting the cost of goods sold and selling,general and administrative
37、 expenses to rise more than 5 percent.In 2024,the industry is expected to bear the impact of fluctuations in demand that have punctuated the past few years.It is during such times that supply chains experience a“bullwhip effect,”in which small sales variations cause high levels of volatility,leading
38、 to factory underutilisation,layoffs and delayed infrastructure investments.To navigate these challenges,fashion brands should consider investing in developing more transparent Riding Outthe StormEXECUTIVE SUMMARY10The State of Fashion 2024and collaborative relationships with their suppliers.Meanwhi
39、le,fashion supply chains could be under increased scrutiny amid incoming regulations on several fronts.This includes new sustainability rules in the European Union and the US,which will require brands and manufacturers to double down on initiatives aimed at cutting greenhouse gas emissions and waste
40、,while building business models that protect and preserve natural resources.The fast-fashion industry,which has already been buffeted by a cohort of companies like Shein and Temu that are not only faster and cheaper but also fuelled by big marketing budgets,may be particularly pressured by these new
41、 regulations.When seeking to identify growth levers,one area that respondents to the BoF-McKinsey Executive Survey said they are homing in on is generative AI,where there is significant potential in creativity-focused use cases in design and product development.Some 73 percent of executives expect t
42、o prioritise gen AI in 2024,but many may face a talent gap,given that just 5 percent said they are ready to make best use of the technology.Marketing is another area of focus.After years of relying on performance marketing,brand marketing may increasingly take centre stage in the year ahead,with 71
43、percent of executives planning to spend more on brand marketing than in 2023 in a bid to cultivate emotional connections with customers.At the same time,brands may find consumers are more demanding when it comes to authenticity and relatability,leading to a shift towards influencers who are more qui
44、rky,vulnerable and less-polished.Forward-looking companies should consider leaning into this new wave of content creators to enhance their brand stories.As consumers travel with renewed enthusiasm in the year ahead,fashion companies may need to revamp how they engage with consumers who are shopping
45、abroad.For the first time since the Covid-19 pandemic,travel levels in 2024 are projected to exceed those in 2019.Chinese travel to overseas destinations is expected to reach between 70 percent and 100 percent of pre-pandemic levels in 2024.As these shoppers return,there is a growing desire for bran
46、d experiences and traditional shopping trips in both tourist destinations and second-tier cities.Alongside a return to travel,there is also a shift to spending more time outdoors,which will likely drive up demand for outdoor wear in 2024,further blurring the lines between functionality and style.All
47、 told,executives are bracing for a strategically challenging year ahead.Fashion leaders need to plan carefully for a range of different scenarios,become better equipped to manage pricing and get ready to accelerate when the storm begins to clear.Looking to 2024,fashion leaders are anticipating furth
48、er headwinds and are uncertain about prospects for the year ahead.11Executive SummaryFashion industry executives looking towards 2024 are on edge.The most prominent sentiment among fashion leaders is“uncertainty,”according to the BoF-McKinsey State of Fashion 2024 Executive Survey.1 Causes for conce
49、rn include geopolitical events,weakened economies and the continuing impact of high interest rates.Yet executives also see some reason for optimism in specific markets and segments.Looking ahead to 2024,26 percent of respondents to the survey conducted in early September expected conditions to impro
50、ve year on year,37 percent expected conditions remain the same and 38 percent expected the situation to worsen,marking the biggest divide in executives expectations for the year ahead since the inception of the BoF-McKinsey survey in 2017.2 Yet the outbreak of the Israel-Hamas war in October undersc
51、ores the uncertain environment,raising questions about whether a regional widening of the conflict could impact the global economy and have ramifications for the fashion industry.Geopolitics continue to be a firm fixture on executive radars 62 percent of respondents to the survey cited geopolitical
52、instability as the top risk to growth,while economic volatility is cited DestinationUnknownINDUSTRY OUTLOOK12The State of Fashion 2024by 55 percent.Inflation concerns appear to be diminishing.Among surveyed respondents,51 percent cited inflation compared to 78 percent in the previous years survey,pe
53、rhaps an acknowledgement that central bank policies are starting to achieve their intended results,after inflation rates began rising to historic highs in the US and Europe in 2022.3As for business performance,top-line year-on-year growth is expected to be lacklustre in 2024,at between 2 percent and
54、 4 percent globally,according to the McKinsey Fashion Growth Forecasts.However,regional and country variations in both luxury and non-luxury segments will be evident.4 Non-Luxurys Steady PathOverall,non-luxury retail sales growth is forecast to remain steady year on year in 2024 at between 2 percent
55、 and 4 percent.In Europe,non-luxury growth of between 1 percent and 3 percent is expected,after recording 5 percent in the first half of 2023 and 1 percent to 3 percent in the second half,due to slumping consumer confidence and declining household savings,among other factors.5 When taking into accou
56、nt the forecasted high core inflation of around 3 percent to 4 percent,the growth outlook Exhibit 1Slower but normalised growth is anticipated across regions in 2024Retail sales year-on-year growth by region and segment,%Note:Growth forecasts reflective of inflation;growth rates calculated on actual
57、s expressed in local currenciesSource:McKinsey State of Fashion Forecasts;McKinsey Global Fashion IndexUSChinaEuropeNon-LuxuryLuxury131240 to 220 to 21010121 to 334 to 62781491 to 310H1H22023E2024E20202021202218591 to 3131 to 32510155 to 7163 to 51640321 to 34 to 62 to 4H1H22023E2024E202020212022H1H
58、22023E2024E20202021202213Industry Outlookis even more limited.6In the US,non-luxury growth is forecast at 0 percent to 2 percent amid declining consumer sentiment.7 Slightly slower increases in the rate of inflation forecast at around 2 percent to 3 percent in 2024 may result in mildly more positive
59、 growth.However,a“soft landing”is forecast if,as expected,the country avoids outright recession,helping inflation to get under control more quickly than in Europe.8 E-commerce activity is expected to pick up after the post-pandemic slowdown in which consumers rebalanced spend towards in-store retail
60、.Among survey respondents,64 percent identified owned online channels as a more important growth driver than in the previous year.9 In China,non-luxury demand remains relatively weak compared to historical growth rates,reflecting economic uncertainty and subdued consumer confidence.Even so,growth is
61、 projected to outpace that of the US and Europe,at 4 percent to 6 percent.Positive factors include subdued inflation and the ongoing expansion of the middle class,which is underpinning demand for contemporary and premium fashion.Consumer sentiment shifts towards trading down are also bolstering the
62、large mass-market segment.More opportunities within growth categories such as sportswear and outdoor wear will likely be supurred by government initiatives and shifting consumer preferences for healthier lifestyles and wellbeing.10Luxurys RestraintLuxurys global retail sales growth is forecast to sl
63、ow to between 3 percent and 5 percent in 2024,from between 5 percent and 7 percent in 2023,as consumers restrain spending after a post-pandemic shopping surge.11In Europe,year-on-year growth of between 3 Exhibit 2Uncertainty reigns as executives reveal no clear consensus on the outlook for 2024Expec
64、tations for how fashion industry conditions will evolve in the year ahead compared to prior year,%of respondentsBetterSameWorseNote:Numbers are rounded and may not add to 100Source:BoF-McKinsey State of Fashion 2024 Executive Survey,BoF-McKinsey State of Fashion 2023 Executive Survey,BoF-McKinsey St
65、ate of Fashion 2022 Executive Survey383726Expectations for 2024562816Expectations for 202392962Expectations for 202214The State of Fashion 2024percent and 5 percent is predicted in 2024,compared to 10 percent in the first half of 2023 and 5 percent to 7 percent in the second half of the year.An anti
66、cipated rise in inbound tourism,boosted by Paris hosting of the Olympic and Paralympic Summer Games,will likely be a growth driver,as will a pipeline of store openings in tier two and tier three cities across Europe.12 13In the US,luxury is expected to grow at 2 percent to 4 percent year on year in
67、2024,compared to 1 percent in the first half of 2023 and between 1 percent and 3 percent in the second half.This would represent a return to the long-term pace,with slightly stronger sales driven by higher-end aspirational brands.However,the luxury boom of recent years is not likely be rekindled.Rat
68、her,stabilisation at a lower level is expected.A strong dollar against,for example,the euro may also lead to some spend shifting abroad.14As for China,luxury growth of 4 percent to 6 percent is expected,compared to 16 percent in the first half of 2023,which dropped to between 1 percent and 3 percent
69、 in the second half.Though moving in the right direction,the projected growth rate in the year ahead stands in sharp contrast to 2020s 32 percent and 2021s 40 percent.Renewed uptake of international travel may dampen domestic demand,as affluent consumers resume shopping for luxury outside the countr
70、y.However,its worth noting that the size of Chinas luxury market remains almost double what it was in 2019.15While the biggest fashion markets are seeing only tepid signs of renewed growth,others may be more compelling.When asked about the countries or regions they believe will be the most promising
71、 in the year ahead compared to 2023 in the survey conducted in September,executives cited the Middle East(51 percent net intent),India(39 percent net intent)and Asia Pacific(34 percent net intent).North 69%Exhibit 3Companies are planning price increases to combat continued inflation,with 25 percent
72、of executives expecting increases of over 5 percentExpected change in retail sales prices across all products/categories in 2024,%of respondentsNote:Numbers are rounded and may not add to 100Source:BoF-McKinsey State of Fashion 2024 Executive SurveyMore than 5%251%to 5%44No change184%to 0%65%or less
73、615Industry OutlookAmerica and China recorded 8 percent and 3 percent respectively,while Western Europe was negative 11 percent.16As for expanding physical footprints,the US,Middle East and Asia Pacific stand out as priorities,with executives reporting net intent of 44 percent,45 percent and 45 perc
74、ent respectively.North America is the biggest investment destination,with 48 percent of executives citing footprint expansion plans in the region,compared to 44 percent in Western Europe.17 Eyes on the PrizeIn 2024,71 percent of surveyed executives said they will focus on increasing sales,compared t
75、o 63 percent the previous year.18 Achieving that growth will likely require laser-sharp attention on pricing and promotion strategies,with a large portion of investment directed to potential quick wins.Indeed,pricing strategies are likely to be particularly critical given weakening prospects for vol
76、ume growth.Net intent to raise prices across the industry is 50 percent,with 69 percent of executives planning to lift prices,compared to 58 percent a year ago.Among the surveyed executives,44 percent expect to raise prices by up to 5 percent,while 25 percent plan price increases of more than 5 perc
77、ent.19 Companies that succeed in driving growth through price rises will likely take a precise,carefully tailored approach.Simultaneously,decision makers will likely keep a tight grip on costs and investments.However,the industry has already seen widespread cost cutting,suggesting the focus should b
78、e on stricter controls rather than cuts.The good news is that executives expect cost pressure to abate,with just 18 percent of executives predicting their companies cost of goods sold(COGS)to grow more than 5 percent next year and 19 percent expecting selling,general and administrative expense(SG&A)
79、to rise more than 5 percent.This is in contrast to last year,when 55 percent expected COGS growth of more than 5 percent,and 40 percent expected SG&A growth of more than 5 percent.One reason is fading concern about inflation,with 12 percent and 18 percent of executives expecting COGS and SG&A respec
80、tively to remain steady,compared to 1 percent and 3 percent last year.20 Additionally,the successful implementation of cost measures over the last couple of years have already absorbed many of the potential cuts.Strategic PrioritiesAs climate change continues to gather pace,fashion executives remain
81、 focused on building more sustainable businesses.When identifying the biggest challenges and opportunities in the year ahead,some 12 percent cite sustainability as a principal opportunity for 2024,placing it at the top of the C-suite agenda.However,reflecting the scale of the task and rising regulat
82、ory pressure,12 percent also name it as a top challenge.21 Finding a balanced way to implement sustainability improvements and risk-reduction programmes with competitive advantages is likely to be a key challenge for fashion executives in 2024.Another opportunity high on executives agendas is an inn
83、ovation that has been surrounded by buzz in 2023:artificial intelligence,and particularly generative AI.22 Given its application across the fashion value chain and among functions,fashion companies are already starting to experiment cautiously.Those efforts are likely to continue in 2024,with a view
84、 to scaling use cases where there are demonstrable performance upsides.As for consumers across markets,discretionary spend is likely to zero in on categories and brands on which they feel they can rely.Hard luxury goods jewellery and watches as well as leather goods are emerging as key categories,as
85、 more players enter the market and consumers seek to invest in pieces that will maintain or increase in value over time.23 Meanwhile,focused brand-building may help companies stave off challenges across segments,with consumers gravitating towards brands with the greatest differentiation and brand st
86、orytelling.In the face of an uncertain future marred by continued macroeconomic challenges,fashion executives may need to make bold decisions:leading players cannot allow an ambiguous outlook to cloud decision making when seeking to capture growth opportunities ahead.Fashion shoppers in Europe.Shutt
87、erstock.17Industry Outlook03.Vacation ModeConsumers are gearing up for the biggest year of travel since before the pandemic.But a shift in values means travellers have a different set of expectations,even as shopping remains high on the agenda.Brands and retailers should consider refreshing distribu
88、tion and category strategies to meet travellers wherever they are.04.The New Face of InfluenceIts time for brand marketers to update their influencer playbooks.A new guard of creative personalities is gaining brands attention,winning trust and fandom among key audiences.Working with these personalit
89、ies in 2024 will require a different type of partnership,an emphasis on video and a willingness to relinquish a degree of creative control.05.Outdoors Reinvented Technical outdoor wear has been propelled by consumers post-pandemic embrace of healthier lifestyles as well as“gorpcore,”and is likely to
90、 accelerate even further in 2024.More outdoor brands will likely launch lifestyle collections while lifestyle brands embed technical elements into collections,further blurring the lines between functionality and style.02.ClimateUrgencyThe frequency and intensity of extreme weather-related events in
91、2023 mean the climate crisis has become even more visible,leaving the fashion value chain especially vulnerable.With climate risks worsening across continents,the fashion industry cant hold off any longer on building resilience into its supply chains and helping to abate emissions.01.Fragmented Futu
92、reIn 2024,the global economic outlook will likely continue to be unsettled.As new and ongoing financial,geopolitical and other challenges weigh heavily on consumer confidence,fashion markets in the US,Europe and China are facing differing headwinds,requiring suppliers,brands and retailers to bolster
93、 contingency planning,among other measures.Consumers net intent to spend on apparel is 16%across the US,Europe and China in Q4 2023In 2024,global travel volumes are projected to reach 110%of 2019 levels,the first year to exceed pre-pandemic levelsMore than$65 billion of apparel exports are at risk o
94、f being wiped out by climate events such as flooding and extreme heatTrade activity on resale platform StockX for Salomon,Arcteryx and The North Face grew on average 800%in 2023 vs 2022More than 40%of consumers prefer fashion influencers who are relatable and authenticCONSUMER SHIFTSGLOBAL ECONOMYTh
95、e State of Fashion 2024110%40%800%1616%$65$65bnbn08.All Eyes on BrandBrand marketing will likely be back in the limelight in the year ahead as the fashion industry confronts a shifting landscape in which performance marketing no longer reigns.Consumers emotional connections to brands will likely be
96、critical as fashion marketers reorientate their playbooks to emphasise long-term brand-building strategies.09.Sustainability RulesThe era of the fashion industry self-regulating sustainability is drawing to a close around the world.Across jurisdictions,new rules could have a widespread impact on bot
97、h consumers and fashion players.Brands and manufacturers need to revamp business models to align with the changes ahead.10.Bullwhip Snaps BackChanges in consumer demand have resulted in the“bullwhip effect,”where cuts to orders increase in magnitude at different parts of a supply chain,putting press
98、ure on fashions suppliers.Now,if supply is to keep pace with anticipated renewed demand,brands and retailers should consider focusing on transparency and bolstering strategic partnerships.07.Fast Fashions Power PlaysFast-fashion competition will likely become even fiercer in the year ahead.Challenge
99、rs,led by Shein and Temu,are changing tactics around price,customer experience and speed.Success for disruptors and incumbents will likely hinge on their ability to adapt to evolving consumer preferences,while navigating regulations that may impact the industry.06.Gen AIs Creative CrossroadAfter gen
100、erative AIs breakout year in 2023,use cases are emerging across creative industries,including fashion.Capturing the value of this transformative technology in 2024 will require fashion players to look beyond automation and explore its potential to augment the work of human creatives.73%of fashion ex
101、ecutives think gen AI is a 2024 priority for their companies,but only 5%believe they have the capabilities to fully leverage it71%of fashion executives plan to increase brand marketing spend in 202440%of US consumers have shopped at Shein or Temu in the last 12 months87%of fashion executives think s
102、ustainability regulations will impact their businesses in 202473%of chief procurement officers cited demand volatility as a dynamic that may impact supplier relationships in the next five yearsFASHION SYSTEMThe State of Fashion 20247171%8787%4040%7373%7373%Global Economy01.Fragmented Future02.Climat
103、e Urgency01.Fragmented FutureIn 2024,the global economic outlook will likely continue to be unsettled.As new and ongoing financial,geopolitical and other challenges weigh heavily on consumer confidence,fashion markets in the US,Europe and China are facing differing headwinds,requiring suppliers,bran
104、ds and retailers to bolster contingency planning,among other measures.KEY INSIGHTS Global GDP growth is set to slow to 2.9 percent in 2024,down from 3 percent in 2023 and 3.5 percent in 2022.Consumer spending may be tempered in the year ahead.In the third quarter of 2023,net intent to purchase appar
105、el was 7 percent in China,but negative 25 in the US and negative 29 in Europe.Emerging Asia provides potential growth spots,with Indiasinvestment activity,domestic demand and developing infrastructure making it a promising market for fashion.21Global EconomyConsumers around the world might be mistak
106、en if they believe 2024 will offer a chance to catch their collective breath after enduring a post-pandemic period of turbulence.Universally,slowing growth,new and continued geopolitical conflict,and consumer spending pressures are likely to define economic prospects.And as in previous times,the imp
107、acts will likely not be felt uniformly as market responses diverge.As 2023 rolls towards its end,forecasters have readjusted their outlooks as the strains of high inflation and subsequent interest rate hikes showed few signs of falling closer to target levels.By October,the International Monetary Fu
108、nds forecast put global GDP growth at 2.9 percent in 2024,down from 3 percent in 2023 and 3.5 percent in 2022.24 The IMF cites slowdowns in advanced economies as the primary culprit.Inflation,still remaining high,will likely continue to be in the limelight.According to the IMF,the global headline in
109、flation rate is set to fall to 5.8 percent in 2024,from 6.9 percent in 2023 and 8.7 percent in 2022.25 Against this backdrop,officials at the US Federal Reserve Bank are among those at central banks who expect interest rates to remain“higher for longer.”26 27What will likely differentiate 2024 from
110、the past few years is that consumers in key economies may be confronting different challenges from each other,thus creating additional complexity for fashion executives steering their companies through headwinds from region to region.In Europe,the economic picture is gloomy,as it continues to strugg
111、le under the shadow of the war in Ukraine.By the second quarter of 2023,Europes biggest economy,Germany,saw growth stagnate,and the risk of a second recession within a year is still hovering.28 29 Meanwhile,in the UK,Europes second-largest economy,growth was slow as the economy attempted to shrug of
112、f 2022s surge in inflation and adjust to 14 consecutive interest rate hikes.30 31GDP growth in the euro zone is set to remain low,seeing only a tentative rise in 2024 from 0.7 percent in 2023 to 1.2 percent in 2024,according to the IMF.32 A monthly euro-zone survey by the European Commission found t
113、hat consumer 1 Europe includes respondents from France,Germany,Italy,Spain and the UKSource:McKinsey ConsumerWise Global Sentiment DataExhibit 4Consumers in Europe and the US plan to reduce apparel spend,while Chinas is expected to riseNet intent to spend on apparel over 3 months to end-December 202
114、3,%29Europe125US7China22The State of Fashion 2024confidence hit a six-month low in September.33 The euro zones ongoing cost-of-living crisis is straining many households,alongside continued higher core inflation rates compared to the US.34 35In the US,where Federal Reserve policies appear to have av
115、erted outright recession and achieved lower levels of inflation,growth prospects seem slightly brighter than those in Europe.However,GDP growth is expected to slow next year,from 2.1 percent down to 1.5 percent.36Various events in the second half of 2023 underscored the fragility of consumer confide
116、nce in the country.For example,in October US policy makers lifted the three-year freeze on student-loan repayments,37 leaving 37 percent of respondents to a Morgan Stanley survey anticipating that they would have to cut spending in order to make payments,while 34 percent said they would not be able
117、to make payments at all.38 Earlier in the year,credit card debt reached an all-time high of$1.03 trillion,according to central bank research,with high interest rates and financing charges also contributing to headwinds.39 In China,2023 held different economic pressures.The economy moved into deflati
118、on,and an ongoing crisis in the property market which drives 25 percent of Chinas economy left apartment sales in August 47 percent below 2019 levels.40 41 Major property companies are buckling under the weight of unsustainable debts and losses.42 Youth unemployment has been high,hitting 20.8 percen
119、t in May(the latest date that Chinas National Bureau of Statistics published new figures).43 Chinese consumers have continued building up savings,while a return to spending has been slow.44 At around 35 percent to 45 percent of GDP,Chinas gross savings rate has been historically high and,according t
120、o the World Bank,the country has the highest savings-to-GDP rate among large economies.Indicators suggest that in 2023,Chinas savings levels increased further,perhaps as households expanded their safety nets out of precaution.45In contrast,savings pots have dwindled in both the US and Europe.An unus
121、ual amount of excess in savings was built up in these regions during the Covid-19 pandemic,but analysis now suggests that these are likely to run out by the end of 2023,A pedestrian on The Bund in Shanghai,China.Getty Images.23Global Economyafter consumers returned to shopping more freely following
122、the lifting of pandemic lockdowns.The subsequent toughening of the economic climate in 2023 has also meant that it is difficult for consumers to replenish their savings,and even as savings remain reasonably high in absolute terms,inflation is causing them to devalue.This bodes ill for discretionary
123、spending in 2024,after recent years of relatively buoyant consumption.46 47 Pressure on household budgets is likely to prompt a decline in discretionary spend.In the third quarter of 2023,net intent to purchase apparel was negative 25 in the US and negative 29 in Europe,according to a McKinsey surve
124、y.48 Rays of LightStill,there are certain country-level reasons for some degree of optimism.This is the case with China,even if the base case is for muted demand and slow GDP growth,from 5 percent in 2023 to 4.2 percent in 2023,according to IMF forecasts.The volume of imports expanded 1 percent year
125、 on year in the first half of 2023(compared with a decline of 6.4 percent in the same period in 2022),indicating a tentative rise in domestic demand.49 50Consumer spending plans in China appear to be marginally more positive than in the US and Europe,with a 7 percent net intent to purchase apparel a
126、s well as jewellery,and 8 percent for footwear,McKinsey research shows.Meanwhile,69 percent of consumers are planning to splurge on shopping.51 However,even if cautious,optimism for the country should be tempered,as the overall outlook may be disappointing forecasts for shopping and travel have rema
127、ined dampened in recent months,52 and growth is still well below historical levels.Emerging Asia provides potential,too.For example,in India,consumer confidence reached a four-year high in September 2023,while India-based executives are more optimistic than western peers,with 85 percent of responden
128、ts to a McKinsey global survey saying that conditions have improved in the six months to August.53 Indias bellwether manufacturing Purchasing Managers Index(PMI)hit a 31-month high in May and the services PMI reached a 13-year high in July.GDP growth stood at 6.9 percent in fiscal 2023.54 Strong inv
129、estment activity,consistent domestic demand and a policy-maker push to invest in infrastructure buoyed the rapid growth.This rate will likely moderate in 2024 but remains strong with forecasted GDP growth of 6.3 percent.55The impact of 2024s mixed outlook will be felt by fashion businesses across th
130、e value chain.Brands and retailers will likely need to confront a further wave of low consumer demand in some key markets,while suppliers may feel the amplified effects of this dampened demand even more as it echoes along the supply chain,leading to underutilised capacity.Revenue growth in this envi
131、ronment is likely to be driven by price rather than volume,and businesses will need to plan price increases with care and precision to avoid alienating cash-strapped consumers.To build greater resilience across value chains in 2024,fashion decision makers can focus on contingency planning,ensuring t
132、hat scenarios take into account high levels of uncertainty and the range of regionalised consumer demand shifts.Scenarios for each region will need to factor in increasingly divergent underlying factors.Meanwhile,strong inventory management is likely to remain a priority,continuing successful cost m
133、anagement programmes implemented in post-pandemic times.Meanwhile,suppliers can expect an increasingly competitive landscape.Manufacturing sector price wars are a possibility as weak consumer demand puts pressure on orders and leads to excess capacity in some supply chains.Suppliers may want to work
134、 to build deeper,collaborative relationships with brands to reduce exposure to price competitiveness,while ensuring they retain tight control of costs in the year ahead.Universally,slowing growth,new and continued geopolitical conflict,and consumer spending pressures are likely to define economic pr
135、ospects.24The State of Fashion 2024The Tumultuous Path to an ExitBy Sara Hudson,Pamela Brown,Leila Le Merle and Simona KulakauskaitIN-DEPTHGlobal EconomyPrivate equity(PE)firms looking to exit their fashion industry assets in 2024 may find they have some difficult choices to make.Against a backdrop
136、of public market volatility,finding an attractive route to exit has been challenging,to such an extent that future deal-making may provide less-than-ideal returns and raise questions about the long-term value creation opportunities across parts of the fashion industry.The significant shift in fashio
137、ns financial market performance had,in fact,already started in 2018.Apparel,fashion and luxury(AF&L)companies generally tracked benchmark indexes closely up until then,after which industry performance began to diverge.While luxury companies outperformed the MSCI World Index by 14 percentage points i
138、n the five years to October 2023,non-luxury has underperformed the same index by 3 percentage points.56A similar scenario has been playing out in the private realm,with PE investors becoming increasingly cautious about non-luxury fashion categories,with deal volume stagnating over the last decade(ex
139、cept for 2021 which was a record PE deal year)even when“dry powder”that is,capital available for investment grew in the PE industry overall.57 In early 2023 amid an overall downward trajectory in the broader PE space,PE activity in AF&L ground to a halt due to pressure on discretionary consumer cate
140、gories,high valuations and difficulties obtaining debt financing.58 PE firms are likely to continue to see more limited exit options.59 On one side,strategic buyers have not made many investments in the past few years,given their caution around adding further complexity to their portfolios,and have
141、focused instead on optimising their existing operations.60 PVH Corp and VF Corp,for example,last acquired targets in 2018 and 2020,respectively.On the other side,few PE-backed brands can reach the scale that an initial public offering requires.This then means attracting another PE investor,but they
142、will likely be confronting the same concerns about the industrys long-term value creation as the public market.An increasingly important priority for investors is to minimise exposure to the“fashion risk”inherent in brands that rely on actively shaping or getting fashion trends right.61 Naturally,th
143、ese brands see swings in popularity over time,which makes it difficult to assess their value at any point in time,encouraging investors towards brands with iconic,timeless designs and a credible,compelling brand story.Even if investors are able to identify the brands with staying power,the added cha
144、llenge of how to underwrite the intangible value that is the value of the brand adds complexity and risk to the deal-making process.PE players have long homed in on luxury targets,The New York Stock Exchange.Shutterstock.The fashion industry has struggled to attract investment over recent years,amid
145、 inconsistent performance and increasing polarisation.In this challenging environment,fashion businesses seeking funding should have solid performance fundamentals demonstrating sustainable profitability,clear brand equity and a path to value creation.Finally,market timing will be critical.26The Sta
146、te of Fashion 2024for example the sale in August 2023 of luxury womenswear brand Zimmermann to PE firm Advent International.However,large luxury houses and other strategic suitors are equally attracted to these assets and are typically also active bidders when brands come onto the market.PE firms ar
147、e also not singularly focused on luxury sportswear,footwear,wellness,outdoor,modern jewellery and intimates are on their radars too.62 Also in demand are B2B players further down the value chain that allow PE investors to gain exposure to the fashion industry indirectly(without assuming fashion risk
148、).Transactions in this space include Permiras acquisition of luxury contract manufacturer Gruppo Florence in late 2022 and San Quiricos 75 percent purchase of Minerva Hub,a metallic components and leather producer for luxury companies,in 2023.63 Looking to DivestAcross the PE industry,there is a gro
149、wing backlog of deals that have exceeded their typical holding periods and need a sale to realise returns for investors.However,about half of the assets that are at or near the end of their holding periods are in segments which investors are increasingly wary of.Fashion-focused womens apparel curren
150、tly makes up 12 percent of this cohort in EMEA and poses a significant amount of trend-related risk.64 A number of potential deals in this category have stalled in 2023,including Giuseppe Zanotti(L Catterton),Sezane(General Atlantic),Isabel Marant(Montefiore Investment)and Ganni(L Catterton).65 In t
151、he current economic climate,PE investors are also likely to be cautious about department stores and other“third-party”retailer assets(e.g.online and offline retailers that primarily sell goods from other brands),amid increasing macroeconomic headwinds and narrow profit margins.Third-party retail acc
152、ounts for 36 percent of assets held(offline 24 percent and online 12 percent).66 All told,PE firms choice may come down to Exhibit 5Market values are higher for companies with strong revenue and profit growthEnterprise value(EV)growth and underlying drivers,Sector aggregate growth(5.5%)Source:McKins
153、ey Global Fashion IndexEV CAGR(20102022)total industryEV CAGR(20102022)total industry excl.luxuryEBITDA margin change(20102022)Margin accretive,growth laggardsN=68N=63N=115N=102N=44N=37N=46N=38Margin dilutive,growth laggardsMargin accretive,growersMargin dilutive,growersRevenue growth(CAGR 20102022)
154、5%2%2%4%16%14%11%10%27Global Economydelaying exit or compromising on price.But PE firms could also decide to sell to brand management groups,some of which have started making acquisitions.Authentic Brands Group,which bought Reebok in 2022,as well as WHP and Blue Star Alliance,are among such acquirer
155、s specialising in turning around distressed assets.However,the prices on offer are not always going to be attractive.The Public Market ViewIf investors cannot sell into private markets,they may look to the public markets for their exit.Since the 1980s,there were on average two to four AF&L IPOs in E
156、urope and North America every year.The number of AF&L IPOs spiked in 2019 as well as 2021,with 25 IPOs over those two years,and have included brands such as Zegna,Allbirds,Dr Martens as well as luxury marketplace The RealReal.67 But the performance of newly listed AF&L stocks has generally been chal
157、lenging.Since 2018,the stock price of newly floated AF&L companies has dropped an average of 40 percent one year after listing,according to data from McKinsey Corporate Performance Analytics.68 Exceptions include USWE(IPO in 2021),Revolve(2019)and Levi Strauss(2018).As of the third quarter of 2023,t
158、he stock prices of nearly all AF&L companies that had IPOs in 2021 were below their listing prices.An outlier is On,whose share price has turned a corner and is now trading close to its listing value.Another exception from 2021s IPO group is Zegna,whose shares at the end of September 2023 were up 13
159、 percent.69Several factors have contributed to the outperformance of Zegna and On.One is the strength of the brand story.The heritage of craftmanship of Zegna,born in wool mills in Italy and deeply rooted in its local environment,aligned with consumers desire for high-quality fabrics.Furthermore,Zeg
160、na moved away from a reliance on formalwear towards classic but“quiet”collections in time for the quiet luxury boom in recent years.Investors also reward consistent and strong top-line growth.70 On grew revenue more than 60 percent in both 2021 and 2022,driven by its highly innovative solutions and
161、design that appeal to a broad group of customers looking for comfort.Zegnas revenue grew 27 percent and 16 percent in those two years.71 Another factor is that strong performers sit within in-demand categories like luxury and sportswear.Luxury now makes up close to half of the industrys total econom
162、ic profit,having increased its economic profit 3.5 times from 2018 to 2022.Sportswears(including sports footwear)economic profit grew 1.7 times from 2018 to 2022,despite a 17 B2B upstream companiesExhibit 6Around half of fashion assets that private equity investors may want to offload soon are brand
163、s,which can pose trend-related risksDistribution of assets acquired by private equity investors in EMEA in 2020 or earlier,%,total=111 assets1 Includes specialist players in lingerie,suiting and other clothingSource:McKinsey Analysis,PE fund websitesBrandsRetailersOffline retail24Online retail12Spec
164、ialists119Womenswear12Footwear and accessories12B2B companies10Jewellery6Sports554%28The State of Fashion 2024percent drop in 2022.72A McKinsey Global Fashion Index analysis in 2023 of publicly listed AF&L enterprise value between 2013 and 2023 suggests that while profitable growth is most attractiv
165、e to investors,revenue growth is generally more heavily rewarded than margin accretion.Margin accretive companies that grew revenue above the industry average saw a 11 percentage points uplift in enterprise value growth,compared to margin accretive companies that grew below the industry average.In c
166、ontrast,companies that grew revenue above the industry average only saw a 5 percentage points uplift if they were margin accretive compared to those that grew revenue but were margin dilutive.Signs of RevivalTowards the end of 2023,there were many rumours of large IPOs for AF&L players,including She
167、in73 and Skims,74 raising expectations for a return of deal activity.One of the highest profile IPOs of 2023 was Birkenstock,whose target valuation set multiples at 18 times EBITDA.Despite very healthy margins of 35 percent EBITDA,this valuation would put Birkenstock at a similar or even higher mult
168、iple to LVMH(15 times EBITDA for the current year),and the same multiple as Nike,which has lower margins.75 Other shoe brands,such as Crocs and Dr Martens,are trading at six to seven times EBITDA.Despite the wave of brand hype generated by the“Barbie”movie(in which the shoe had a cameo)and strong pe
169、rformance fundamentals,Birkenstock stock declined in value in the first week of trading.This was due to investor concerns over how long Birkenstock can sustain its growth trajectory76 to date driven by demand for comfort“home shoes”during the pandemic and made cool by high-end designer collaboration
170、s with Dior,Manolo Blahnik,Jil Sander and Proenza Schouler.For successful flotations,firms are expected to meet several requirements,including a compelling equity story,sustained revenue and margin growth,ability to scale,and resilience amid category tailwinds.Of course,even these may not guarantee
171、success.Consistent performance in meeting(and exceeding)investor expectations is critical to share price performance.When deciding when to IPO,owners should closely monitor consumer trends and public perceptions,as well as the performance of recently listed companies.In addition,PE owners listing th
172、eir portfolio companies will need to consider the impact of retaining a meaningful stake post IPO.77 By doing so,they expose themselves to share price volatility due to company performance,as well as broader market moves.A public market revival is typically a precursor of PE deal-making and the fund
173、s with fashion specialisms are likely to move first.Non-fashion specialists are likely to remain on the sidelines for longer.Still,there are nascent signs of a more general shift in sentiment,with$1.2 billion of PE“dry powder”putting pressure on funds to begin investing again.78 Meanwhile,investment
174、 committees will look to the green shoots of M&A recovery,reflecting slightly better macroeconomic fundamentals in some markets and valuations starting to decline to more transactable levels.79 One thing is certain:given the volume of assets held by PE players,there is likely to be a queue for the e
175、xit when markets pick up,potentially creating a bottleneck.Within PE,aversion to fashion risk and concerns about discretionary categories are likely to remain significant barriers.Alongside market timing,value creation will likely remain a key priority for 2024.Owners should consider focusing on bra
176、nd health,topline growth and commercial excellence(including getting pricing and promotions right),while also optimising sourcing,rethinking categories,and considering new occasions and channels.For those approaching exit,continuing to invest and not starving the assets is likely to be key,while at
177、the same time hoping for consumer sentiment and discretionary spending to turn around.For successful flotations,firms are expected to have a compelling equity story,sustained revenue and margin growth,ability to scale,and resilience amid category tailwinds.29Global Economy02.ClimateUrgencyThe freque
178、ncy and intensity of extreme weather-related events in 2023 mean the climate crisis has become even more visible,leaving the fashion value chain especially vulnerable.With climate risks worsening across continents,the fashion industry cant hold off any longer on building resilience into its supply c
179、hains and helping to abate emissions.KEY INSIGHTS Fashion is responsible for between 3 percent and 8 percent of total greenhouse gas emissions.By 2030,extreme weather events could jeopardise$65 billion worth of apparel exports and eliminate nearly one million jobs in four economies that are among th
180、e most central to the global fashion industry.Fashion executives said other challenges such as economic uncertainty,geopolitical tensions and inflation will vie for their attention ahead of climate risk in 2024.30The State of Fashion 2024For many fashion businesses,addressing climate-related risks i
181、s often a priority that is eclipsed by other challenges they deem more urgent or imminent.However,due to the geographic footprint and structure of fashions supply chains,it is especially vulnerable to extreme and increasing climate volatility.In 2024,a mindset shift is needed across the industry to
182、acknowledge that maintaining the status quo is no longer an option and climate risk cannot be viewed as a long-term project to be tackled further down the line.The past year has provided ample examples of why climate de-risking needs immediate action given fashion value chains exposure to extreme we
183、ather conditions around the world.80 De-risking will not be the sole responsibility of manufacturers brands will also need to revisit their supplier standards and invest to ensure they are sufficiently addressing new climate-related dimensions.Globally,2023 will likely be remembered as a year of cli
184、mate-related disasters,and the frequency of these disasters is only expected to increase due to climate change.81 Soaring temperatures around the world will make 2023 one of if not the hottest years on record,which scientists say is the result of both El Nio weather patterns and global warming.82 83
185、 Sweltering temperatures,wildfires,torrential rain and flash floods have devasted communities around the world,leaving behind death and destruction.Few regions seemed to be spared.84 85 86 87 88Monsoon rains in Hue,Vietnam.Sergi Reboredo/Getty Images.31Though the human and environmental tragedy loom
186、s large,it is also hard to ignore the economic toll.The US,for example,had suffered an annual record,at$23 billion,of climate-related disasters even before 2023 comes to an end,surpassing 2020s record high.89 And drought in Argentina in 2023 could cause the countrys economy to shrink by 2.5 percent,
187、according to the International Monetary Fund.90 Beyond the Americas,China lost more than$7.6 billion due to severe drought in 2022.91 Globally,the cost of each climate-related disaster is estimated to have increased 77 percent over the past 50 years,reports the World Economic Forum.92As global warmi
188、ng exceeds its current level of 1.1C above pre-industrial levels,productivity growth is set to fall.With global warming levels potentially reaching 2.2C by 2050,global GDP levels could be reduced by up to 20 percent,while warming of up to 5C by 2100 could lead to“economic annihilation,”according to
189、Oxford Economics.93The BoF-McKinsey State of Fashion 2024 Executive Survey found that executives expect other challenges notably economic uncertainty,geopolitical tensions and inflation to be vying for their attention ahead of climate risk.94 Yet,the past year should be a wakeup call for fashion.Wit
190、h fashion still responsible for between 3 percent and 8 percent of total greenhouse gas emissions,95 a mix of short-and long-term strategies can help companies address the climate challenge.Companies,for example,may look to de-risking the value chain and revamping structural and operational legacies
191、,or doubling down on sustainability.Outsized Risks for Fashions Value ChainEvery part of the fashion value chain is affected by the climate crisis,not least because so much of the industry is reliant on the countries and regions most directly impacted by climate upheavals,signifying an outsized risk
192、 for fashion in comparison to many other industries.By 2030,extreme weather events could jeopardise$65 billion worth of apparel exports and eliminate nearly one million jobs in four economies that are among the most central to the global fashion Source:United Nations Office for Disaster Risk Reducti
193、on,World Trade OrganisationExhibit 7A significant share of apparel exports is from countries most directly impacted by climate-related disastersTop 10 countries most impacted by climate-related disasters,Measured by number of people affected,200020231.China20303.Philippines7.Thailand00115.US9.Brazil
194、121602.India1634.Bangladesh8.Ethiopia09006.Pakistan10.Vietnam6266Share of global apparel exports%,2021Share of global cotton exports%,202167%of cotton exports are highly affected by climate disasters52%of apparel exports are highly affected by climate disasters32The State of Fashion 2024industry in
195、Bangladesh,Cambodia,Pakistan and Vietnam.96One part of the fashion value chain that is particularly exposed is the production of raw materials supplying manufacturers.97 Consider cotton,which is sensitive to both droughts and flooding.In India,the worlds second-largest cotton exporter,extensive rain
196、fall and pest invasions have reduced its supply to the extent that the country began importing it.98 Pakistan,too,has been hit by extreme monsoons,while in contrast,drought has hit Texas cotton producers,leading to abandoned crops and steep production declines.99 100 101For manufacturers,flooding is
197、 also a growing risk,forcing temporary or permanent factory closures.In Ho Chi Minh City,Vietnam,55 percent of apparel and footwear manufacturing sites could be exposed to rising sea levels and flooding by 2030.102 Not only are the livelihoods of factory workers impacted,but their health and safety
198、as well.Factory workers in Dhaka,Bangladesh,report suffering headaches,exhaustion from dehydration and lack of sleep due to high temperatures,while 53 percent of surveyed Cambodian workers reported becoming unwell due to heat stress.Meanwhile,as temperatures climb,productivity is expected to fall si
199、gnificantly,estimated to decrease at about 1.5 percent for every degree that temperatures rise above 25C.103 Climate is also impacting fashions logistic strategies.Across all industries,90 percent of exported goods are reliant on shipping to reach their final destinations,but an estimated$122 billio
200、n of economic activity at ports is at risk from disruptions caused by extreme climate events.104 105 The summer of 2023 saw Europes worst dry spell in 500 years,with ships navigating the Rhine River forced to reduce the weight of cargo in order to continue their journeys.A similar narrative played o
201、ut on the Panama Canal.In China,drought slowed traffic on the Yangtze River,forcing companies to move goods through alternative,often more expensive routes.106 Weather-Proofing Strategies in 2024 and BeyondFashion executives in 2024 and beyond should embed climate strategies across their businesses.
202、They may do so by first identifying direct value at risk from potential climate impacts as well as material second-and third-order impacts such as supply chain disruptions,damage to infrastructure,or financial and job losses and implementing thorough scenario planning for these possibilities.Boostin
203、g resilience up and down the value chain,particularly in climate risk“hotspots,”is critical.Nimble processes are needed to swiftly offset weather-related pressures on suppliers and inventories as well as consumers.Alongside these operational changes,other adjustments must be considered,including sou
204、rcing strategies and locations to ensure they also enable flexibility and speed in times of extreme weather events.This may require trade-offs between risk mitigation and cost,speed,capacity and availability of materials.Action by manufacturers must take the form of prioritising worker health and sa
205、fety.This can be actioned through operational shifts such as offering more frequent breaks,rehydration amenities and proactive temperature monitoring of the factory floor,alongside capital investments in fan systems.Longer term,and most importantly,companies should invest in innovation across the va
206、lue chain aimed at helping to reduce fashions impact on the planet.This will touch on all areas of the value chain,from new material innovations such as lab-grown fibres,more efficient and ethical product reuse and recycling,and a shift from encouraging make-take-waste consumption culture.Industry-w
207、ide initiatives will be crucial to facilitate progress at scale.Joining pacts such as the Fashion Pact,the Sustainable Apparel Coalition and the Fashion Charter is a strong first step,but action must follow alignment.Individual company adaptation should be supported by urgent collaborative change.Ev
208、ery part of the fashion value chain is affected by the climate crisis not least because so much of the industry is reliant on the countries and regions most directly impacted by climate upheavals.33Global EconomyConsumer Shifts03.Vacation Mode04.The New Face of Influence05.Outdoors Reinvented03.Vaca
209、tionModeConsumers are gearing up for the biggest year of travel since before the pandemic.But a shift in values means travellers have a different set of expectations,even as shopping remains high on the agenda.Brands and retailers should consider refreshing distribution and category strategies to me
210、et travellers wherever they are.KEY INSIGHTS Global travel is projected to exceed pre-pandemic flows for the first time in 2024,reaching up to 110 percent of 2019 levels.80 percent of consumers surveyed in the US,UK and China expect to shop for fashion while travelling in 2024,with 28 percent planni
211、ng to spend more than the previous year,according to the BoF-McKinsey State of Fashion 2024 Consumer Survey.More than half of respondents are seeking destinations they havent visited before,including second-tier cities.35Consumer ShiftsIn the aftermath of the Covid-19 pandemic,consumers around the w
212、orld have embraced travel with a new fervour.Despite cost-of-living pressures and economic uncertainties,global travel flows(calculated as the total number of kilometres travelled by paying airline passengers)are projected to return to 100 percent of pre-pandemic levels in 2023 and reach between 105
213、 percent and 110 percent in 2024,according to McKinsey analysis.107A fundamental change of lifestyles adopted in recent years is helping to fuel this rise.For example,remote and hybrid work are more entrenched than they were pre-pandemic.A growing number of workers are no longer tethered to offices.
214、In the US,only 39 percent of companies now require staff to work from their offices full time,down from 49 percent at the start of 2023,according to workplace provider Scoops Flex Index,which predicts the number to fall to 15 percent in the coming years.108 Meanwhile,business travellers are extendin
215、g their work trips into“workation”trips,a global phenomenon that combines business with leisure.Business travellers in the US,Europe and Asia take on average six“workation”trips annually,with 29 percent of these trips to international destinations,according to travel-agency specialist Travel Edge.10
216、9 110For many consumers,travelling and shopping go hand in hand.Leading players like LVMH and Kering have cited tourists,specifically Americans in Europe,as a key driver of increased sales in the first half of 2023,which grew 47 percent and 53 percent respectively.111 Moreover,the BoF-McKinsey State
217、 of Fashion 2024 Consumer Survey found that 80 percent of global respondents expect to shop for clothes,footwear and accessories while travelling in the year ahead,with 28 percent expecting to spend more than the previous year while travelling.112 For brands and retailers,these travelling consumers
218、will provide new growth opportunities.Net Intent11 Net intent calculated as the difference between the percentage of respondents who will do more and the percentage of respondents who will do lessNote:numbers are rounded and may not add to 100Source:BoF-McKinsey State of Fashion 2024 Consumer Survey
219、Will do lessWill do the sameWill do moreExhibit 8Consumers will prioritise experiences whilst travellingFuture intent whilst travelling,%of respondentsBeing in nature28%Sightseeing16%Dining out/eating local food 15%Cultural experiences/entertainment13%Relaxing by beach/pool12%Active sports/outdoor a
220、ctivities11%Shopping for apparel,footwear and accessories8%Shopping for home dcor,gifts and souvenirs0%47520355523542319% intent for experiences4% intent for shopping36The State of Fashion 2024Pushing the BoundariesThe worlds capital cities will remain popular for wo
221、rld-class shopping.Paris,for example,has seen a notable spike in tourism in 2023 with numbers approaching those in 2019.Nearly 12 million tourists visited the city between January and April 2023,representing a 27 percent year-on-year increase and only 2.5 percent down on 2019 levels.113 London has a
222、lso seen a surge two million more international visitors are forecast to arrive in the city in 2023,compared with the year prior.114 But now,many travellers are also looking to expand their itineraries beyond these traditional destinations.Over half of the respondents to the BoF-McKinsey consumer su
223、rvey said they are seeking destinations they havent visited before in the year ahead,perhaps as a nod to a post-pandemic desire for freedom and escapism.115 Smaller cities like Edinburgh,Scotland;Lisbon,Portugal;or Osaka,Japan,have witnessed surging popularity this year,offering different experience
224、s in terms of historical sightseeing,culture,local dining and nightlife as well as local shopping.116 117“Set-jetting”destinations inspired by television and film are also resonating with travellers consider what the series“The Game of Thrones”has done for tourism in Dubrovnik on the Adriatic coast
225、of Croatia.118While travel itineraries are being redrawn,some brands are already adjusting where and how they connect with shoppers.In some cases,this has meant expanding store networks into second-tier cities.Uniqlo has been focusing on accelerating new openings,including plans for a store in Scotl
226、and,on Edinburghs Princes Street,in 2024.119 Edinburgh,too,has been in Chanels line of sight as it opened its first Scottish pop-up in the city this past summer.120 In other cases,it has meant capitalising on trending locations from popular culture.This is what Louis Vuitton did in Taormina,Sicily,w
227、here it opened a branded caf and boutique in 2023 after the hilltop town served as the backdrop of the hit series,“The White Lotus.”121 122 Revival of Experiences Providing differentiating experiences is also important.According to marketing agency Razorfish,40 percent of travellers are willing to s
228、pend half or more of their travel budget on a highly curated moment or experience.123 While pop-ups have been part of fashions playbook for some time,brands are increasingly expanding these experiences into adjacent categories such as food,nature and wellness.In 2023,these have ranged from Pradas po
229、p-up caf in Londons Harrods department store to resort-based rollouts like Fendis,124 which extended the luxury fashion brands aesthetics to design a beach club for the Puente Romano Beach Resort in Marbella,Spain,featuring personalised sailing boats for guests of the luxury Costa del Sol destinatio
230、n.125 Loro Pianas La Rserve la Plage in Saint-Tropez,France consisting of a beach club and boutique is another example.126And as customers travel itineraries expand geographically,so too will pop-up ventures.Consider Diors Dioriviera,which launched in 2018 to showcase the brands annual beach collect
231、ion in a few select destinations.127 By summer 2023,Dioriviera had reached nearly two dozen pop-up and concept shop locations,extending beyond iconic spots such as Beverly Hills,Saint-Tropez and Capri,setting up shop further East in places like Bali and Phuket.128 129 130 Meanwhile,Coach launched it
232、s first Coach Airways-themed pop-up in Malacca,Malaysia featuring a concept store and caf housed in a Boeing 747 jet,selling ready-to-wear,bags and travel accessories.131Fashion is also joining forces with hospitality to reimagine experiences for travellers.For example,the Four Seasons Hotel in Hous
233、ton,Texas and fashion membership club Vivrelle have partnered to offer hotel guests complimentary access to an on-site luxury“closet”of brands such as Prada,Gucci and Dior.132 Saks Fifth Avenue has also rolled out Fifth Avenue club concepts that offer personal styling,trunk shows and special events
234、at various Ritz-Carlton and St Regis hotels.133Now,many travellers are also looking to expand their itineraries beyond traditional destinations.perhaps as a nod to a post-pandemic desire for freedom and escapism.37Consumer ShiftsGet PackingThe new travel era also has implications for category prefer
235、ences.With the BoF-McKinsey consumer survey finding that nearly 40 percent of consumers purchase new clothing to wear on their vacations,resort fashion is a key beneficiary of travels growth,134 135 spurring the appeal of bright,summery labels ranging from Australias Zimmermann to Brazils Farm Rio,1
236、36 137 as well as sales in the vacation category from luxury e-tailers such as MyTheresa,whose vacation category sales in 2022 were triple 2019 levels.138Luxury brands have launched or refreshed resortwear collections,often aiming to attract new customers at more accessible prices.For example,LVMH-o
237、wned Loewe one of Lysts hottest brands of the year has continued to expand its Paulas Ibiza vacation line,riding on the success of its popular totes made from woven palm leaves.139 140 But resortwear is not just confined to luxury houses.In the mass segment,for example,Mango launched a designer coll
238、aboration in 2023 with California-based lifestyle brand Simon Miller to create a colourful capsule beachwear collection.141 Beyond the collections themselves,succeeding in resortwear requires creative approaches to marketing,such as influencer trips and buzzy local activations.Recent launches of rea
239、dy-to-wear lines reflecting the spirit of travel include Louis Vuittons LV By the Pool,with a branded activation at the iconic Zuma restaurant in Mykonos,Greece,and Versaces La Vacanza in collaboration with musician Dua Lipa,which debuted in the south of France.142 143For fashion executives,travels
240、rebound creates an opportunity to view their global growth maps with a new lens.As their customers seek out more unique,off-the-beaten-path experiences,fashion players should consider proactively identify emerging hotspots,while innovating marketing initiatives and piloting activations that resonate
241、 with 2024s travel zeitgeist.Partnerships with adjacent industries,such as travel adventure,hotels,spas and restaurants,can enable brands and retailers to create compelling blended experiences no matter where customers find themselves.Overall,the key will be to keep pace with global customers,adapti
242、ng to when,where and how they want to shop when on the road.Zimmermann 2023 resortwear collection.Simon Lekias/Isa Sanchez/Getty Images.38The State of Fashion 2024How Chinas Tourists Will Return in 2024By Daniel Zipser,Asina de Branche,Steve Saxon,Jackey Yu and Liann WuIN-DEPTHConsumer ShiftsFor mor
243、e than two decades,outbound travel from mainland China was a major catalyst for the growth of global tourism.In 2019,China accounted for one-fifth of international tourism spending,amounting to$255 billion as the result of a total of 166 million outbound trips.144 However,this growth engine came to
244、a halt with the Covid-19 pandemic and the ensuing lockdowns.After three years of restrictions,mainland Chinese consumers are getting ready for new travel adventures.For fashion brands and retailers around the world,the return of China tourism is a welcome silver lining to the current clouds hanging
245、over the countrys economy.However,to maximise the opportunity,companies need to prepare for consumers with different behaviours and expectations than pre-pandemic.Domestic StrengthWith international borders closed through the pandemic,domestic travel has thrived in mainland China,currently on track
246、to exceed pre-pandemic levels in 2023.145 Despite the current economic uncertainty affecting the country,consumers willingness to travel is robust.McKinsey consumer research in Q3 2023 shows that travel is the category Chinese consumers are most likely to splurge on,exceeding other categories such a
247、s restaurants and groceries.146 During the countrys eight-day Golden Week holiday in October 2023,the Chinese took nearly 826 million domestic trips,up over 70 percent from last year.147 In 2024,this domestic momentum is expected to continue,with mainland travel flows reaching 110 percent to 120 per
248、cent of pre-pandemic levels.One major reason for the strength of domestic tourism is local destinations have become increasingly attractive.Hainan has emerged as a top hotspot for tax-free shopping,where fashion sales in April 2023 were 203 percent higher than Chinese tourists and luxury fashion sho
249、ppers.Tomohiro Ohsumi/Getty Images.In 2024,Chinese tourists are set to return overseas,as outbound flows and spending gradually return to near pre-pandemic levels.However,evolving preferences and behaviours adopted throughout the pandemic years mean visitors from China will likely travel and shop di
250、fferently than before.40The State of Fashion 2024pre-pandemic levels.148 The island is set to become one of the worlds largest luxury retail markets in the next five years and is expected to attract over 80 million visitors annually.In October 2023,luxury travel retailer DFS announced a major projec
251、t its largest ever to build a“world-class,seven-star”luxury retail and entertainment destination in Hainans Yalong Bay by 2026 that will cover more than 128,000 square metres and attract over 1,000 luxury brands.149Outside of Hainan,retail in the mainland has improved significantly as well.Top brand
252、s including Herms,Dior,Chanel and Louis Vuitton invested heavily in their domestic footprints during the pandemic by renovating flagship stores,opening VIP salons and strengthening sales associate teams to cater to local clientele.150 Luxury has also entered domestic airports for the first time in S
253、eptember 2023,DFS entered the domestic terminal at Chongqing airport with a line-up of brands such as Bulgari,Valentino and Versace.151 Higher duty-free allowances on e-commerce purchases and the price parity of brands with markets abroad decreasing from up to 50 percent in the late 2010s to between
254、 10 percent and 20 percent today,also incentivise domestic spending.152Given strong domestic options,experts forecast a permanent repatriation of luxury spend.While Chinas 460 billion yuan($63 billion)personal luxury market will continue to grow in the long term,domestic shopping may account for 60
255、percent to 70 percent of the spend(and international 30 percent to 40 percent).McKinsey analysis indicates a likely permanent reversal from pre-pandemic levels of about 40 percent domestic and 60 percent international.153Outbound ReturnsWhile domestic travel continues to surge,2024 will also see the
256、 long-awaited renaissance of Chinese LessSameMore1 Net intent calculated as the difference between the percentage of respondents who will travel more and the percentage who will travel lessNote:Numbers are rounded and may not add to 100Source:BoF-McKinsey State of Fashion 2024 Consumer SurveyNet Int
257、ent12557196%5042842%39441721%34521322%Exhibit 9Chinese consumers are planning both international and domestic travelChinese consumers future intent for travel,%of respondents PersonalPersonalBusinessBusinessDomesticInternational41Consumer Shiftsoutbound travel.Outbound travel from the mainland is re
258、covering quickly,and may grow from almost 0 percent of pre-pandemic levels in 2022 to 50 percent in 2023,with potential to almost double to 70 percent to 100 percent in 2024.A full recovery could take place by the end of 2024 or early 2025.154What will drive outbound recovery among Chinese consumers
259、?Primarily,there is a burning desire to go out and explore further afield again.During the October Golden Week holiday,demand for Alibabas Fliggy visa processing services were over 70 percent higher than May Day,Chinas last major national holiday.The number of outbound bookings also hit a high for t
260、he year.Moreover,travel interest spans both business and leisure.155 Some 39 percent of respondents from the latest BoF-McKinsey State of Fashion 2024 Consumer Survey plan to travel more internationally for personal reasons,while 34 percent plan to travel more for business reasons.156On the supply s
261、ide,barriers to outbound travel are also falling,leading to increased flight capacity.Total seats in September 2023 reached over 50 percent of pre-pandemic levels and have consistently risen week on week.157 Regulatory hurdles have also eased as travel bans to more than 170 countries have been lifte
262、d,adding momentum to the recovery.158 The regions that will likely benefit immediately are those that are easiest logistically to get to,including other East Asian countries and Southeast Asia over 40 percent of surveyed consumers have expressed interest in travelling to these regions in 2024.159 Ou
263、tside of the“four-hour flight circle”around China,tourism is also picking up in Australia and New Zealand,United Arab Emirates,Turkey and Egypt,according to Fliggy.160 The Experience ImperativeFor Chinese tourists who return abroad,there has been a fundamental change in priorities.Much higher on tou
264、rist agendas is the desire for experiences.According to the BoF-McKinsey consumer survey,dining out and trying local cuisine are the most popular travel activities(63 percent expect to do more on the next trip),followed by being in nature(58 percent)and sightseeing(57 percent).Shopping,meanwhile,is
265、in seventh position.161 While the shifting demand landscape suggests big shopping hauls are lower on the list vis-vis other activities,shopping data from tourism tax refund company Global Blue points to spending on shopping still being on track to recover in force.This year,in Asia Pacific,the shopp
266、ing spend of mainland Chinese tourists is already 109 percent of 2019 levels.This has been driven by a significant increase in the average spend per shopper.162In continental Europe,the shopping recovery has been slower,with like-for-like in-store sales to mainland Chinese tourists reaching 41 perce
267、nt of pre-pandemic levels,despite a 54 percent jump inair capacity.163 Leading the recovery are ultra-high-net-worth individuals,who are spending 28 percent more per transaction on average.164 According to Jean-Marc Bellaiche,the chief executive of French luxury retailer Printemps,most business this
268、 year has been from individual clients at a much higher level compared to pre-Covid,while group travel which represented nearly a third of sales in 2019 is significantly down.165 Therefore,as travel normalises,European stores could expect a recovery of shopping spend close to pre-pandemic levels,tho
269、ugh in the near-term driven by value of shoppers rather than volume.New Shopping PrioritiesWhen it comes to shopping,Chinese travellers now have a more sophisticated set of expectations than before the pandemic.To start,in-store experience is a top priority.This is especially true in luxury:In the l
270、atest McKinsey China Luxury Consumer Survey,81 percent of consumers said they want to touch and feel products,regardless of the initial discovery channel.166 This means they now look for elevated in-store experiences,full assortments,deep product education and immersive interactions.Digital expectat
271、ions have also matured,as 61 percent of Chinese luxury consumers are true omnichannel shoppers.167 This means they are more likely to engage with brands that can interact In 2023,in Asia Pacific,the shopping spend of mainland Chinese tourists is already 109 percent of 2019 levels.42The State of Fash
272、ion 2024through familiar digital ecosystems with features such as scheduling appointments with Mandarin-speaking associates,WeChat loyalty programmes as well as personalised communications and services.Category preferences have evolved.In personal luxury,jewellery and watches are expected to gain 4
273、percentage points of share of discretionary spending between 2023 and 2027,having overtaken handbags as the top-spending category in 2023.One reason is the belief that hard goods are more likely to retain their value in an uncertain economic environment than other categories.Ready-to-wear is expecte
274、d to lose 2 percentage points of share from 2023 to 2027.168Lastly,demand is high for niche and differentiated products for self-expression and individuality.According to the McKinsey luxury consumer survey,when it came to top factors that consumers consider in a purchase,brand names fell from numbe
275、r one in the ranking in 2019 to number five in 2022.And 31 percent of Gen-Z(age 16 to 23)are open to smaller brands,compared to just 22 percent of Gen-X(39 to 54).169How Should Brands and Retailers Respond?Now is the time for brands and retailers to proactively prepare for the return of the worlds l
276、argest outbound travel population.This means strategically balancing domestic and international needs and tailoring shopping experiences to new expectations and preferences.First,higher standards for in-store experience mean brands should consider maintaining exceptional retail in domestic locations
277、 such as Hainan or mainland cities,while deploying investments in key international hubs popular among Chinese travellers.This means creating shopping spaces that offer elevated comfort and convenience,alongside exclusive VIP services in destinations such as the Ginza neighbourhood in Tokyo or famou
278、s department stores such as Galeries Lafayette or La Samaritaine in Paris.Second,retailers awaiting the Chinese consumer could rethink their digital playbooks to link with the latest Chinese ecosystems,integrating a personal touch and tailored offerings into Chinese apps such as WeChat.Partnering wi
279、th key opinion leaders(KOLs)and other influencers on social platforms such as Xiaohongshu or Douyin will also help drive awareness and engagement with hyper-digitised consumers.Third,brands and retailers should consider revamping their assortments to reflect the updated tastes of the Chinese consume
280、r.Successful companies will pivot towards categories such as fine watches and jewellery for affluent shoppers seeking safe-haven indulgences and niche products for the individualistic younger generation that will become the future face of Chinese consumers.Lastly,as global brands and retailers striv
281、e to win back the Chinese shopper,they must not lose sight of other key demographics like American and Middle Eastern shoppers who play a large role in the market.Achieving success in serving diverse clientele while making the most of this unique Chinese opportunity demands thoughtful,targeted moves
282、 and commitment to creating inclusive experiences that cater to a wide range of tastes and preferences.43Consumer Shifts04.The New Faceof InfluenceIts time for brand marketers to update their influencer playbooks.A new guard of creative personalities is gaining brands attention,winning trust and fan
283、dom among key audiences.Working with these personalities in 2024 will require a different type of partnership,an emphasis on video and a willingness to relinquish a degree of creative control.KEY INSIGHTS 68 percent of consumers feel bothered by the amount of sponsored content on social media and 65
284、 percent rely less on fashion influencers compared to previous years.Consumers increasingly demand authenticity,entertainment and relatable personalities,unlocking a“new wave”of creators who embrace less-polished aesthetics,quirkiness,humour and vulnerability.To capture and hold the attention of con
285、sumers online in 2024,fashion marketers will likely break free of tried-and-tested routines and explore new avenues for partnering with creators.44The State of Fashion 2024Capturing consumers attention online isnt about to get any easier for fashion businesses.On Instagram,engagement rates have fall
286、en,by roughly 30 percent year on year in 2022,170 while the reach of posts has diminished.171 Consumers are showing signs of fatigue towards traditional influencer marketing after years of being bombarded with product promotions and brand announcements.The BoF-McKinsey State of Fashion 2024 Consumer
287、 Survey found that 68 percent of respondents were unhappy about the high volume of sponsored content on social media platforms and 65 percent were turning less to fashion influencers than a few years ago.Young consumers are becoming particularly adept at tuning out the noise.One study found Gen-Z lo
288、ses active attention for advertising after just 1.3 seconds.172Even in this environment,influencers continue to be a powerful channel for brands to break through the noise and connect with consumers,with the influencer-marketing industry forecast to reach$21.1 billion in 2023,up from$16.4 billion in
289、 2022.173 However,the influencer landscape has been evolving in the past few years as consumers increasingly demand authenticity,entertainment and relatable personalities,with this trend likely to gather momentum in the year ahead.According to the BoF-McKinsey consumer survey,consumers are gravitati
290、ng towards relatable and authentic influencers far more than other attributes Amelia Dimoldenberg at The Standard,London.Dave Benett/Getty Images.45Consumer Shiftssuch as an aspirational lifestyle or celebrity status.Marketing and influencer firms echo these findings a 2023 survey found that,althoug
291、h beautiful and aspirational content was effective,social media users were more likely to follow influencers whom they deem authentic and fun.174The changing dynamics are reflected in where users spend their time online.TikTok,often regarded as a platform that promotes authenticity,175 has taken the
292、 lead among some user groups.A March 2023 study estimated that US adults spent nearly 56 minutes a day on average on TikTok.By comparison,US adults spent just over 30 minutes on average on Instagram.176 TikToks success,which has prompted Instagram to emulate the platform with its Reels video feature
293、,177 is based largely on how it surfaces content,emphasising measures such as the time users spend on a post and whether they return.178 As a result,any creative and entertaining content can reach a wide audience,even if the creator doesnt have a high number of followers.The platform BeReal,meanwhil
294、e,saw surging user growth in 2022,and while there are doubts about its longevity,179 its emergence may well be a response to the perceived inauthenticity of social medias large incumbents.The New GuardThough consumers have rewarded greater authenticity online for some time,it is becoming more pronou
295、nced as influencers emphasise their individuality.Gen-Z in particular value pursuing their own unique identities and appreciate diversity among other attributes,according to a Stanford University study.180 This generations favourite platform for following influencers is TikTok,181 which was also dee
296、med the best platform by Gen-Z respondents for promoting a product through influencers in a 2022 survey,surpassing both YouTube and Instagram.182While traditional influencers who convey an aspirational lifestyle and command large audiences are likely to remain important for fashion marketing,other i
297、nfluencers who come across as less scripted or polished are already gaining audiences.Quirkiness,humour and vulnerability are helping this cohort stand out.A case in point is Alix Earle,who has built a following of nearly 6 million on TikTok,not with any sort of viral hit but rather with her apparen
298、t relatability and willingness to be herself.183 Madeline Argys TikTok confessionals,which take the form of funny,rapid-fire videos such as a tearful questioning of what DJs actually do,have earned her roughly 5 million followers.And Sabrina Bahsoon,who goes by Tube Girl,shot to fame posting TikTok
299、videos showing her dancing in the London Underground,an act thats been called“unapologetic self-expression.”184While the styles of these creators differ,what Source:BoF-McKinsey State of Fashion 2024 Consumer SurveyExhibit 10Consumers prefer fashion influencers who are relatable and authentic over o
300、ther traitsAttributes consumers like about their favourite fashion influencers,%of respondentsThey are relatable43Their creative content inspires me37They are expertsin fashion23They post authentic content40They have celebrity status1546The State of Fashion 2024unites them is their off-beat,personal
301、 approaches to creating content,which reads as being authentic to who they are rather than pursued purely for“likes”or to convey an unattainable ideal.The most-followed personality on TikTok is Khaby Lame,whose content featuring his humorous silent commentary on ridiculous online videos has attracte
302、d roughly 162 million followers.Fashion brands are embracing these personalities and seeing the benefits.Bahsoon featured in Hugo Boss most-viewed TikTok post,which has garnered more than 144 million views.Lame and Argy have fashion partnerships as well.For the debut of creative director Sabato de S
303、arno in September 2023,Gucci asked Amelia Dimoldenberg,who became popular conducting awkward interviews at a fried-chicken establishment,to attend the event and interview other guests.Brands are also going down the path of creating deeper partnerships with influencers than one-off videos or fashion
304、show invitations.For example,luxury brands Loro Piana and Audemars Piguet are working with the creator known as Gstaad Guy,who built his following parodying the tastes and attitudes of the ultra-wealthy.Both brands now dress Gstaad Guy and regularly invite him to events,such as Loro Pianas Spring-Su
305、mmer 2024 show in Milan and Audemars Piguets Tokyo launch of its collaboration with 1017 Alyx 9SM.Outside of luxury,online retailer Revolve has created a size-inclusive line with Remi Bader,a TikToker with 2.2 million followers who became popular for her humorous,unfiltered accounts of trying on clo
306、thing as a plus-size woman.Realising the importance and reach of these personalities,brands are investing significantly in their engagement for example,Lame reportedly closed a$450,000 contract with Hugo Boss to walk its Milan Fashion Week show in 2022.185As this new guard of creators joins traditio
307、nal influencers in fashion week front rows and in brand marketing,it offers consumers contrasting viewpoints and another channel for communicating a brands message.Be CreativeTo be sure,capturing and holding the attention of consumers online in 2024 will likely require fashion marketers to break fre
308、e of tried-and-tested initiatives.In addition to collaborating with celebrities and mega-influencers,they may also need to dedicate resources to identify talent that might not be on their current radars but offers untapped possibilities.When creating content,brands might want to look beyond highly p
309、olished product promotions and push boundaries by developing innovative and surprising campaigns that resonate with followers and reach new audiences.This will still require campaigns to align with a brands core image and values.In its own guidance to brands,TikTok recommends creating“actionable ent
310、ertainment”that holds users attention and can gain greater reach from the platforms content algorithm,among other benefits.186 Brands should also consider incorporating humour,self-awareness and unfiltered tones into short videos and other popular social media formats.Because some of the most succes
311、sful creators build their own online worlds,brands that partner with them might want to empower them with a degree of creative control.Rather than simply gifting items or sponsoring posts,they can collaborate closely to integrate the brands presence into the influencers content style.In the most ide
312、al collaborations,a brand finds an avenue to convey its message and perspective in a manner that feels seamless and authentic.Gucci,for example,partnered with TikTok influencer Francis Bourgeois,who shares his passion for trainspotting with his followers,in campaigns such as the latest Gucci Gift an
313、d fashion week activations inspired by the scenic countryside,as a way to convey the joy and nostalgia of train travel.Of course,fashion businesses should still exercise diligence to minimise potential image risks when taking new creative directions.But new directions are also likely to lead to some
314、 of the greatest rewards.Consumers are showing signs of fatigue towards traditional influencer marketing after years of being bombarded with product promotions and brand announcements.47Consumer ShiftsGstaad Guy:Catering to the 1%with Social Media WitBy Tamison OConnorEXECUTIVE INTERVIEWThe Gstaad G
315、uys online parodies of the ultra-wealthy have blossomed into a full-time business for the pioneering influencer partnering with exclusive luxury brands for ultra-high-net-worth shoppers,highlighting how a niche genre of influencer marketing is helping to inject newness into how brands connect with t
316、heir customers.48The State of Fashion 2024Gstaad Guy who keeps his real identity a secret began making a name for himself only a few years ago in niche social media circles by parodying the lives and tastes of the ultra-rich through sharp,satirical social commentary delivered through fictional perso
317、nas:mainstay character Constance,an old-money British aristocrat who peppers his conversations with French and Italian and dresses head-to-toe in LVMHs“quiet luxury”bastion brand Loro Piana,and guest-star Colton,a happy-go-lucky,nouveau-riche Gen-Z American.His humour is carefully targeted:many of C
318、onstances quips will sail far above the heads of the average Joe or Jane,but leave 1 percent of the wealthy,who are used to flitting between Gstaad,Monaco and London,chortling.(According to Forbes,a good chunk of its Billionaires List is among his following.)Equally,luxury fashion brands also get wh
319、ere Gstaad Guy is coming from to the extent that several have entered into partnerships with the social media star.Loro Piana launched 600 limited editions of its Open Knitted Walk shoes exclusively for Gstaad Guy followers;the collaboration sold out within hours and became the fastest-selling produ
320、ct the brand had ever made,according to Forbes.How did Gstaad Guy come about?I was Facetiming with a close friend of mine,who has a place in Gstaad.He was complaining about something he shouldnt be complaining about.I had never been there at the time,but I knew a lot of things about it purely based
321、on conversations with him.I filmed one video on Snapchat,making fun of things Ive heard him say,while really dialing up the absurdity.I sent that video to his mum,all in character,this fictional character I coined Constance,inspired by my friend.His family and closest friends found the video hilario
322、us.His mum sent it to all the Gstaad mums WhatsApp group chats,which went to different parents and students of the Le Rosey boarding school in Switzerland.And it then quickly trickled into Gstaad-frequenting Geneva,Monaco and London communities.My satirical social commentary would focus on things th
323、at are only really relatable to very few in Gstaad,Monaco,Geneva and Mayfair in London.By video five,I think I had maybe 4,000 followers,I spoke about how Constance loves his Loro Piana vicua gilet.A couple of weeks later,I was told by the salesperson at Loro Piana on Sloane Street that people have
324、been coming into the store asking to buy the items I was wearing in my video.And all similar gilets had sold out.I was accidentally selling dozens of products that cost about three grand,with under 5,000 followers.This has never been done before;I knew it because Ive been on the other side.I thought
325、 theres really something here.What is it about Gstaad Guy that attracts your target audience?I was making fun of a place thats very inconvenient to access through commercial means of transport.It is three hours away from any commercial airport.49Consumer ShiftsAnd its,frankly,too expensive and too q
326、uiet for someone to just stumble upon.So through travel inconvenience,unaffordability and the privacy of the Swiss mountains,Gstaad just attracts some of the worlds wealthiest people people that commute between their chalets in Gstaad,townhouses in London,chateaux in Saint-Tropez and boats on the Me
327、diterranean.And because I was making jokes about them and the way they live their lives there,I was attracting them.In this influencer landscape that is so saturated,whats the white space that you occupy?I am in a very unique position,where I have,through fiction,created very authentic characters.Pe
328、ople have a deep connection with the characters,likely because of how authentic to their values they are.Especially Constance.And because of the rather niche jokes Im making.I have the highest concentration today of high-net-worth people of any social media page globally,who are being communicated t
329、hings that are delivered lightly through tongue-in-cheek storytelling thats very digestible.What has your Gstaad Guy account led to in terms of business opportunities?Gstaad Guy is an atypical account.With anything atypical,especially in the luxury world,you dont sell it like you sell commodities.It
330、s not,Hey,heres my price,buy or leave it and move on.Thats bad for the buyer and the seller.In the world of luxury social-media marketing,selling ad space and having a very authentic partnership are two very different things.For Gstaad Guy,I always had to have a“tasting”for my potential clients befo
331、re they hired me as their chef.And the way I always played that game is:who is Gstaad Guy in real life?What are the products and items that he would actually love?And let me just talk about those things more and more.I never thought I would have the scale to convert the masses of voyeurs.And I still
332、 dont think I do.But I know I have the storytelling abilities to convert and elevate customers of an existing brand to new,better products,and to an elevated perception of that brand.Slowly,through storytelling,I built a really strong connection with my audience around a very few,very high-end produ
333、cts,which are historically very difficult to market,and it gave the brands no choice but to work with me.I became their ambassador before they asked me to.I think thats what every brand is looking for now.Ad space is readily available,but authentic connections with an audience are scarce.If you have the choice,who are you going to choose?Obviously,the person who has the most authentic connection w