The State of Fashion Report 2020 suggests the following year will have its challenges for luxury fashion brands, but will ultimately be a race to the top for companies who are willing to adapt and innovate.
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The Top 10 Trends That Will Shape the 2020 Fashion Industry
This is the featured image caption
Credit: This is the featured image credit
Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.
PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.
In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”
The Fondation Cartier pour l’Art Contemparain building in Paris
The State of Fashion Report 2020 suggests the following year will have its challenges for luxury fashion brands, but will ultimately be a race to the top for companies who are willing to adapt and innovate.
While the majority of fashion executives are feeling an overwhelming sense of anxiety and concern about what 2020 has in store, the top players in the market still have a chance to get ahead of the curve and prosper in the year to come.
McKinsey & Company's newly released report, "The State of Fashion 2020," indicates that while optimism isn't at its peak compared to sentiments last year, the bold luxury fashion houses who are willing to make moves early and improve productivity by all means possible will be the ones to boost earnings.
The McKinsey Global Fashion Index predicts that the fashion industry will continue to grow at 3 to 4 percent in 2020, at a slightly slower rate than the 3.5 to 4.5 percent estimate for 2019.
And when it comes to "the big and the bold," the top 20 players by economic profit in the fashion industry account for more than the combined economic profit of the entire industry. Guess that means it's go big or go home.
Now let's take a look at the top 10 trends that will shape the industry in 2020.
1. On High Alert
Fashion executives are unfortunately feeling more pessimistic than ever, with the threat of geopolitical instability and the risk of recession in the near feature. The issues of the world have a direct effect on the global economy, causing industry leaders to practice continued caution and plan for risks such as trade tensions and monetary policies. Fifty-five percent of those surveyed expect conditions for the industry to worsen in the next year.
To ensure fool-proofing against these numerous threats, fashion brands are encouraged to drive productivity while creating operational flexibility, digitise where appropriate, divest in non-core assets and carefully monitor global relations.
2. Beyond China
While China still serves as an exciting market for exponential growth and opportunities, in 2020 fashion executives are expected to expand into other high-potential countries in order to minimize total reliance in Asia. While powerhouses like LVMH, Kering, Lululemon and Nike have enjoyed continued success in China, other international mass-market brands like Asos, New Look and Dolce & Gabbana have had more difficulties fully adapting to the Chinese market in a successful way.
The population of consumers aged 30 or below in five other markets outside of China (UAE, Saudi Arabia, Russia, Brazil and Southeast Asia) are expected to grow to be more than double that of China by 2025.
3. Next Gen Social
Not all social media platforms are created equal, and in this coming year fashion brands will have to be more meticulous than ever in making sure to establish attention-grabbing content that performs well on the right platforms. There are dozens of media platforms which engage hundreds of millions, if not billions, of users. The report indicates that 2020 will be the year for brands to rethink their social media strategy by more effectively exploiting existing platforms and capitalising on the rise of new platforms.
More than two-thirds of fashion players believe “increased exploration of spend on new media platforms vs. ‘traditional’ platforms” will be a top theme in the coming year.
4. In The Neighbourhood
Prioritising customer convenience and proximity will be key to succeeding in 2020. High-end customers are not interested in getting in their car for 45 minutes to venture into their nearby city or shopping complex. Next year will be all about complementing existing brick-and-mortar shops with smaller format locations to optimise on-demand in-person shopping. While e-commerce has taken off in past years, in the fashion category– more than 70 percent of purchases are still made offline.
More than half of fashion executives believe a “localised brick-and-mortar-experience” will be a top theme in the coming year.
Do you need to increase your drive-to-store traffic?
5. Sustainability First
Despite small efforts made by some of the top luxury brands, fashion still has a long way to go before its considered as environmentally-friendly. From energy-consumption, to polluting and waste, fashion leaders will need to take real action rather than small efforts which they can use as an advertising platform. Demand for change is being lead by the young, who increasingly state that they will pay more for products that have the least negative impact on the environment.
Survey respondents stated that “sustainability” will be both the single biggest challenge and the single biggest opportunity for the industry in 2020.
6. Materials Revolution
Along the same lines of sustainability, fashion brands will also focus on exploring alternatives to today's standard, and often harmful, materials. With fibre technology and materials specialists booming in recent years, luxury brands with an emphasis on material innovation and function are expected to thrive next year. New Balance, VF Corporation and 3M are already leading the way by experimenting with leather alternatives such as Piñatex, which is made of pineapple leaf fibres.
Sixty-seven percent of fashion industry leaders think using innovative sustainable materials is important for their company.
7. Inclusive Culture
There's a growing unacceptance in the world of fashion when its comes to lack of diversity and cookie-cutter brand hierarchy. Consumers are looking for companies to embody the values of diversity and inclusion. Companies are expected to begin approaching inclusive culture as a top priority. However, as major brands continue to adapt their business models, customers will be more skeptical than ever regarding how sincere these efforts are. Nearly two-thirds of customers say they will choose, switch, avoid or boycott a brand based on its stand on societial issues.
Across fashion companies, there are currently seven male chief executives for every one female chief executive.
8. Cross-Border Challengers
The global market is growing, and with it comes increased challenges with established fashion brands who are now facing a variety of increased competitors, especially from Asia. The fashion industry can expect to see greater competition from unknown players in the Asian market who can manage to market popular items at affordable prices using cross-border e-commerce. A key driver in this upcoming trend is customers' decreased focus on brand names, and increased focus on price point and accessibility.
Year-on-year growth in APAC cross-border B2C e-commerce transaction value is 37 percent.
9. Unconventional Conventions
As digital continues to gain importance for luxury fashion brands, the industry will have to rethink its target audience and say good-bye to old buying models. While trade shows were previously at the heart of the brand-retailer relationship, all that is changing. In order to succeed, trade shows will need to add B2C attractions and launch innovative experiences.
Fifty-five percent of brands and retailers believe that trade shows are of little to no relevance anymore, while 45 percent still believe there is still opportunity to flourish through these events.
10. Digital Recalibration
Investors are more obsessed than ever with a brand's digital performance. However, they are also growing more apprehensive regarding the path to profitability for some digital players. Only 24 percent of companies are expected to report positive net income on their first year in the market. An important differentiator will be data and analytics that can make life easier for customers and suppliers, and it may be the key to outperformance in the longer term.
The average fashion-tech IPO of the past two years has seen a 27 percent decrease in its stock price since going public.
Check out the full State of Fashion Report 2020 here.
Cover image credit: Diane Von Furstenberg 2019 Spring Campaign.
Writer at Luxury Society
Before joining the editorial team at Luxury Society, Meaghan was based out of New York City writing for CBS New York and NBC Universal. A Washington-D.C. native, Meaghan also wrote for Washington Life Magazine while studying journalism at university. After moving to Switzerland in 2016, she went on to contribute to Metropolitan Magazine and CBS affiliates before joining the LS team.
