According to a report by consulting firm McKinsey, fashion industry executives believe the industry will face uncertainty in 2024.
Zhitong Finance App learned that according to a report by consulting firm McKinsey, fashion industry executives believe the industry will face uncertainty in 2024. McKinsey predicts retail sales will grow by 2%-4% in 2024. “By 2024, the industry is expected to be affected by occasional demand fluctuations over the past few years,” the McKinsey report said. “It is during this period that the supply chain has experienced a 'bullwhip effect', where small changes in sales can cause high volatility, leading to underutilization of factories, layoffs, and delays in infrastructure investment.”
McKinsey expects the luxury market to grow at a higher rate than the non-luxury market: 3%-5% for the former and 2%-4% for the latter. However, this is still below the company's expectations for the luxury goods market to grow by 5%-7% in 2023. The severe economic environment caused by declining consumer confidence and reduced household savings is thought to be the main culprit.
McKinsey said that although growth in the luxury goods market in China and Europe is expected to slow, the US market is expected to grow slightly.
According to a survey conducted by McKinsey and industry media The Business of Fashion, although fashion industry executives view economic fluctuations and inflation as the second and third biggest growth risks, respectively, they are most concerned about geopolitical uncertainty.
Executives are also divided on the future prospects of the industry. 26% expect the situation to improve year by year, 37% think the situation will remain the same, and 38% think it will worsen.
Consumers should be prepared to spend more on clothes next year, as 69% of executives plan to increase prices. 25% of executives plan to increase prices by 5% or more, and 44% expect price increases of 1% to 5%.