In 2022, the fashion industry can finally return to growth.


McKinsey&#39;s sixth The State of Fashion 2022 report was published a few days ago. In collaboration with Business of Fashion (BoF), it discusses the key issues shaping the fashion industry and examines a number of possible solutions.&nbsp;

The last two years have challenged the fashion industry in unprecedented ways. When the coronavirus pandemic shook the world, the industry experienced the worst year in its history. Consumer behaviour changed abruptly, supply chains were disrupted, and three-quarters of the world&#39;s fashion companies saw their economic profits drop by about 90 per cent.&nbsp;

Now McKinsey is once again taking a look at the future with its State of Fashion Report for the year 2022. Based on extensive research and numerous conversations with industry leaders, an insight into the most important trends that will shape the fashion industry in the coming year has emerged. The pleasing quintessence of the report: the overall turnover of the fashion industry will fully recover next year. The USA and China in particular are forecast to drive growth.

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If the analysis&#39; predictions come true next year, 2022 could turn out to be the year of success that the industry has been longing for. As little money continues to be spent on travel, spending is increasingly shifting domestically, which could mean that many companies will rethink and upgrade their retail presence.&nbsp;

The report also suggests that discount and luxury fashion will outperform in the coming year. You can certainly understand the need to refresh your wardrobe after two years of wearing loungewear all the time. So the prediction is that our rising appetite for buying will bring strong growth to many brands.

However, global production circumstances remain complex: logistical bottlenecks, production delays, high shipping costs and material shortages. The result: higher prices for you as the end consumer. In the end, it is particularly positive that the pandemic has hardly slowed down the important megatrends of the fashion industry. Industry leaders have pushed the digitalization of their companies even further, increased their commitment to greener materials and more sustainable production options, and generally focused more on diversity and integration.

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But what exactly are the development trends that McKinsey was able to identify in its analysis? Below we present the 10 key areas of focus for the fashion industry that will set the agenda in 2022, according to the McKinsey State of Fashion:

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1. An uneven recovery in the fashion industry.

Countries with strong health systems and economic resilience tend to recover better from the economic stresses caused by Covid-19. To offset this uneven recovery, international fashion companies will need to be precise in their investment decisions, regularly reassessing local conditions while mitigating market-specific risks.

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2. The supply chain chaos must be overcome

The fashion industry depends on a complicated web of global supply chains.&nbsp;Faced with logistical bottlenecks, rising transport costs and numerous supply shortages, companies need to adopt modern supply chain management and plan for more flexibility to cushion the chaos.

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3. Travel is so 2019! Focus falls on domestic spending in 2022

Travel has always been a key driver of luxury spending. But with tourism only expected to recover between 2023 and 2024, this shift in consumer habits from foreign to domestic spending needs to be capitalized on. Thus, luxury companies should engage more with domestic customers and work on optimizing their retail presence.

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4. Identifying customer preferences earlier through data-driven product development&nbsp;

After almost two years of increased focus on loungewear and sportswear, our projected spend in 2022 will fall more on garments related to social liberties outside the home. To understand these preferences, brands should increasingly rely on data-driven product development to adjust their inventory accordingly.

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5. The &quot;metaverse&quot; concept could mean tapping into a younger target group.

As consumers spend more and more time online and the hype around the metaverse spreads to virtual offerings, leading fashion companies will need to find new digital ways to appeal to younger audiences.&nbsp;

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6. Social commerce for frictionless digital shopping experiences

Social commerce is becoming increasingly popular with brands, consumers and investors alike. Although the applications differ in some countries, brands should focus on tailored in-app purchases and test the benefits of livestreaming and augmented reality trials.

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7. Recyclable textiles for greener production

One powerful way the fashion industry can reduce its environmental impact is through the circular economy. In fact, it is currently being introduced on a large scale and promises to limit the extraction of new raw materials and reduce textile waste.&nbsp;

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8. The use of digital product passports

In an effort to promote authenticity, transparency and sustainability, brands are using a range of technologies to store and share product information with consumers and partners. To get the most out of these so-called digital product passports, companies need to agree on common standards to maintain the loyalty of their customers.

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9. The development of corporate cyber defences

As the fashion industry becomes more digitized, companies are increasingly faced with cyberattacks and the improper handling of customer data. With the increasing sophistication of cybercrime, brands need to act urgently to ensure the digital security of their customer data.

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10. Revise work philosophy to retain employees.

Companies that rely on the attractiveness of their brand to attract employees will have to work harder in the future. In general, there is a trend for workers across sectors to rethink their priorities and for more job openings to emerge. From there, companies need to revise their philosophy and provide for an increasingly flexible, diverse and digitalized workplace.

The State of Fashion 2022 Report: Hopeful prospects in turbulent times

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