Looking toward 2024, the most prominent sentiment among fashion industry leaders is uncertainty, reflecting the prospect of subdued economic growth, persistent inflation, and weak consumer confidence. This article is a collaborative effort by Imran Amed, representing views of Business of Fashion, and Anita Balchandani, David Barrelet, Achim Berg, Gemma D’Auria, Felix Rölkens, and Ewa Starzynska, representing views from McKinsey’s Retail Practice. Though the luxury segment initially fared well, it too began to feel the effects of weaker demand in the latter part of the year, leading to slowing sales and uneven performance. On a regional basis, Europe and the United States saw slow growth throughout the year, while China’s initially strong performance faded in the second half. In 2023, the industry faced challenges that were both persistent and deepening. Strong margin performance meant the industry in 2022 achieved more than double the economic profit than in all years between 20, except for one. Yet even the non-luxury sector was ahead of its long-term average. Echoing the pattern of the previous year, the luxury sector outperformed, with a 36 percent rise in economic profit that offset weakness in other segments. In 2022, the industry again showed its resilience, almost equaling the record economic profit of 2021, the McKinsey Global Fashion Index shows. Storm clouds are gathering, but the experience of recent years shows how the fashion industry may ride out the challenges ahead.
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