The fashion industry still faces significant challenges in 2025, and understanding the shifting dynamics at play is critical for brands looking to thrive in today’s market. McKinsey & Company’s annual State of Fashion report is a key reference for brands looking for expert analysis of industry trends, and this year’s edition sheds light on the complex changes that are redefining the fashion sector. Here’s a breakdown of Bleckman’s key takeaways from this year’s report, providing valuable insights on how brands can best position themselves for success in the coming year and beyond.
As the slowdown continues, growth requires agility
A major trend affecting brands across the board is sluggish growth. Revenue growth across the industry is expected to stabilise in the low single digits, mirroring the situation seen throughout 2024. The growth that we’ve seen has proved geographically variable, with different regions displaying distinct revenue drivers. Seizing these opportunities requires agility and precision. Executives are therefore homing in on localised go-to-market strategies, tailoring brand positioning to better resonate with regional customer bases.
Are consumers turning away from luxury?
Affected by periods of high inflation and a continuing climate of global uncertainty, consumers are becoming increasingly price-sensitive, with preferences trending away from the high-end. Indeed, in the fashion industry, the majority of profit growth is expected to come from non-luxury items in 2025 – a marked departure from the dominance of luxury in recent years. In this climate, broadening price points and expanding resale and off-price offerings may be critical to achieving growth among an increasingly value-oriented consumer base.
The bricks-and-mortar revival continues
The post-COVID resurgence of in-store retail continued in 2024, with footfall in many regions approaching pre-pandemic levels. However, this recovery is far from secure and comes with heightened consumer expectations. Brands therefore need to remind customers of what they love about the in-store model. This means that knowledgeable, inspiring staff and immersive shopping experiences are essential to reignite consumer interest.
On the other hand, many e-commerce players are still struggling to reverse share price declines from pandemic highs amidst stuttering demand and rising customer acquisition costs. Many brands are focusing on new paths for product discovery to help their offerings stand out in what many consumers see as an increasingly crowded marketplace. AI-powered curation, content and search optimisation can help bring brands to the attention of online shoppers and provide them with a more tailored product selection.
The rise of the ‘silver generation’
In general, the fashion industry has historically focused on younger demographics. In recent years, however, shoppers over 50 – often referred to as the ‘silver generation’ – have become responsible for an increasingly significant proportion of the total spending power in the market. While capitalising on this demographic shift may require a pivot in terms of messaging and design, it represents a significant opportunity for brands willing to adapt.
Smaller brands show that agility is key
‘Challenger’ brands are increasingly emerging as leaders when it comes to implementing creative and effective responses to the changing realities of today’s marketplace. Unencumbered by traditional notions and conventional approaches, these newer brands are proving more nimble in adapting to changing market dynamics. Sportswear is a prime example, with a generation of smaller brands disrupting the position of established giants and capturing growing market share through innovative design and engagement strategies.
Reinventing supply chains for greater efficiency
Ongoing shifts in global trade are forcing brands to recalibrate their international supply chains, with prioritising nearshoring and ‘friend-shoring’ – locating production in geopolitically aligned countries to mitigate the threats posed by external issues to supply chain continuity. More generally, improving logistics efficiency to reduce excess inventory and avoid stock-outs is essential. Effective, tech-driven approaches to inventory and supply chain management will be critical to successfully achieving growth despite ever-tightening margins and increasingly stringent government regulations on waste and emissions.
Read more about Bleckmann’s approach to AI-enabled supply chain efficiency HERE.
Towards a more sustainable future
While many consumers have proven reluctant to pay a premium for more sustainable products, ignoring sustainability concerns is not a viable long-term strategy for fashion brands. Indeed, pressure and scrutiny from legislators and non-governmental bodies will only increase in the coming years, and the growing number of climate-related disruptions to supply chains demands immediate action. Those who choose to approach sustainability with a long-term mindset, even while addressing short-term considerations, are likely to be rewarded with more efficient operations and a competitive advantage.
Adaptability is key to success in a rapidly changing landscape
As the latest State of Fashion report shows, the challenges facing fashion brands in 2025 are daunting. Nevertheless, for those who know where to look and are willing to innovate, the opportunities are there for the taking. Success will require a departure from the old playbook, and brands will need to embrace new technologies, reimagine customer engagement and adapt to shifting market dynamics. Those that identify new areas of opportunity and act swiftly will be best positioned to thrive in the year ahead.
