The fashion industry has always been associated with volatility and fast changes. In recent times a more interconnected global society has even started to push its transformation further, more rapidly than ever.
Below a quick summary of the 12 main trends that changed the fashion industry in 2018. Basically a quick guide for fashion companies to stay updated and keep the pace of this transformation.
UNPREDICTABILITY IS THE NEW NORMAL
Geopolitical turmoil, economic uncertainty and unpredictability are factors the world is dealing with on a daily basis. In 2018, fashion brands accepted the fact that change and instability are fixed features of the current business climate, and focused their efforts on those aspects of the business that they can control. From now on, successful brands need to be agile: work fast and iteratively, build flexible supply chains and always keep customers at the forefront.
Technology and globalization
Despite the rise of nationalism globalization will not stall. A new phase of globalisation characterised by the exponential growth of cross-border connectivity and digital data flows will alter the global equilibrium and prompt the rise of new players.
This growing global connectedness is driving up competitive intensity in the fashion industry. The advantage of well-established companies is very likely to diminish. In 2018, more fashion companies entered new markets, as connectivity allows for access to customers worldwide through own or third-party platforms, without establishing a significant physical presence.
Fashion is Moving East
Asian economies have experienced strong economic growth (much higher than in Europe and US), boosting consumers’ fashion expenditures. Asia-Pacific has already established itself among the most important regions for fashion, as it accounted for almost 40% of global sales in 2018. Asian players will assert their power and leadership even more through pioneering innovations and global scale investments and expansion.
Global Price Harmonization
As a consequence of the last two trends, fashion is experiencing a global price leveling, especially in luxury. Prices in Italy and France in 2017 were 22% lower than global average, while those in China were 21% higher. Since Asia accounts for 40% of the world’s fashion market, price discrepancies and lack of synchronization make brand images difficult to manage, resulting in customer retention problems and sales loss. In 2018 fashion brands already started to harmonize prices around the globe to have a clear understanding of each market’s real revenue contribution, ease global brand management and producing more stable sales streams.
Customer Data is the New Currency
Customer data is the most valuable asset a company can own. The 2018 winners took advantage of their customers’ digital obsession, create a deep understanding of each shopper and leverage those insights across every touchpoint. A company able to leverage big data has the opportunity to effectively and efficiently reshape its whole strategy: products, collections, marketing campaigns, promotions, physical store locations…etc. This is very likely to result in a big competitive advantage.
Consumers Chasing Customization
Personalization is the most important to customers always expecting everything: convenience, price, quality, and a personal touch whenever they engage the brand. One reason is consumers’ desire to use their fashion choices to express their own style and values: as consumer values authenticity and individuality, brands value data even more to customize experiences. The ability to create individualised products will more and more become a source of differentiation.
Ecommerce Revolution: Aggregators VS. Brand-owned Solutions
Having an online presence has been crucial players for the fashion industry for some time and in 2018 they further solidified their position. The question for fashion brands seems to no longer be “if” but “how” to go online, and potentially how to collaborate with big online platforms, or “aggregators”. However, the strength of online platforms poses a clear threat as fashion companies are becoming increasingly reliant on platforms to drive business. Selling through online platforms not only means giving up control of one’s own brand and merchandise presentation, but also hands over the collection and control of increasingly important customer data to the platforms. Because of these problems, several fashion brands, such as Coach in China, already left these big platforms and opted for brand-owned solutions, seeking more exclusivity, offering a more personalized purchasing experience and trying to avoid custumer confusion between original products and counterfeit goods.
As consumer reliance on mobile grows, the transactions will also move to mobile. With an overabundance of mobile pay ment solutions already available globally, fashion companies will be expected to cater to consumers who are using their mobile device as their primary wallet. In 2019 we will see more examples of retailers embracing mobile transactions to upgrade both online and offline purchase journeys. They will use mobile transactions to deliver experiences that range from frictionless check-outs online, self-check-outs and the use of mobile wallets in-store, as well as better social media integration.
High Tech Revolution AI Gets Real
AI (Artificial Intelligence) can deliver significant speed, cost and flexibility improvements across the fashion supply chain. But the potential of AI for the fashion industry goes beyond supply chain processes and automation, as it transcends typical machine tasks and blurs the lines between creativity and technology. Leading fashion companies will use it to enhance the creative process, design and product development; they will, for example, use algorithms to shift vast amounts of data to predict which product features customers are most likely to prefer.
Fashion Goes Green
More fashion brands will plan for recyclability from the fibre stage of the supply chain and many will harness sustainability through tech innovationin order to unlock efficiency, transparency, mission orientation and genuine ethical upgrades.
Sustainability will evolve to be an integral part of the planning system where circular economy principles are embedded throughout the value chain, and sustainability will tap millennials desire to be loyal to brands that match their lifestyle.
From mono-label outlet stores to multi-brand off-price concepts and outlet malls, off-price formats have become an important part of the fashion retail landscape, and the off-price sector will continue to grow even further in 2019. Today’s shoppers continue to demand lower prices and desire a treasure-hunt experience, while off-price offers brands and retailers a channel for clearing excess inventory quickly.
This is an important consideration because of the difficulty of forecasting consumer preferences accurately. Fashion executives should carefully consider their strategy for this channel and determine how to reap its benefits while avoiding the potential downward spiral seen in some cases. They need to take into consideration the trade-off between short-term sales growth and brand image.
Fashion is a Winner-Takes-All Industry
In fashion, the top 20% of companies create 100% of the economic profit. Gaining experience first-hand in that sort of “winner-takes-all” industry often comes at a catastrophic price: failure. Instead of going it alone, a far better approach is to learn from the experiences, failures, and successes of the best performers.
Worldwide Fashion Trends