Business of fashion: Here are 10 things shaping the industry

Climate change and AI could have the biggest impact on the fashion sector.


The 2024 outlook for the fashion industry can be described with one word: “uncertain”. This is the word most often used by industry executives, who are completely divided over the prospects of their fields of expertise, according to the latest State of Fashion report by The Business of Fashion and McKinsey & Company.

There might not be a clear pathway as to what lies ahead, but the report lined up the ten most important things that are going to shape the next 12 months of the industry, based on global surveys of fashion executives and consumers.

Industry growth is projected to slow to 2 to 4%, helped by a rebound in global tourism and the opportunities presented by generative artificial intelligence.

Taking a closer look at the market

However, the global industry seemed resilient in recent years, in Europe and in the US, as consumers’ appetite to shop for fashion was diminishing in the second half of 2023, the industry had to face slowing sales and uneven performance.

Mainly due to fragile consumer confidence in key markets of the US, Europe and China, the report forecasts slower growth for the next year, with year-on-year retail sales between 2-4%. The luxury segment is expected to see the fastest growth, between 3% and 5%.

“The fashion industry once again demonstrated remarkable resilience in 2022. The luxury segment in particular propelled growth through price increases, partially offsetting the weaknesses of other segments,” said Senior Partner at McKinsey Achim Berg.

Meanwhile, foreign travel is expected to give a boost to fashion sales. Global travel is expected to jump 10% above pre-pandemic levels, and 80% of surveyed shoppers from the US, UK and China plan to shop for fashion while on holiday, so plenty of opportunities for brands to re-engage international shoppers in 2024.

More than half of the industry expects to raise prices while cost pressures are predicted to abate. 

Influencer marketing — an industry currently worth more than $21 billion — is likely to shift, insights indicate that people increasingly prefer influencers with less polished but more authentic content, interest in celebrity status could be wiped away by relatable and authentic influencers who are fun. 

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