Is Fashion destined to rule the world? – McKinsey and Business of Fashion have conducted a study to find out. The industry is the result of interconnectedness and the digital age. While the fashion industry is one of the few economic success stories of the last decade, it has suffered from some negative consequences. This is why the question of whether fashion will ever rule the world is still relevant and important.
Fashion is one of the past decade’s rare, economic success stories
The global economy has been suffering for years, and is a bit gloomy right now, but the fashion industry is a bright spot. There are no shortage of new designers and products, and the industry is a major contributor to global GDP. In fact, the fashion industry is so large that it would rank as the world’s seventh-largest economy, if you included all the other industries in that ranking.
In the year 2022, the business of fashion will pick up steam in most global regions, as consumers unleash their pent-up spending power and dress to impress. Fashion executives have a bright outlook for the year ahead, as recovery is high on the agenda for 61 percent of midmarket, 58 percent of value and 75 percent of luxury industry executives. However, there are many challenges to recovery. Many companies are struggling with inventory flows and tie lower sales forecasts to supply-chain blockages.
While there is a strong consumer confidence in North America, the impact of policy changes is still unclear. Although markdown pressures and store closures will continue to impact sales, global fashion sales are expected to grow at a modest pace over the next five years. Nevertheless, some countries, particularly emerging markets, have more optimism in the coming years than the developed ones. In fact, the fashion industry will become one of the most profitable industries in the world by 2020, according to the BoF-McKinsey Global Fashion Index.
It is a hedonistic treadmill
Whether we realize it or not, clothing and apparel is on a hedonistic treadmill. The hedonic treadmill is the human tendency to return to a stable state of happiness after experiencing a temporary burst of dopamine, no matter how major life events change our circumstances. The hedonic treadmill often leads us to spend money on items in order to get those bursts of dopamine again. But buying new clothes or gadgets won’t improve our overall happiness in the long run.
The theory of hedonistic treadmills isn’t new. It has been around since the time of Aristotle, who distinguished between the two types of human well-being – moral and sensory. According to the theory, we can only gain long-term happiness if we engage in activities that promote eudaimonic well-being. But what is the hedonic treadmill?
One definition of a hedonistic treadmill is “a low-to-mid position.” In this position, the individual isn’t trying to satisfy an imaginary audience and isn’t focused on generating clicks and likes. Instead, she is empowered by social bonds. Her perception of a meal is more similar to the average consumer, and her evaluation is more reliable than that of her egotistic counterparts.
It is a product of the interconnectedness of the industry
The global apparel industry has emerged as one of the most innovative and competitive industries in the world, with a complex value chain and one of the highest per capita consumer goods markets in the world. With its low capital investment and low labour intensity, the apparel industry has been a key entry point for developing countries into the global value chain. As a result, apparel production is a vital source of employment and income for over 60 million people around the world. In some countries, this industry contributes up to 70 percent of the nation’s total industrial output.
The global fashion industry has significant impacts on the environment. It is the world’s largest polluter and uses many hazardous chemicals, which contaminate more purified recyclates. As natural fibers become more scarce and expensive, the fashion industry is increasingly concerned about their impact. Growing consumer awareness about the environment’s impact on garment production has prompted global brands to seek alternative and greener fibers and processes, as well as a more circular business model.
The global value chains of the apparel industry are highly interconnected. This means that when one region suffers from an epidemic of COVID-19, that outbreak will be felt in the rest of the world as well. In addition, the apparel industry is affected by poor healthcare systems in developing countries, and there is widespread poverty in those countries. Furthermore, extended unemployment in developing countries can lead to disease and hunger.
It is a product of omni-channel operations
The fashion and apparel industry is undergoing a transformation to embrace omni-channel operations. This new model of retailing transforms traditional, separate paths to purchase into a unified universal path for the consumer. Omni-channel operations help retailers optimize and unify different purchase points for a better customer experience. Retailers can use multiple channels, including websites, mobile applications, interactive television, wearable technology, and stores, to drive more business. Omni-channel strategies enable retailers to see every aspect of a customer’s purchase, including its purchase history, preferences, and satisfaction.
Omni-channel distribution helps in the transfer of products over the shortest distance, increasing profits. Moreover, it provides information about a product’s availability across various channels, enabling customers to choose the channel that suits them best. Inventory visibility is the first aspect that retailers notice in omni-channel operations. They want to know how much inventory they have and whether it’s available or not.
Smart assortment is an essential part of omni-channel operations for apparel retailers. It includes an accurate end-to-end inventory, lean warehouse operations, and efficient downstream delivery and returns flows. Omni-channel apparel retailing combines the strengths of online and offline retailing and helps retailers build customer loyalty and consumer confidence. Omni-channel apparel retailing requires that brands integrate their online and offline stores to offer the same products, prices, and offers across all channels.
It is a product of leveraging new technologies
The evolution of technology in the apparel industry is bringing about many interesting opportunities for the industry. Big data, product technology innovation and production automation are transforming the way that apparel is manufactured, thus making it more precise, local and sustainable. Moreover, these innovations will lower the cost of production. Hence, new technologies in apparel will help the industry to stay competitive in the market. Listed below are some of the ways in which technology will benefit the industry:
Digital textile printing allows for customisation and relatively cheap production. This also enables companies that face localisation challenges to tap into the local market, increasing the circularity of the economy. Leveraging new technologies in fashion will help companies increase their revenue, while simultaneously improving the efficiency of their production cycle. Moreover, technology in Clothing And Apparel Site Selection Software will help in the development of new techniques that will make the company more sustainable and appealing to the customers. Moreover, artificial intelligence (AI) is spreading throughout the industry. It has the potential to transform businesses by providing access to consumer data and improving operational efficiency.