10 Challenges facing Fashion in 2023
Key Takeaways:
Fashion is an ever-changing landscape due to evolving trends and seasons. However this time around, the changes are mostly driven by economical, socio-political, and environmental concerns.
2023 will see the fashion industry slowing down due to macroeconomic tensions and a looming global recession.
Greenwashing remains a problematic issue as more and more companies claim to be sustainable, but their actual practices might say otherwise.
According to the annual report ‘The State of Fashion 2023‘ released by The Business of Fashion (BoF) and McKinsey & Company, the fashion industry has experienced impressive growth in 2021 and the first half of 2022 due to pent-up consumer demand as economies lifted Covid-19 restrictions. But as 2022 went on, some of these gains were lost. A series of events were triggered as a result of the conflict in Ukraine, leading to supply chain disruptions and an escalating energy crisis in Europe. Such conditions weighed heavily on the industry in the second half of 2022, and will continue to leave fashion executives on edge as they look towards 2023.
Against such a turbulent backdrop, brands will have to work harder to remain attractive to consumers. Fashion companies will need to rethink their operations, including their organizational structures, supply chain strategies, and distribution channels. Marketing strategies will also be important as brands strive to remain attractive to consumers, who may cut back on discretionary spending or trade down to value retailers. Brands should also focus on sustainability in order to appeal to consumers and differentiate themselves in a crowded market.
Here are the 10 challenges the fashion industry needs to face in 2023 if it is to survive one of the most unpredictable and complex periods of the past decade.
Global Fragility
In the face of high inflation, increasing geopolitical tensions, climate crises, and declining consumer confidence due to the possibility of an economic downturn, the global economy is in a state of uncertainty.
Geopolitical issues, such as the ongoing war in Ukraine and lockdowns in China, have had a significant impact on the fashion industry. While China and the United States are expected to experience growth (between 9% and 13%), it will be tough for Europe due to inflation. Both war and extreme weather events have disrupted the procurement of raw materials and trade routes, causing delays and problems for the industry.
In order to succeed in the coming year, fashion brands will need to carefully plan and consider the potential risks and uncertainties they may face in 2023.
2. Regional Realities
Determining where to invest globally in 2023 is going to be more challenging than ever before, due to factors such as increased geopolitical uncertainty and uneven post-pandemic economic recoveries. Brands should weigh those risks against the economic growth potential of the region in which they operate.
The strong economic growth in certain areas like China, the U.S., and the Middle East will increase the need for better local control of operations. The uneven recovery of different national economies will also present a challenge that must be addressed. To address these issues, it will be necessary to develop customized strategies for each region, including marketing, customer service, and growth.
3. Reserved Consumption
During times of potential economic instability and inflation in 2023, the impact on consumers may vary. Those with higher disposable incomes may hold off on non-essential purchases, while others may look for discounted prices, leading to an increase in demand for resale, rental, and off-price options. In order to maintain customer loyalty and preserve their brand identities, fashion industry leaders should consider adapting their business models, reevaluate their strategies, carefully consider their investments, and protect their brand identity in order to maintain customer loyalty.
4. Gender-fluid Fashion
As attitudes towards gender identity and expression shift, largely propelled by Gen Z, gender-fluid fashion is becoming more mainstream. In order to accommodate growing demands, many brands and retailers will need to adapt their product design, marketing strategies, and shopping experiences (both in-store and online) to reflect the blurring of traditional boundaries between men's and women's clothing.
This will involve appealing to both a traditional, conservative customer base as well as a younger, progressive audience that is increasingly seeking out genderless products.
5. Formalwear Reinvented
Formal attire is taking on new definitions as shoppers rethink how they dress for work, weddings and other special occasions. Offices and events will likely become more casual, which could lead to incorporating more casual and comfortable elements into traditional corporate wear.
Last year we mentioned that occasion wear could be one of the top-selling categories, seems like that trend will carry onto this year as well. Special occasions may be dominated by statement-making outfits that consumers rent or buy to stand out when they do decide to dress up.
6. Diversification
Many brands that have focused on a direct-to-consumer(DTC) model now face the challenge of rising digital marketing costs and the struggles of maintaining an e-commerce presence. As a result, the sustainability of the DTC model has been called into question. BoF and McKinsey suggested that these brands diversify their channels and consider a mix of sales channels. Options such as wholesaling and partnering with physical and digital multi-brand retailers, in addition to DTC could foster better exposure to a wider range of audiences and increase growth.
7. Tackling Greenwashing
As concerns about the negative environmental and social impact of the fashion industry persist, consumers, regulators, and other interested parties may pay closer attention to how brands present and communicate their sustainability efforts. If all brands that claim to be sustainable were truly following sustainable practices, the planet would already be saved.
It is important for both large fashion brands and fast fashion companies to follow through on their sustainability promises by demonstrating that they are making genuine, credible progress towards sustainability and complying with relevant regulations.
Offering made-to-order options, fully tracing all materials, and reducing carbon footprints are just a few steps a brand can take to be sustainable. This is crucial in order to avoid being accused of greenwashing, and truly make an impact.
8. Future-Proofing Manufacturing
Ongoing disruptions in supply chains are driving the need for a restructuring of global production.
As challenges of sourcing manufacturing and materials from distant locations persist, brands will likely have to implement new supply chain models; from nearshoring (outsourcing to local or nearby factories to create shorter and more sustainable supply chains), vertical integration (taking direct ownership of production without relying on external contractors/suppliers), and even small-batch production.
By leveraging digital technologies to streamline production and reduce waste, brands can increase efficiency, control costs, and improve sustainability.
9. Creative Marketing
Recent changes in data regulations will make it more challenging for companies to accurately predict consumers' preferences in real-time, leading to a shift in the landscape of digital marketing.
As traditional methods of customer targeting become more expensive yet less effective, brands will need to turn to innovative campaigns and alternative channels of communication. Coming up with out-of-the-box creative campaigns are crucial to capturing consumer attention.
From retail media networks to the metaverse, such channels could maximize the return on marketing investments and collect valuable first-party data to strengthen customer relationships.
10. Organization Overhaul
In order to succeed in the current climate, it is important for companies to optimize their management teams around key functions, cultivate talent, and prioritize digital growth and sustainability efforts.
Fashion industry leaders should consider what the ideal organizational structure will be in the future, with an emphasis on attracting and retaining top talent and empowering teams and C-suite roles to prioritize sustainability and digital growth, and respond effectively to various challenges and priorities in this period of uncertainty.
In a nutshell, the fashion industry of the future will require brands to adapt to change and meet the needs of consumers in order to succeed. Those that are able to do so will successfully navigate through challenges and rise to the top, while those that do not may struggle to survive.
However, through resilience and a willingness to embrace new ideas and approaches, fashion brands have the opportunity to not only survive but also thrive in the face of these challenges. As the industry looks towards 2023 and beyond, it will be crucial for brands to prioritize agility, diversity, and innovation in order to remain relevant and successful in an increasingly complex and competitive market.
One of the biggest driving forces at 4tify is our goal to provide business and designers sustainable yet cost-effective solutions through science and innovation. Even though the global fashion industry seemed to be heading into troubled waters this year, our team of dedicated scientists and consultants are always ready to help you navigate through challenges and tough times. Thank you for reading!
