High inflation has made consumers more sentimental about their spending habits and will it effect the fashion industry. In addition, to the inflation there is the startling increase in dupes, the rapid progression of climate change, and the continuous restructuring of global trade. In the upcoming year, regional disparities that were apparent in 2024 will become even more pronounced. According to the annual BoF McKinsey State of Fashion Executive Survey 20% expects improvements in consumer sentiment, 41% expect conditions to remain the same while 39% see the industry conditions worsening in 2025.
As consumers are returning back to the pre-pandemic in-store shopping experience levels, smart e-commerce players are not focusing on new paths for product discovery. It seems like shoppers who were once once amazed by the endless selection is now finding it hard to find what they want. In 2025 fashion brands will benefit by
- AI-powered curation, content and search can help consumers discover brands and products more effectively and make consumers feel more inclined to make a purchase.
- “Silver Generation” the over-50 consumers is growing as a proportion of the overall population and fashion spending. As they are oft-overlooked consumers, historically as younger shopper has be always been prioritized in the fashion industry.
Despite these continued challenges, according to a research done by McKinsey it predicts that the global fashion market to post low single-digit growth in 2025. Due to this slowdown and comparatively low consumer confidence, brands need to focus on acquiring market share before reaping the benefits of the recent years’ overbearing market expansion. The debate in the industry about luxury vs non-luxury products, but many individuals think that non-luxury will be the main driver of economic profit growth for the first time since 2010 (not including COVID-19).
According to a research done by Statista, Luxury fashion world-wide is expected to grown by 3.08% (CAGR 2025-2029) as a result the revenue in the luxury fashion market amounts to US $150.40 billion in 2025. But, according to a research done by The Business Research Company, the non-luxury (fast fashion) market size has grown rapidly and is expected to grow by 7.0% in 2025. It is also expected to grown from $141.23 billion in 2024 to $163.21 billion in 2025.
As price hikes are becoming tired to consumers. Consumers with lower or middle incomes are especially affected by price increases. Brands are expect to have less pricing power as a result, reflecting fashion leaders hesitancy over consumers’ willingness to spend. Therefore, three out of four fashion leaders are prioritizing sales growth over cost improvement. However, in the last few years volume growth has slowed/ declined in regions such as US and Asia Pacific.
Fashion leaders is now starting to find ways to differentiate their brand whether it’s through design, consumer experience or new customer niches. Fashion executives have found ways and has stated to prioritize on localization, reduced focus on cost improvements and reduced focus on sustainability.
In 2025, it will be more important to be accessible to a wide range of consumer therefore, Let’s explore what the fashion industry in 2025 has in store from global economy to consumer shifts to fashion systems.
