![]() Inflation is at the top of executives’ minds for the coming year, according to results from the annual Business of Fashion and McKinsey State of Fashion Survey. ![]() Reflecting in-depth research and numerous conversations with industry leaders, it reveals the key trends likely to shape the fashion landscape in the year ahead. The report, the seventh in the annual series, discusses the major themes shaping the fashion economy and assesses a range of possible responses. These are just some of the findings from The State of Fashion 2023, a joint report from the Business of Fashion and McKinsey. These forecasts are reflective of inflation and are calculated in local currencies, meaning that the real impact for the sector could be more negative than these figures suggest. China and the United States are expected to fare better, growing between 2 and 7 percent and between 1 and 6 percent, respectively. McKinsey analysis of fashion forecasts projects relatively slow sales growth of between –2 and +3 percent, weighed down by a contraction in the European market (expected to shrink between 1 and 4 percent) (exhibit). The fashion market, excluding the luxury sector, will struggle to deliver significant growth in 2023. ![]() Europe, on the other hand, is under high pressure from currency rates and a growing energy crisis, which are likely to result in modest sales growth for the luxury sector (projected to grow between 3 and 8 percent). Based on McKinsey’s analysis of fashion forecasts, the luxury sector is expected to grow between 5 and 10 percent in 2023, driven by strong momentum in China (projected to grow between 9 and 14 percent) and in the United States (projected to grow between 5 and 10 percent). Looking forward, we anticipate that the luxury sector will outperform the rest of the industry, as wealthy shoppers continue to travel and spend, and thus remain more insulated from the effects of hyperinflation. ![]() This article is a collaborative effort by Imran Amed, representing views from the Business of Fashion, and Sarah André, Anita Balchandani, Achim Berg, and Felix Rölkens, representing views from McKinsey’s Retail Practice. ![]()
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