As the industry braces for a cyclical slowdown, consumers remain cautious, their spending habits impacted by recent high inflation. New challenges, such as the proliferation of dupes, climate change, and shifts in global trade, will further disrupt the market. Regional disparities, already evident in 2024, are set to deepen, creating a fragmented global outlook.
The anticipated downturn predicted by industry experts last year has materialized. Growth opportunities persist, but businesses must navigate compounding challenges, including economic instability, shifting consumer behavior, and uneven market conditions.
For many brands, 2025 could be a make-or-break year. However, those that adapt quickly and strategically can still capitalize on emerging opportunities amid the chaos.
The fashion industry is expected to sustain low single-digit revenue growth in 2025, echoing the slowdown seen in 2024. Non-luxury segments will outpace luxury for the first time since 2010 (excluding the COVID-19 period), driving the modest rise in economic profit.
Executives are pessimistic: only 20% expect improved consumer sentiment, while 39% anticipate worsening conditions.
Geographically, revenue and profit drivers are shifting. Europe benefits from declining inflation and increased tourism, while the U.S. sees resilience among high-net-worth consumers. In Asia, emerging markets like Japan, Korea, and India are gaining importance as China faces economic headwinds despite its continued regional dominance.
To navigate this landscape, fashion leaders plan to:
Localize Strategies: Tailor go-to-market models for regional markets.
Broaden Price Ranges: Address shoppers’ growing focus on value.
Enhance Brand Positioning: Justify premium pricing with clear differentiation.
Physical Retail: In-store shopping has returned to pre-pandemic levels, offering brands a chance to re-engage consumers. Well-trained, empowered staff are essential to delivering memorable in-store experiences.
E-Commerce: Online marketplaces face disruptions, with declining demand and rising customer acquisition costs. Smart players are adopting AI-powered tools for product curation and discovery to ease shopper frustrations.
New Demographics: While younger shoppers have historically been the industry’s focus, the over-50 “Silver Generation” is an untapped growth driver for 2025.
Challenger brands, especially in sportswear, are excelling at these pivots. By breaking free from traditional approaches, they’re capturing market share from established players.
Global trade shifts and geopolitical tensions will drive further supply chain realignments. Retailers are emphasizing:
Nearshoring: Sourcing from geopolitically aligned countries.
Agility: Reducing excess inventory to lower risks and improve margins.
Government regulations targeting emissions and waste, combined with climate change’s economic toll, underscore the need for sustainability. Though consumers remain reluctant to pay a premium for eco-friendly products, brands with long-term sustainability goals will gain operational efficiency and competitive advantages.
Fashion’s old playbook is no longer effective. Brands that innovate and adapt to regional, demographic, and technological shifts will thrive. Success in 2025 will require resilience, agility, and a willingness to embrace new strategies for differentiation and growth.
Source and download report: BoF Business of Fashion
