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China to overtake the US as the world’s largest fashion market in 2019

"As per ‘State of Fashion 2019’ report by McKinsey & Company and the Business of Fashion (BoF), China will overtake the US as the world’s largest fashion market for the first time in 2019. The report predicts the leading trends expected to shape luxury fashion industry in 2019. Despite predicting year-on-year growth of 3.5 to 4.5 per cent for the fashion industry next year, experts remain pessimistic. This pessimism could be driven by fears of the accelerating trade war between China and the US, and uncertainty in Europe over how Brexit will impact the global fashion market, according to the study."

 

China to overtake the US as the worlds largest fashion market in 2019 001As per ‘State of Fashion 2019’ report by McKinsey & Company and the Business of Fashion (BoF), China will overtake the US as the world’s largest fashion market for the first time in 2019. The report predicts the leading trends expected to shape luxury fashion industry in 2019.

Trade war leads to pessimism

Despite predicting year-on-year growth of 3.5 to 4.5 per cent for the fashion industry next year, experts remain pessimistic. This pessimism could be driven by fears of the accelerating trade war between China and the US, and uncertainty in Europe over how Brexit will impact the global fashion market, according to the study. However, in the report, Joann Cheng, Chairman of Fosun Fashion Group & Lanvin, expresses her belief that the trade war will have minimal effect on China’s business.

Increasing omnichannel integration

Technology-impacted consumer shifts are among the most important trends predicted for the coming year. Luxury fashionChina to overtake the US as the worlds largest fashion market in 2019 002 brands in China have been quick to utilise the country’s most popular social-media-turned-e-commerce app WeChat, which boasts over 1 billion daily active users. Around 54 per cent of the McKinsey-BoF State of Fashion Survey respondents prioritise omnichannel integration alongside investing in e-commerce and digital marketing as their number one priority for 2019.

Contrasting views

While 51 per cent of executives in the premium and luxury fashion sector believe fashion sector will ‘become better; in 2019; 19 per cent believe it will stay the same. In North America’s market, a staggering 64 per cent executives believe the industry will become worse suggesting America is more cautious of impending trade war tariffs.

Growing domestic demand

China is the world’s fastest-growing consumer market, accounting for more than 18 per cent of all final goods consumed. Chinese manufacturers are using its vast production abilities to cater to surging domestic demand even for luxury products. China’s Singles’ Day shopping holiday this year hit an estimated $30.8 billion in sales, surpassing both Black Friday and Cyber Monday in the United States combined.

Incorporating trust value in products

The increasingly discerning customers are demanding specific information on materials, labor conditions, duties and mark-up. According to the report, fashion companies must cater to demand of distrusting consumer and ensure full transparency across the value chain. 65 per cent of respondents cited consumer needs for trust in product authenticity and creative originality among their top 5 trends for 2019.

Leading the global fashion arena

Surveying over 270 global fashion executives, the report uses McKinsey & Company’s database of over 500 private and public companies to analyse and compare the performance of individual business against their peers by category segment and region. It recognises the top 20 companies leading charge in the global fashion arena. These “super winners” now account for 97 per cent of global economic profit, compared with 70 per cent in 2010, showing their increasing dominance in the market. These 20 companies include: Inditex, Nike, LVMH, TJX Companies, Hermès, H&M, Richemont, Ross, Adidas, Kering, LBrands, Pandora, Fast Retailing, Next, VF, Luxottica, Michael Kors, Gap, Hanesbrands and Burberry.

 

 
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