How the Fashion World Will Change in 2023

As the Black Friday dust settles and shoppers grab Cyber Monday bargains, fashion players will be poring over their latest sales reports to look for clues about which direction consumer spending will head in the months ahead. But given the unpredictability and fragility in which the industry is operating, many will hold off drawing firm conclusions.

It’s unclear whether early holiday shopping figures as well as the release this week of consumer sentiment indicators on both sides of the Atlantic will restore the cautious optimism that many felt at the beginning of the year. Back then, the fashion industry was getting back on its feet after nearly two years of pandemic disruption. The State of Fashion 2022 from the Business of Fashion and McKinsey & Company, found some brands were already surpassing their pre-Covid performance, benefitting from a burst of pent-up consumer demand that was expected to continue. But the Ukraine War, the cost-of-living crisis and ongoing supply chain headaches all helped to erode optimism in 2022.

Next year will likely be a continuation of what the fashion industry faced in the second half of 2022. “Challenging” and “unpredictable” were the words most-frequently used by executives surveyed for our latest The State of Fashion report, to be unveiled at BoF VOICES this week, when asked to describe the conditions in which their companies will be operating in the year ahead.

Knowing now how fragile recoveries can be, any glimmer of hope may be fleeting, given the array of challenges that economies continue to face. “This year’s winter has just started, and a few warm November weeks do not automatically make for a warm season,” Carsten Brzski, chief economist at ING Germany, cautioned last Thursday when Germany’s closely watched monthly sentiment survey of executives in retail and other industries, the Ifo Business Climate Index, showed a robust month-on-month rebound in November. “Today’s Ifo index gives hope for some stabilisation, nothing more, nothing less.”

On Tuesday, we’ll have a few more indicators that make the picture clearer. More broadly, including those from the European Commission. Last week, however, the Commission downplayed its preliminary flash estimates that suggested a month-on-month recovery in consumer sentiment in the EU, noting that confidence levels are still “well below its long-term average.” In the US, where consumer confidence fell in October after two consecutive months of gains, November’s numbers posted this week may provide insight into whether the Federal Reserve will start easing the interest rate increases aimed at taming inflation.

For months now, rising prices have cast a shadow over the fashion industry, seriously impacting consumer behaviour, particularly among lower-income shoppers when it comes to spending discretionary items, such as on apparel and footwear. “Increasing cost of living has long been one of the most feared phenomena in western countries, and, now that this fear has come true, the inflation index has gained much attention,” wrote Alberto Prati, economics professor at the London School of Economics, in a recent blog. “In 2022, Europe, the UK and other areas which have not experienced major inflationary periods for four decades, have registered record levels of inflation.” And let’s face it, he added, “inflation makes people miserable.”

It’s a point not lost on fashion executives. Inflation is one of the top concerns among surveyed executives in the year ahead, according to the seventh annual edition of The State of Fashion. The report, which launches this week on day two of BoF VOICES 2022, BoF’s annual gathering for big industry thinkers, cites relentlessly high inflation among the multiple factors contributing to an expected industry slowdown in 2023. As in previous editions, The State of Fashion 2023 shines a light on how the industry can — and in some cases, already is — responding and adapting to turbulent conditions, while identifying where brands can seize opportunities.

You can find out more about The State of Fashion 2023 at BoF VOICES 2022. Over the course of five two-hour sessions over three-day event that starts this Tuesday, we unite the movers and shakers of the global fashion industry with thought leaders and inspiring people shaping the wider world, including Demna.

Register now to join us for the whole of BoF VOICES or the sessions of your choice, free of charge.

BoF VOICES 2022 is made possible in part through our partners McKinsey & Company, Shopify, Flannels, Brandlive, Lenzing, ShopRunner, Snap, Canada Goose, Invisible Collection, Soho House, and Getty Images.

What Else to Watch for This Week

Monday

Cyber Monday

Japan’s unemployment, retail sales

Tuesday

The Conference Board’s monthly US Consumer Confidence Survey

EU’s monthly business and consumer sentiment

Broadway debut of “The Collaboration,” a play about Andy Warhol and Jean-Michel Basquiat’s artistic relationship in 1984, following its global premier in London in February

BoF VOICES 2022: CNN’s Clarissa Ward speaks on the Ukraine War

Wednesday

Victoria’s Secret, PVH Q3 earnings

Eurozone annual consumer inflation

Publication of the second part of the European Commission’s Circular Economy Package, whose proposals include a new law requiring companies to substantiate green claims

India’s quarterly GDP (Q2)

BoF VOICES 2022: Fear of God’s Jerry Lorenzo speaks on building a diffusion line strategy

Thursday

Ulta Beauty earnings

Farfetch investor day

The launch of Art Basel Miami, which runs through Dec. 3; Pantone reveals its colour of the year at the event

BoF VOICES 2022: Nobel Peace Prize winner Malala Yousafzai speaks on activism

Friday

US unemployment data for November

BoF VOICES 2022 is made possible in part through our partners McKinsey & Company, Shopify, Flannels, Brandlive, Lenzing, ShopRunner, Snap, Canada Goose, Invisible Collection, Soho House, and Getty Images.