FIVE FACTORS OF GLOBAL UNCERTAINTY AND INCREASED CUSTOMER REQUIREMENTS IN THE FASHION INDUSTRY

FIVE FACTORS OF GLOBAL UNCERTAINTY AND INCREASED CUSTOMER REQUIREMENTS IN THE FASHION INDUSTRY

FIVE FACTORS OF GLOBAL UNCERTAINTY AND INCREASED CUSTOMER REQUIREMENTS IN THE FASHION INDUSTRY



Business results in the fashion industry were not very promising during the past years. Low growth and stagnating profit margins are proof of this development which is being accelerated by the continuing pressure on retailers and fashion brands to constantly offer their customers new and interesting products in order to stay attractive and competitive.
So, the question is: What are the reasons for this crisis in the fashion industry? There are a few important issues to consider:

1. Brain drain
Many designer talents have left major fashion houses which had a serious impact on fashion lines and also affected the ready-to-wear sector.

2. Change of customer needs
There has been a change in customer needs and requirements in the fashion and luxury segment. The distinction between standard, luxury and fitness wear has become less clear. Sports-oriented customers look out for fashion collections that combine sportswear with everyday clothes. Leading fashion labels have already invested in this segment, niche suppliers have followed the trend.

3. Internet-savvy customers
Today’s customers are more demanding and know their way around online shopping. They expect customized fashion and low prices at the same time. These increased expectations have led to price battles. Retailers are forced to focus on promotion and discount campaigns to increase business volume. Increased pressure to meet customers’ demands by keeping delivery times short adds to the challenge.

4. Off-price-Stores
Another trend is the growing importance of off-price stores. A recent study documented that almost one third of luxury consumers also frequent fast fashion retailers or shop at luxury outlet stores. Luxury consumers spend a major part of their fashion budget at off-price stores. Luxury brands have made use of this trend by opening or planning new discount stores. These new off-price stores have an innovative look and feel that attracts young and experienced customers alike. In order to prevent flat growth and deal with strong competition, retailers in the luxury segment put their trust in modern in-store technology. A further strategy is the opening of stores in developing markets in Asia. These markets promise a high customer growth in the high-end sector of the brick-and- mortar stores.

5. Commercial and political situation
The economic slump in China has affected the fashion industry. Major fashion brands might lose significant shares in an important market. Brexit ist another element of uncertainty. Exchange rate fluctuations and higher production costs could lead to import restrictions. International designer talents may well be deterred by the Brexit situation.

All these developments will certainly have an impact on the fashion industry and require adjusting pricing and business policies.

 
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