Every year, The State of Fashion report from McKinsey&Company and Business of Fashion explores what the near future holds for the fashion industry in the following three categories: global economy, consumer shifts, and fashion system. Together with Polish experts, we have looked at how the global trends it describes will affect the fashion business at home.

Download the report here: http://bit.ly/thestateoffashion2019

1. Caution Ahead.

A potential economic downturn is prompting concern among more than one thousand brand executives all over the world. In a survey published by McKinsey in September 2018, more than 40 percent expect the global conditions to deteriorate in 2019. This is why boosting productivity and flexibility of companies is considered to be of key importance in the year to come. The report mentions the following innovations as the factors that will positively affect the companies’ ability to accommodate shocks: production automation, making decisions based on data analytics and the reorganization of fossilized structures.

How will this trend affect the Polish market?

Olka Kaźmierczak, author at olkakazmierczak.com:

At the turn of 2017 and 2018 Polish brands felt the need for refreshing or revising their existing narrations. This resulted in a new image trajectory followed by brands such as Reserved (trends, catwalks, fashion influencers), Apart (leader, prestige, beauty), or Kazar (fashion and trends). We have learned the lesson on strategic lifting and now the time has come for rebranding 3.0, that is, finding a non-financial motivation for the existence of Polish brands. This entails answering the question, also in the global context, of why would someone choose a Polish product over a non-Polish one? It is worth taking a closer look at Nanushka which, by glorifying Hungarian countryside, has turned Budapest into another LA, or Ganni, which was the first brand to combine ‘cool’ with ‘sustainable’. And while the world has been collecting case studies of brands with a strong moral compass for several years now, an approach based on values is still considered as innovative in Poland. This is why, in order to make our domestic companies more flexible, 2019 will be a year of thinking very hard about the purpose and reasons for their existence. Also as consumers.

2. Indian Ascent.

As India’s middle-class consumer base and manufacturing sector grow rapidly, the country has become a fashion industry’s focal point that cannot be ignored. India’s apparel industry is expected to be worth nearly $60 billion in 2022, making it the sixth-largest player in the world. We are talking here about 900 million people who will be able to make online purchases by 2021— and that’s one way of looking at it. On the other hand, we are looking at a highly complex market largely characterized by social disparities, corruption, poor-quality infrastructure, and fragmentation. Yet, for the fashion industry seeking unsaturated markets, India is a great promise.

3. Trade 2.0.

The State Of Fashion 2019 report describes two key dynamics that will reshape trade in 2019. The first one being the escalating tensions in international trade will drive companies to rethink their sourcing strategies, potentially to the benefit of countries involved in newly-negotiated trade agreements. The second—fast fashion, which depends on short production times, will need to develop new production strategies in order to keep up the speed of deliveries, e.g., shifting production to neighboring countries or even producing at home. On the other hand, luxury brands, and especially those deriving their revenues mainly from China and the US, may have to face a dilemma of whether to increase prices or squeezing margins.

4. End of Ownership.

The lifespan of a fashion product is extending with the increased popularity of using pre-owned, refurbished, repaired and rented pieces, while the number of brands based on such business models is on the rise. By buying pre-owned or renting clothes, we are driven by the desire for variety, sustainability, and affordability. While the number of second-hands grows and the interest in fast fashion is quenched, luxury brands have been doubling their prices of watches and jewelry (since 2005). But consumers can also circumvent these increases, by, e.g., shopping for iconic models at luxury second-hand stores like The RealReal and Vestiaire Collective.

How will this trend affect the Polish market?

Kinga Kośnik, owner at Love The Dress, a dress rental business:

Consumers in Poland and worldwide are making better-informed choices and becoming more aware of their consequences not only for their wallets, but also for the environment. They are shifting away from ownership in favor of sharing or renting, also in the fashion markets. At Love The Dress, every year, we are witnessing an increase in the number of new and returning customers, and also the frequency of rentals. Already at this point, we have over 20k followers on Facebook, and the number is still rising. People especially express great interest in our actions, such as #sharethedress, under which they can bring a designer dress to us and make money each time someone rents it. Additionally, we donate PLN 10 from each rental to Fundacja Kosmos dla Dziewczynek (Space for Girls Foundation). This way, we promote the zero waste concept, help girls grow, and extend the lifespan of dresses. In the years to come, we are expecting greater openness of Polish women to the idea of sharing.

5. Getting Woke.

Younger consumers are genuinely concerned with social and environmental causes, with many of them investing only in those brands that reflect their values and avoiding those that don’t like the plague. Nine in ten young consumers believe companies should undertake measures to improve the quality of life on Earth, and 50 percent of Generation Z consumers regard themselves as activists driven by passion. Brands have begun to resonate with this approach. Take Gucci, for instance, which donated $500,000 to the student-led March for Our Lives gun-control rally, or Nike which supported Colin Kaepernick, the face of the NFL’s “anthem protests.”

How will this trend affect the Polish market?

Agnieszka Polkowska, CEO at Trendspot:

The balance of powers is changing in both the Polish and the global business. Until now, brands have been setting standards which the consumers accepted either without giving it much thought or simply because there was no alternative. The Gen Next is the first cohort to experience first-hand the effects of poor natural resource management, which makes them more aware of the existing problems and willing to hold brands accountable for their actions. The economy in Poland continues to develop; there aren’t that many progressive consumers to force changes. It could still be a while before we achieve the same the level of consumer awareness as in the US or Western Europe. However, we do not live in silos, we buy international brands. It is their strategies that Polish consumers increasingly consider a standard to which they compare local brands. I believe that the biggest game-changers in the Polish market will be the companies which are thinking about global expansion or ones that are already in the process of going global, and thereby entering a new level of business growth built not only on the foundation of profit, but also values.

6. Now or Never.

Amazon, Uber, and Netflix—the three technology musketeers—have forever changed the way we watch movies, travel, and eat, but also the way we consume, in general. We have gotten so used to instantaneous and professional services that we are not willing to forgive those who make us wait. And fashion brands are well aware of this and work to reduce the distance between the thought “I want this!” and the purchase. One innovation in this area is the possibility of screenshopping, that is, taking a screenshot or picture of different pieces of clothing and then shopping similar items straight from a smartphone. UK-based start-up company SnapTech is a leader in the field—Marie Claire editors use the company’s app to search for cheaper substitutes for what they saw celebrities wearing. The State of Fashion 2019 predicts that once a Shazam-like solution will emerge on the market as a clear winner, we will all witness a widespread adoption of such technologies.

7. Radical Transparency.

Fashion companies must come to terms with the fact that full transparency in the fashion industry is just a matter of time. Consumers more often expect three things of brands: to provide the details about the costs of materials, production, transport, and margins; to establish prices that reflect the quality of products; and to add bring something to the table that is based on their own intellectual property (copycats land on DietPrada). Interestingly, for Neliana Fuenmayor from A Transparent Company, the transparency of luxury fashion brands is especially problematic, “[Consumers] don’t question luxury because if it has that high price ticket [then] you want to think it’s been done in the best way possible.” This is why the news in the summer that Burberry had burned $37.6 million worth of unsold clothes came as such a shocker.

How will this trend affect the Polish market?

Marta Grabińska-Włodarczyk, co-founder of Elementy brand:

Three years ago, when Elementy was just entering the market, the transparency trend did not exist in Poland—and to this day, no Polish brand is relying on a business model which shows production costs; I don’t believe this will change any time soon. What I do expect, however, is an increase in the popularity of actions, such as those we had at Elementy this year, that is “we’re not having a Black Friday sale” or “we’re using recycled boxes for repackaging.” Transparency is irreversible, and Poland as a market is becoming saturated—the time has come for balance and choice.

Aleksandra Bąkowska, author of a blog about responsible fashion, olabakowska.com:

The Buy Responsibly Foundation has been in operation since 2002. It is the most reliable source of information on the ethical practices of Polish and foreign brands. But it was only in 2017 that in response to European regulations Poland’s major apparel brands began to discuss in more detail how, where and using what materials their products were made in their non-financial reports. On the other hand, we have independent brands such as Balagan and Elementy, members of the Transparent Shopping Collective, which build their communication around the transparency of supply chains and social responsibility. Radical Transparency is only in its infancy in the Polish fashion business, but I have no doubt that there will be more solutions like this. I look forward to the moment when we will be able to use new technologies to check where certified cotton comes from or watch the level of wages in clothing factories.

Julia Turewicz, co-founder of NAGO brand:

Customers are right to expect more transparency from companies today. In the case of the fashion industry, this applies especially to the three key areas of its impact: we want to know that the people who make the clothes we are wearing have good working conditions and receive fair compensation, we want to know how this production affects the natural environment, and, finally—as is the case with foodstuffs and beauty products—we want to know what these products are made of and how their composition affects our health and wellbeing. I think that in Poland the radical transparency trend will remain in the niche. Of course, there will be brands like NAGO or Elementy, which focus on delivering transparency in its different aspects, but not many will take interest in responsible fashion.

8. Self-Disrupt.

There are two key factors making brands similar to the cities that never sleep: younger consumers’ preference for novelty and technological advancements, including social media. All you need now to show your collection to people on the other side of the world is a smartphone and Instagram. This is why the young brands that are disrupting the fashion landscape are characterized by social media proficiency, rapid growth, and sales focusing on the e-commerce channel. An example of an Instagram-powered success story is Reformation, a brand with over 1 million followers which makes an impressive 80 percent of sales online. Glossier, a beauty brand that draws pilgrimages of American women, has 1.6 million fans all over the world, sales totaling $X millions and… only three stationary stores. The report predicts that in 2019 brands with an established global position will be launching accelerators and innovative incubators to test new approaches to communication in a more controlled environment; companies will embrace innovation in their business models; and fashion brands will work to ensure faster deliveries.

How will this trend affect Polish fashion business?

Joanna Trepka, CEO L37

In my opinion, small fashion brands have a great future ahead. Consumers like products that have a story behind them and we can only get those with smaller brands versus huge conglomerates that are anonymous and therefore we don't know who is behind the products. We observe a real trend to support "local" companies. Clients want to support European and hand-made products. They feel that they play their small part in helping production and traditional workmanship survive in Europe, which - in light of the inundation with cheap products from China and India - is increasingly a more difficult feat. They are placing a great emphasis on quality, but also on being able to stand out. Large companies produce huge amounts of one style, which means that it is likely you will meet someone with the same shoes or bag anywhere you go in the world. The amounts of styles and colours manufactured means that the products don't have a soul; they don't have this added value. Small brands produce small amounts and each model has its own story. In addition, smaller brands have an easier time having a close conversation with clients and this means they will keep coming back. That's why, in our opinion, small and local brands that offer high quality craftsmanship have a lot of potential and we hope that, soon, large conglomerates will start to notice them and hold them in high regards, just as consumers have done for some time now.

9. Digital Landgrab.

In 2019, e-commerce will turn into a battlefield, where the largest players will compete to become the go-to platform for consumers. The giants will compete in the following categories: customer service, delivery speed, extra services, own brand. Zalando, which intends to become the “Spotify for fashion,” will focus its strategy on four pillars: assortment, convenience, demand generation, and digital experience. Smaller e-commerce companies will still have their role to play as long as they will be able to differentiate on curation and build emotional relationships based on trust.

How will this trend affect the Polish market?

Barbara Dębowska, official spokesperson at Zalando:

Implementing innovations that would constitute added value for the customer in the purchasing process is one of the key elements of development for Zalando. We wish to offer a comprehensive package of inspiration and ensure maximum comfort of purchases. We have challenged ourselves to offer the best possible personal shopping experience for each of our customers. We have become leaders in this field—we intend to offer a personal view of the platform tailored to the individual needs and preferences of each of the 25 million customers. We have recently implemented a special algorithm which applies machine learning to select personalized looks based on products added to user wish lists. We also offer advanced systems for making footwear recommendations, which—based on AI solutions—are able to help users choose the right size. But we do not stop at this point and continue to develop in this area.

10. On Demand.

Automation and data analytics have enabled a new breed of start-ups to develop agile production cycles. And mass players have made it a point of honor to respond more rapidly to consumer demands. As a result, 2019 will be a year of achieving ‘just-in-time’ production, reducing unsold stocks and creating small-batch collections. The pace of changes will be determined by Instagram trends—instead of pushing and promoting collections on the market, apparel brands will use their collections to respond to current market trends.

How this trend will affect the Polish market?

Monika Kapłan, marketing director at Reserved:

The “On Demand” phenomenon is both interesting and alarming. Among its benefits I can mention a positive impact on cash management in a company. On-demand production allows for better control over company stocks, reduces the risk of unsuccessful collections, and minimizes the risk of your money “going down the drain,” which, as we know, is often the reason why new market entrants fail. But there’s a side effect to this phenomenon: the trivialization of design and collection concepts. I’m wondering what can you make within a week? What kind of fabric can you get off the market to deliver on a “just-in-time” order? It seems to me that soon enough we will witness the creative process taking steps backwards because of the “fast-fashion-on-demand” system. It will have a negative effect on the innovativeness of design and bring it down to simple structures and unsophisticated fabrics.

Source of the main photo: Re.design / Reserved 03. campaign