#8: How has 2024 fared for the global fashion sector so far?

Welcome to Perspective, WFX’s monthly newsletter for fashion industry pros who love tech and innovation. This month, we’re diving into a mid-year analysis of how the fashion industry has fared in 2024. As Q3 ends, it’s a pivotal moment to assess the hurdles the industry has faced so far and what lies ahead as we approach the crucial Golden Quarter.?

This year, the fashion industry is bracing with high hopes for a positive Golden Quarter to make up for drab year. With Q3 ending, this is as good a time as any to assess the biggest challenges that have weighed on apparel businesses worldwide.??

? Weak Demand: Consumer demand in the fashion sector has taken a significant hit, with many brands struggling with unsold inventory piling up. Reports indicate that brands are increasingly reviewing purchasing and production budgets. In a highly volatile environment, most are opting for a conservative approach: reducing production, cutting costs, or focusing on products that are easier to sell. Bold investment is being reserved only for those brands with substantial momentum. This cautious approach reflects the growing uncertainty in global markets, leading even leading fashion players to prioritize efficiency over expansion.?

? Election Uncertainty: 2024 is a pivotal election year, and political uncertainty is weighing heavily on the fashion industry. The protectionist policies proposed by several global leaders, particularly in the U.S., have caused concern regarding the future of trade agreements. Notably, presidential candidate Donald Trump has threatened a flat tariff of 60% or more on Chinese imports, a move that could deeply affect supply chains dependent on overseas manufacturing. As a result, brands are increasingly exploring options like nearshoring and friendshoring to mitigate risk. The question of where to manufacture apparel in a changing political landscape will be critical as brands move forward.?

? Forced Labour Risks: The scrutiny on supply chain ethics has continued into 2024, with a particular focus on forced labor. Major fashion houses like Armani and Dior are currently under investigation by Italy’s competition authority over allegations of misleading production processes, specifically concerning poor working conditions and underpaid workers in their supply chains. With forced labor remaining a top priority for fashion companies, staying compliant with labor laws while maintaining profitability remains a delicate balancing act.?

? Supply Chain Volatility: This year has seen multiple disruptions in global supply chains, from the Red Sea crisis to unrest in Bangladesh, creating significant downstream effects. These events have led to shortages in critical equipment, congestion at key ports, and decreased trucking capacity. Brands relying on global sourcing have faced heightened volatility, further emphasizing the need for a diversified, agile supply chain model that can weather such storms. This unpredictability has slowed down production timelines and increased costs for many fashion businesses.?

? New Regulations: A wave of new regulations has added pressure to fashion companies. From the Corporate Sustainability Due Diligence Directive (CSDDD) in the EU, to updated labor laws in Asia, brands are facing tighter controls on environmental impact and labor rights. Compliance with these laws will require significant investments in technology, particularly in supply chain traceability, to meet the rising demands for transparency and accountability. Non-compliance risks reputational damage and steep financial penalties.??

TLDR (too long; didn’t read): 2024 has been marked by challenges that range from weak demand to political uncertainty and heightened scrutiny over forced labor practices. As the year heads into its most important quarter, fashion brands must balance caution with the need for resilience and agility in their supply chains. Success in the coming months will depend on strategic investments, particularly in digital tools, to navigate the volatile landscape ahead.??

Need an expert perspective? Our digital transformation team is here to help - Book a 1:1 call .?

Check out our team’s favorite reads of 2024 so far!?

?? Is Nearshoring the Future of Fashion? – McKinsey’s deep dive into the growing trend of nearshoring in fashion explores how brands are shifting production closer to their home markets to mitigate risks and reduce lead times.?

?? Shein Reveals Child Labour Cases at Suppliers – The BBC reports on Shein's recent sustainability report, revealing child labor cases in its supply chain. The company took swift action and tightened its supplier policies as it prepares for a potential stock market listing.?

?? Unrest in Bangladesh Threatens Apparel Supply Chains – Fashion United reports on how political unrest in Bangladesh, one of the largest apparel producers, could disrupt the global fashion supply chain.?

?? France's Fast Fashion Tax on Track – Just-Style covers France’s proposed fast fashion tax, which aims to curb the environmental impact of ultra-fast fashion brands.??

?? New EU Sustainability Regulations – Fashion Dive highlights how the EU's new sustainability regulations are reshaping product design, pushing brands to focus on durability and recyclability.??

ICYMI: Our last issue covered “What EU’s Supply Chain Law means for Fashion ,” go catch up!??

The WFX team is coming to Melbourne for Global Sourcing Expo 2024, Australia’s largest sourcing expo for industry professionals associated with buying and global sourcing of apparel, footwear, textiles and homeware products.

If you’re in Australia from 19-21 November 2024, come meet us at booth E-38 at the GSE!?

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