GlobalData shares a roadmap to help fashion businesses navigate the changing tides of the $2.1tn global apparel industry.

The global apparel market’s growth forecast for the first half of 2024 is expected to be just 2.2%, before rebounding to a more robust 4.4% in 2025, explained GlobalData’s apparel analysts, Chloe Collins and Louise Deglise-Favre during a recent apparel market trends webinar.

Collins admitted the first half of the year will be significantly worse than the second due to it facing stronger comparatives. Plus, inflation is expected to soften as the year progresses with a gradual improvement in consumer confidence.

The speakers explained a recent GlobalData survey revealed consumers in six global markets, namely Germany, France, Italy, Spain, the US and China were “pessimistic” about how the first half of 2024 would pan out.

Excluding the resilient Chinese market, the majority of shoppers in the US, Germany, France, Italy, and Spain anticipated curtailing their spending habits, with French consumers expressing the most concerns.

This gloomy consumer outlook from a survey conducted in December 2023 was said to be rooted in the impact of high inflation, which has eroded purchasing power and dampened confidence in personal financial security.

The analysts explained the majority of shoppers across all global markets, including almost 70% in France, expect to reduce their spending, making consumer outlooks for retail particularly poor.

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According to Collins, females are most likely cut back as they are more volume-driven than males and buy more out of wants than needs and typically tend to earn less.

Due to financial pressures, many shoppers deprioritised apparel in particular with prices driving growth in Western Europe and the US, but volumes declining.

This climate of uncertainty has given rise to a polarisation in apparel spending patterns. While some consumers are gravitating towards more affordable options, trading down to cheaper brands or embracing the second-hand market, others are opting to trade up and are seeking out premium and luxury investment pieces that promise superior quality and longevity.

The analysts noted this divergence has left the mid-market or mass apparel market in a precarious position as it is being squeezed between these two opposing forces.

Asia-Pacific to be most successful region in 2023-2028

Collins explained the Asia-Pacific region is projected to have a 5.1% compound annual growth rate (CAGR) through 2028, driven by its growing middle class and economies.

According to GlobalData projections, Asia, excluding Australasia, is expected to experience a 5.1% growth.

In this region, India, the Philippines, and Thailand are expected to be among the fastest-growing countries.

China is also expected to be relatively resilient in the long term, though 2024 is expected to remain challenging as a result of its real estate crisis.

Inflation is impacting consumer confidence in the West, leading to a potential market decline in Europe. However, Eastern Europe (excluding Türkiye) is expected to grow at a CAGR of 4.7%, driven by emerging economies like Romania and Hungary.

The US and Western Europe are experiencing weak consumer spending, which is causing a decline in the Americas share forecast. Latin America’s CAGR is expected to be 4.1%, excluding Argentina, which is facing issues due to devaluation in its local currency.

The Middle East and Africa’s spending is expected to remain flat until 2028 due to geopolitical tensions in Israel, offsetting the resilience of affluent shoppers in Saudi Arabia and the UAE.

From 2025, growth is expected to pick up again slightly to 4.4% and soften gradually each year out to 2028. Between 2023 and 2028, the market is forecast to achieve a compound annual growth rate of 3.3%, finally reaching $2.45tn.

“However, we will see very different performances across the regions as they face different economic backdrops,” added Collins.

What matters most to apparel consumers now?

The challenging economy means consumers are reassessing their priorities with quality emerging as the main purchase driver. A 76.5% of shoppers now prioritise investing in high-quality items that promise enduring value over cheap and disposable fast fashion.

This shift towards longevity and durability is a response to the financial pressures that have reshaped consumer psyches, compelling them to seek garments that can withstand the test of time and provide good value for money, which was the second biggest purchase driver at 77.3%.

Fit emerges as the third key purchase driver, particularly with younger Gen Z shoppers at 60.4% who exhibit a heightened preference for more tailored, figure-hugging silhouettes.

Collins explained that despite sustainability and ethics sitting at the end of the list, they are still important to almost half of shoppers, with Gen Z and Millennials caring significantly more given they are the most environmentally aware demographics. She also noted the importance of these factors will grow as these shoppers age.

“Though whether this interest ever matches up with their actual behaviour remains to be seen,” she said.

Sportswear will see slowdown at end of 2024

Deglise-Favre acknowledged the sportswear market grew 5% to reach $462.4bn in 2023, however she explained the forecast will soften when GlobalData publishes its next full sportswear data update in September.

Chinese consumers anticipate increased sports participation with 83.7% participating in various sports in 2023, leading to the Asia-Pacific region outperforming in 2028.

The US market will also see increased sportswear spending, however the European market will face challenges due to inflationary pressures. Germany is the exception to this rule as it is expected to see a slightly higher spend.

The majority of sportswear shoppers (83.6%) cite performance features such as breathable materials, moisture-wicking properties, and compression technologies as essential purchase drivers.

The running category, led by brands such as On and Hoka, has emerged as a driving force behind the sportswear boom. The “gorpcore” trend, which blends outdoor aesthetics with urban sensibilities has fuelled the demand for these high-performance running offerings.

Brands like Lululemon, Alo Yoga, Vuori, and Tala have capitalised on the consumer’s desire for versatility, crafting garments that transition from the gym to the street and embody a holistic approach to active living.

Just over half of sportswear shoppers (51.9%) purchased sportswear from a fashion brand in 2023. However, mainstream fashion retailers such as H&M and Zara have been developing and expanding their sportswear ranges to include more categories and be more performance-driven.

Luxury slows down but ultra-wealthy continue to shop

While the luxury global apparel market experienced a slowdown in 2023, Deglise-Favre noted the market will always be able to rely on its core ultra-wealthy shoppers, for which macroeconomic woes have little impact.

According to the GlobalData survey, only 13.8% of consumers with the highest household income expected their finances to decline in the first six months of 2024. On the other hand, 42% expected to spend more on clothing and accessories, while only 15.3% planned to spend less.

Online market to outperform until 2028

The online apparel market, which experienced a pandemic-fuelled surge, is poised to outpace its offline counterpart with GlobalData projecting a robust 5.2% CAGR through 2028, compared to a more modest 2.5% for physical retail.

By 2028 the online market is expected to reach $720bn and account for 29.4% of global apparel spend.

AI-powered chatbots, virtual stylists and augmented reality (AR) are transforming the online shopping experience with personalised recommendations and styling suggestions bridging the gap between virtual and physical retail.

This integration of immersive technologies is said to enhance the shopping experience and address some of the barriers to online apparel sales with over a third (36.5%) of consumers citing return fees as a deterrent.

Smart fitting rooms, self-checkouts, and in-store mobile apps are just a few examples of innovations reshaping the in-store experience that will cater to the 53.5% of apparel shoppers who cite convenience as a critical purchase driver.

Live shopping, which began in Asia, allows brands to host interactive livestreams and present their products in real time while enabling viewers to make purchases instantaneously.

This concept has already gained traction in the US and Europe with retailers such as Nordstrom and Mango embracing the power of live shopping to engage their audiences and drive conversion rates.

Sustainability concerns and rise of ultra-fast fashion

The rapid ascent of ultra-fast fashion players such as Shein, Cider, and White Fox has coincided with the global apparel market’s quest to address its environmental impact.

Despite 62.8% of consumers expressing a desire to avoid fast fashion brands due to their unsustainable practices, these disruptors have carved out a significant foothold, particularly among the younger trendsetting Gen Z demographic.

The success of ultra-fast fashion can be attributed to a potent combination of factors, including a relentless pace of new product drops, aggressively low pricing strategies, and a masterful command of social media marketing.

The analysts explained brands like Shein have upended traditional retail models by flooding their websites with hundreds, if not thousands, of new items daily to cater to the insatiable appetite for ‘newness’ and variety among young consumers.

The power of social platforms like TikTok have proven invaluable to these ultra-fast fashion companies, enabling them to forge direct connections with their target audiences and leverage the influence of content creators to drive viral product trends.

Shein’s rise is a testament to this strategy with the brand’s market share in the UK expected to continue its “skyrocketing trajectory” to 2027 and overtaking fast fashion rivals UK online retailer ASOS and Spanish fashion brand Zara, which is owned by Inditex.

Despite the rise of ultra-fast fashion, sustainability will remain a topic of interest for both consumers and brands said Deglise-Favre.

60.2% of shoppers now express concern over the fashion industry’s environmental impact with this sentiment particularly pronounced among Gen Z and Millennial consumers.

GlobalData’s survey suggested Spain has the highest level of concern for sustainability at 72.6% while the US showed the least concern at 43.2%. The majority (85.3%) of Chinese shoppers stated they try to purchase from more sustainable brands and ranges, and their actions are believed to be down to the country’s position as a major apparel production hub.

In response to this growing eco-consciousness, the resale market continues to grow and is expected to see a robust 12.8% CAGR through 2027, reaching a valuation of $193bn by the end of the forecast period.

However, rather than sustainability, the primary driver for purchasing second-hand is to save money at 72.6%, as consumers look for more affordable ways of buying into their favourite brands.

Being sustainable is the second largest driver overall, but is the reason behind less than half of second-hand purchases.