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Fashion is a business that has seen growth for a long time – but the style sector may need to start finding a new path.
Fertility rates around the world have slowed dramatically in recent years — many generations are having fewer children — and are now expected to fall below replacement level before 2050, leading to global population declines.
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The long-term implications for fashion are huge.
As the world moves to a place with fewer people, there will be a pressing need for market share, increasing international pressure and other changes that could reorder the industry in unexpected ways.
Martin Lindstrom, a consultant who specializes in business transformation and branding, said brands need to go back to their roots and produce styles that last and consumers want to invest in, while reducing their ecological impact. .
“Fashion has to go from an expense to an investment,” Lindstrom said. “And if they don’t manage to do that soon – it’s such a sensitive industry now – I don’t think the fashion houses can keep it alive.”
In many ways, the industry is ill-equipped to face the change. A declining population is not only a big and all-encompassing issue, it’s one that today’s chief executives and boards can ignore. Historically people do a poor job of planning for far-out and complex problems. See: climate change.
And now, brands are trying to grow on all levels. Billion dollar brands aren’t often willing to stay that way – they want to expand to $3 billion or $5 billion. Even apartment sales are a failure in the eyes of Wall Street.
It’s not a steady state or something that does business well in general. It wasn’t that – yet.
Since the 1950s, the world population has increased from 2.5 billion to more than 8 billion today, according to the United Nations.
Growing a business requires, more than anything else, the ability to ride that wave and bring in more shoppers. But soon, the wave will hit the shore.
Researchers raised a warning flag last month in the medical journal The Lancet, noting that global fertility rates have fallen from 4.84 per cent in 1950 to 2.23 per cent in 2021 – just above the 2.1 per cent needed to keep the population stable.
By 2050, the fertility rate is expected to fall to 1.83 percent, with the lowest income countries responsible for an increasing percentage of births. “ We generally found that human civilization is rapidly adapting to a persistent low-fertility reality, said the researchers in Lancet.
The effect will be widespread.
“Low levels of fertility over time have the potential to lead to inverted population pyramids with increasing numbers of elderly people and declining working-age populations,” the researchers said. “These changes are likely to place increased burdens on health care and social systems, alter labor and consumer markets, and alter patterns of resource use.”
The population growth that fuels the rise of the modern economy is slowing and likely to stop in the coming years, and business leaders should consider how they can train the next generation of leaders to be fit to enough to deal with that change.
It is difficult to look ahead. Fashion was thinking hard about e-commerce and the internet in the early 2000s, but it didn’t anticipate the invention of the iPhone or social media, which disrupted business plans.
Still, the industry faltered, and came out more on the other side. There will be some path from here to the future, even if, in the end, there is an epic battle with brands courting the shrinking supply of shoppers in high-income countries.
And many of the things that are important today will still be important.
Brands and how they make people feel will matter. Being able to create a personal connection with consumers will be important. And as with everything else in the last 20 years, digital will also be important.
“Fashion is not about keeping you warm, it’s not about ‘I’m wearing clothes to keep myself warm,'” Lindstrom said. “It’s to protect an image. It is to be transformed into another universe. It’s about creating a sense of belonging with like-minded people. It is going to enhance my desires. All of those factors are essentially replicable.”
While the metaverse has fallen out of fashion, or at least from the industry’s white-hot center of attention, Lindstrom said “we’ll probably get the code very soon as to how you get into the virtual world where more than that. just a stupid square avatar jumping around.”
If it sounds like a move into the metaverse or a situation where “investment” fashion trumps or fast fashion, the good news is that fashion is pretty good at making these kinds of moves, especially when they can step only take at. once.
New York fashion manufacturers moved from Seventh Avenue to South Carolina to Mexico to China, just as brands moved online and advertising moved from the printed page to social media.
All these changes were very disruptive, but fashion ended.
“The market is going to adapt, I think people are going to adapt,” said consultant Jonathan Low, a partner at Predictiv, which specializes in the impact of intangibles like strategy execution.
“Remember when you would walk down Madison Avenue during the week and every man was wearing a blue or gray suit with a nice shirt and tie,” Low said. “Now, you see people wearing Lululemon pants and quilted vests and shoes that look like they were invented in some other solar system. That’s a pretty fundamental change.
“Because of the internet and because of cellular communication, there is a global fashion market,” he said. “People will do what they have to do to get it. And on the contrary, the marketers will say, ‘Okay, I’ll sell it wherever I can sell it.'”
However, brands – at least those who make fashion IRL – are likely to find that there are fewer and fewer places to sell as the world becomes much smaller.
In order to win, players will want to solve the problem now.
The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000. It seems every other Thursday.
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