McKinsey & Business of Fashion 2017 Report: The BorderX Lab Summary

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  1. Globalization created great uncertainty in 2016 but it wasn’t all trials and tribulations: “by 2020 MGI expects some 940 million online shoppers to spend almost $1 trillion on cross-border e-commerce transactions.”
  2. The rise of discount: “off-price shoppers account for 75 percent of apparel purchases across all channels, and some traditional retailers now have more outlet stores and discount stores than full-price shops.”
  3. Athleisure, modest clothing, and plus-sized fashion all garnered large amounts of attention and had substantial growth in 2016.
  4. To the delight of HBS case study writers – online only brands continue to gain prominence. Amazon entered the game in 2016 with 7 of its own brands. They joined the ranks of Everlane and Bonobos to name a few.
  5. The commodity market: “Cotton prices have risen throughout 2016, reaching a 2-year high of $0.86/ pound in August.”
  6. With regards to the buzziest of buzzwords, Fast Fashion, “Fashion designers are being encouraged to take more input from the buying and merchandising teams to react to what is selling rather than defining what will sell through forward-looking design risks.”

Economic Summary

After years of stable growth rates, the industry is expected to face a major slowdown in 2016, dipping from 5.0 percent growth in 2015 to 2.0–2.5 percent growth in 2016


  1. Geopolitical instability, the wave of populism, and the 45th President and leader of the Free World will at least create a feeling of uncertainty and instability if nothing else.
  2. The growth of Upper/ Upper-Middle class households will secure China’s purchasing power growth. The US will add 15 million UC/UMC households in the next 8 years. China will add 141 million and India 118 million.
  3. “City-based strategies will trump country-based strategies.”
  4. Thanks in large part to China – mobile will pass desktop in 2017 and dominate by 2018.

More on China – the perennial global economic trend setter, growth source, and political black box. The so-called short-term volatility of China’s stock market stands in contrast to the long-term growth picture, the effects are temporary at most.

Obviously when you’ve just lost millions on the stock market, you are not in the mood to go out and buy diamonds or an Hèrmes bag,

Some kind of market adjustments [do] affect how people spend, but usually that’s quite temporary… The ongoing urbanization of the country and growth of its third- and fourth-tier cities provide longer-term growth opportunities.

The Final Word

The other big “ization” trend, urbanization, is set to completely morph the fashion landscape in decades to come. By 2025 the world’s top 600 cities will account for 2/3 of all GDP.

To illustrate: China’s 5th largest city, Tianjin, will have a GDP the size of Sweden’s GDP in 2025.

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