FW
The champagne wishes and caviar dreams of the luxury market are facing a sobering reality check. A new report released this Monday by Business of Fashion and McKinsey paints a picture of an industry grappling with shifting consumer behaviors and a slowing global economy. As Rahul Malik, Chief Growth Officer at The Business of Fashion, aptly puts it, "The luxury goods market has created its own crisis, and it won’t recover until after 2027." The once-unstoppable growth engine of luxury is predicted to sputter, with a mere 1-3 per cent growth forecast between 2024 and 2027. This slowdown marks a significant departure from the heady days of double-digit growth, forcing luxury brands to re-evaluate their strategies and redefine their value proposition.
Key Change Drivers:
Several factors are contributing to this luxury shakeup:
Economic slowdown: Global economic headwinds are making even the ultra-wealthy more cautious with their spending. Rising inflation and geopolitical uncertainty are prompting a reassessment of luxury purchases.
Shifting consumer preferences: Experiences are the new luxury. Consumers are increasingly prioritizing travel, wellness, and personal growth over material possessions. This shift is reflected in the report's findings, which indicate a growing preference for high-end travel and wellness experiences over traditional luxury goods like watches and apparel. "There’s no doubt: it will take more to win shoppers’ hearts (and wallet-shares) now as they shift their gaze to high-end travel and wellness experiences instead," states the report.
Market saturation and price hikes: Over the past few years, many luxury brands aggressively increased prices and expanded production to capitalize on surging demand. This strategy, while profitable in the short term, diluted the sense of exclusivity and craftsmanship that defines luxury. The result? Even high-net-worth individuals are balking at the price tags. As the report highlights, "Now, even the industry’s highest spenders, who are expected to contribute up to 80 per cent of luxury spending, are turned off by the price hikes."
Rise of ‘Quiet Luxury’: Conspicuous consumption is out, understated elegance is in. Consumers are gravitating towards brands that emphasize quality, craftsmanship, and timeless design over flashy logos and overt branding. This trend favors smaller, boutique brands that offer a more personalized and discreet luxury experience. Ida Palombella, Global Fashion & Luxury Co-lead at Deloitte, explains this shift: "Quiet luxury is a significant part of this trend, emphasizing understated elegance, high-quality craftsmanship, and timeless design over overt branding or flashy logos. Boutique luxury houses are particularly well-positioned to embody quiet luxury.”
Data and Insights:
|
Region |
Projected Growth (2024-2027) |
|
China |
Slowing |
|
Europe |
Slowing |
|
Middle East |
Strong Growth |
|
India |
Strong Growth |
Bain & Company's November report revealed that only a third of the luxury sector experienced positive growth, highlighting the impact of shifting consumer habits and economic pressures.
The State of Fashion report indicates that luxury's highest spenders, who contribute up to 80 per cent of luxury spending, are now resisting price hikes.
Prada's recent success with Miu Miu underscores the growing appeal of smaller, more niche luxury brands. Miu Miu's revenue soared by 105 per cent in Q3 2024, contrasting sharply with the declining sales of giants like LVMH.
Case Studies:
Prada's Miu Miu: The explosive growth of Miu Miu demonstrates the potential of smaller labels within luxury conglomerates to capture the changing consumer mood. By offering a distinct aesthetic and a more accessible price point, Miu Miu has resonated with shoppers seeking individuality and value.
LVMH's diversification: While LVMH experienced an overall sales decline, its beauty and selective retailing segments performed well. This highlights the importance of diversification within the luxury sector and the growing consumer interest in experiences and personalized services.
Luxury market at crossroads
The luxury market is at a crossroads. To thrive in this new era, brands must adapt to the evolving demands of consumers. This means:
Redefining value: Luxury can no longer be solely about price and exclusivity. Brands must focus on delivering exceptional experiences, personalized services, and a strong sense of community. As Malik emphasizes, "customers will need to be 'reconvinced of luxury’s value proposition.'
Embracing innovation: Continuous innovation is crucial to justify premium pricing. This includes exploring new materials, technologies, and sustainable practices.
Cultivating authenticity: Consumers are seeking genuine connections and meaningful stories. Brands need to communicate their values and heritage in an authentic and engaging way.
The luxury market is not doomed, but it is undergoing a profound transformation. By embracing change and adapting to the new realities of the market, luxury brands can ensure their continued relevance and success in the years to come.
In the ongoing debate over international trade, tariffs are often a contentious topic. Some argue that tariffs protect domestic industries and create jobs, while others contend that they harm consumers and stifle economic growth. The reality, as is often the case, is more nuanced. To understand how tariffs can impact an industry, here is a closer look at the apparel industry as an example.
The global apparel industry
The apparel industry is a truly global one, with clothing and textiles produced and traded all over the world.
Table: Global apparel exports and imports
|
Country |
Apparel exports (2020) |
Apparel imports (2020) |
|
China |
$147.9 billion |
$18.9 billion |
|
European Union |
$115.9 billion |
$133.8 billion |
|
Bangladesh |
$31.4 billion |
$4.4 billion |
|
Vietnam |
$29.1 billion |
$15.7 billion |
|
India |
$13.2 billion |
$6.5 billion |
|
United States |
$5.8 billion |
$85.5 billion |
Source: World Trade Organization
The table clearly shows China is the world's largest exporter of apparel, while the US is the largest importer. This means that American consumers rely heavily on imported clothing. EU interestingly is in second position both as exporter and importer.
Tariffs impact on industry
Tariffs on imported apparel can have a number of effects, both positive and negative. On the positive side, in helps in protection of domestic jobs as tariffs can make imported clothing more expensive, potentially leading consumers to purchase domestically-produced clothing instead. This could help to protect jobs in the apparel industry. Domestic production too gets a boost as demand for locally-produced clothing increases, apparel manufacturers may ramp up production, potentially leading to the creation of new jobs. And by making imported clothing more expensive, tariffs could encourage consumers to reduce their reliance on imports, which could have positive effects on the trade balance.
However, on the down side, tariffs make imported clothing more expensive, which means consumers have to pay more for the same products. This can be particularly harmful to low-income households. It could also lead to retaliation from trading partners. When one country imposes tariffs on imports, other countries may retaliate with their own tariffs. This can lead to a trade war, which can harm businesses and consumers in all countries involved. And also tariffs on apparel can lead to job losses in related industries, such as retail and transportation.
Do tariffs actually help?
As the article ‘How Tariffs Can Help America’ points out, the effectiveness of tariffs depends on the specific circumstances under which they are implemented. In the case of the apparel industry, tariffs may provide some benefits in terms of protecting domestic jobs and increasing domestic production. However, these benefits are likely to be outweighed by the drawbacks, such as higher prices for consumers and the potential for retaliation from trading partners.
Therefore, tariffs are a complex policy tool with the potential for both positive and negative effects. While they may provide some benefits to specific industries, they can also harm consumers and lead to trade wars. In the case of the apparel industry, the evidence suggests that the drawbacks of tariffs are likely to outweigh the benefits.
It is important to carefully consider all of the potential impacts of tariffs before implementing them. In many cases, there may be more effective ways to support domestic industries and create jobs.
China's textile industry a behemoth that once clothed the world is facing numerous challenges. Overcapacity, falling exports, and domestic growth problems are casting a shadow over its future. The industry, covering from fiber and yarn production to garment manufacturing, is grappling with a slowdown that has repercussions not just domestically, but also for countries intertwined with China's textile trade.
Excess capacity and falling demand
Years of rapid expansion have led to a glut in production capacity across the textile value chain. This overcapacity is clashing with weakening global demand, which has gotten worse due to geopolitical tensions and economic uncertainties. The result is a drop in exports, a key pillar of China's textile industry.
Table: Exports on the decline
|
Fiber |
2023 (Jan-July) |
2024 (Jan-July) |
Change (%) |
|
Polyester |
10.5 million tons |
10.2 million tons |
-2.90% |
|
Nylon |
2.1 million tons |
2.3 million tons |
+9.5% |
|
Spandex |
0.45 million tons |
0.4 million tons |
-11.10% 1 |
|
Cotton Yarn |
2.5 million tons |
2.2 million tons |
-12.00% |
Source: China Customs
The table illustrates the declining export trend for key fibers and yarns. While nylon exports have seen a slight uptick, likely due to its use in specialized sectors like sportswear, the overall picture is one of contraction. This decline is particularly pronounced in spandex, where overcapacity has led to fierce price wars and a slump in both domestic and export markets.
Ripple effects across the globe
The impact of China's textile slowdown is being felt globally.
Bangladesh: A major garment exporter reliant on Chinese raw materials, Bangladesh is facing higher costs and supply chain disruptions. The decline in Chinese cotton yarn exports, for instance, has forced Bangladeshi manufacturers to seek alternative sources, often at higher prices. This is squeezing profit margins and threatening the competitiveness of Bangladesh's garment industry.
Vietnam: Another key player in garment manufacturing, Vietnam is also experiencing the knock-on effects of China's overcapacity. Increased competition from Chinese manufacturers seeking to offload excess inventory is putting downward pressure on prices and eroding Vietnam's export market share.
Ethiopia: As a rising star in the textile and apparel sector, Ethiopia is attracting investment from Chinese companies seeking to relocate production and capitalize on lower labor costs. While this brings job opportunities and technology transfer, it also raises concerns about potential overcapacity and environmental challenges in Ethiopia.
China's ways of facing challenges
Recognizing the urgent need for change, China is taking steps to address the imbalances in its textile industry. The government is encouraging mergers and acquisitions to reduce fragmentation and create larger, more efficient enterprises. Investments in automation and advanced manufacturing are also being promoted to enhance productivity and move up the value chain. With rising incomes and a growing middle class, China is increasingly looking inwards to drive textile demand. This involves promoting domestic brands, developing innovative products, and fostering a more sophisticated consumer market.
Sustainability and green initiatives are also in line. Environmental concerns are pushing the industry towards sustainable practices. This includes investing in cleaner production technologies, promoting the use of recycled fibers, and reducing water and energy consumption.
For example, the city of Shantou, a textile hub in Guangdong province, exemplifies China's push towards intelligent manufacturing. With a digitalization rate of 55.6 per cent in its textile and garment industry, Shantou is leveraging technologies like the Internet of Things (IoT) and enterprise resource planning to optimize production processes, reduce waste, and achieve green manufacturing. Companies like Guangdong Rongchang Textile Industry Co are using digital control systems to monitor energy consumption, improve quality control, and enhance resource efficiency.
The road ahead for China's textile industry is undoubtedly challenging. With innovations, sustainability initiatives, and adapting to changing global dynamics, China can move ahead in a more balanced and resilient way. The success of these efforts will not only determine the future of China's textile industry but also have far-reaching implications for the global textile landscape.
OEKO-TEX has announced updated testing criteria, limit values, and guidelines for its certifications, effective 1st April 2025. The revisions, based on scientific research and legal developments, aim to bolster trust and transparency across the textile and leather industries.
Key updates include the introduction of OEKO-TEX Organic Cotton certification, now part of OEKO-TEX Made in Green. Claims of ‘GMO-free’ or ‘organic’ will no longer appear under Standard 100, ensuring stricter oversight of certified organic cotton. Bisphenol A (BPA) limits under Standard 100 have been tightened from 100 mg/kg to 10 mg/kg, reflecting growing concerns over its endocrine-disrupting effects.
To align with the European Deforestation Regulation (EUDR), OEKO-TEX Leather Standard will require proof of leather origins, such as slaughterhouse delivery notes, emphasizing traceability and sustainability in leather supply chains.
The Made in Green label now accommodates Organic Cotton certification, combining robust supply chain verification with responsible production. STeP certificate holders can now participate in the ZDHC Supplier to Zero Programme, reinforcing environmental goals across textiles and leather industries.
OEKO-TEX Eco Passport will expand its scope to include commodity chemicals and biodegradability verification, encouraging safer and more sustainable chemical usage. Biodegradability certifications will become mandatory for surfactants, softeners, and complexing agents within a year.
These updates underscore OEKO-TEX's commitment to maintaining high standards while advancing environmental sustainability and consumer trust.
Bluesign, a global leader in sustainability solutions for the textile industry, has announced Everest Textile Technologies as its latest System Partner. As one of Europe’s most innovative denim laundries, Everest is renowned for its eco-friendly garment finishing expertise and advanced technologies
Everest, which collaborates with luxury brands like Chanel, Louis Vuitton, Diesel, and Acne Studios, utilizes state-of-the-art solutions such as ozone and laser treatments, jet dye machines, and proprietary environmental impact software. These innovations enable the company to achieve high-quality, eco-conscious finishes while maintaining transparency and traceability.
"This partnership with Bluesign marks a pivotal moment for Everest. By adopting bluesign Approved washes, we ensure maximum sustainability across all processes, supported by certified machinery and chemicals," said Luca Soligo, CEO of Everest Srl.
As a Bluesign System Partner, Everest will meet the highest environmental standards, aligning with global directives like the Corporate Sustainability Due Diligence Directive (CSDDD), Corporate Sustainability Reporting Directive (CSRD), and Digital Product Passports (DPP).
"Everest exemplifies leadership in sustainable denim," said Bluesign CEO Daniel Rufenacht. "Their expertise aligns perfectly with our mission to promote clean and transparent manufacturing."
This collaboration reinforces Bluesign’s commitment to driving sustainability and regulatory compliance in the textile industry, paving the way for a more environmentally conscious future in denim production.
Following the footsteps of Copenhagen Fashion Week (CPHIFW), British Fashion Council (BFC) is introducing mandatory sustainability criteria for brands aiming to participate in the upcoming London Fashion Week. Developed by CPHFW, these new requirements will begin this year with the BFC's Newgen program, and will be fully implemented by January 2026.
Caroline Rush, Outgoing CEO, BFC, states, the partnership between London and Copenhagen ‘builds on the Council’s existing minimum standards and reaffirms its commitment to driving positive change across the global fashion industry.’ Describing the collaboration as a significant step in making sustainability integral to the future of fashion, Rush emphasizes, the initiative aims to empower emerging designer businesses to take the lead in creating a more sustainable and responsible industry.
Cecilie Thorsmark, CEO, Copenhagen Fashion Week, highlights, the agreement not only promotes much-needed industry alignment but also underscores the significant potential of fashion weeks and councils to drive positive change. Thorsmark had previously introduced the CPHFW Sustainability Action Plan in early 2020, setting 19 minimum standards that brands must meet to be part of the Copenhagen calendar. These standards require companies to take responsibility for their environmental impact, including measuring and offsetting carbon emissions and eliminating the use of single-use plastic hangers and garment bags, among other measures.
The Lenzing Group, a leader in regenerated cellulosic fibers, has unveiled an expanded Lenzing Lyocell Fill portfolio within its Tencel fiber family. The new offerings introduce finer fibers with diverse cut lengths, designed to enhance home textiles, apparel, and other applications.
“Our expanded portfolio, certified by EU Ecolabel and ClimatePartner, supports sustainability while offering thermal comfort, moisture control, and durability,” said Caroline Ledl, Senior Director at Lenzing AG. The fibers cater to innovative designs and applications, inspiring industry partners to redefine product standards.
The portfolio includes two fiber densities. The finer 1.7dtex variant, suitable for blow-fill technologies, blends seamlessly with premium materials like down, feather, and silk, enhancing pillows, stuffed toys, and lightweight apparel like jackets. Meanwhile, the established 6.7dtex fiber excels in carding and blow-fill applications, providing bulk and moisture control for comforters, quilts, and mattresses.
Produced sustainably from wood, these fibers align with the growing demand for reducing fossil-based material use. Their natural composition ensures skin-friendliness and eco-conscious production.
Lenzing will showcase the expanded portfolio at Heimtextil 2025 in Frankfurt from January 14–17 at Hall 11, Booth #A11. Visitors can explore the innovative potential of these fibers for diverse consumer needs.
The expanded range supports Lenzing’s commitment to combining comfort and sustainability, offering a natural choice for better sleep and eco-conscious living.
A 51 per cent decline in domestic production and delays in imported cotton shipments has led to local cotton prices in Pakistan rising to Rs 20,000 per maund.
Driven by strong export orders, the textile industry in Pakistan has shifted its focus to local cotton as imported shipments face delays. Cotton prices for deferred payments increased to Rs 20,000 per maund, while routine payments ranged between Rs 19,000 and Rs 19,500 per maund. Market analysts expect prices to rise further amid sustained demand.
Ihsanul Haq, Chairman, Cotton Ginners Forum, attributes the import delays to fumigation issues in Brazil caused by a shortage of required chemicals.
Meanwhile, in accordance with the directives from Prime Minister Shehbaz Sharif, the Federal Board of Revenue (FBR) held a meeting on January 13 in Islamabad to decide whether to maintain the 18 per cent sales tax exemption on imported cotton and yarn.
The FBR meeting addressed these concerns and determined the future of tax exemptions, a decision with significant ramifications for both the textile industry and local cotton producers.
Pakistan-based denim brand Soorty Denim aims to incorporate its new fabric range Collagen Denim into new collections that align with the brand’s unique identity.
Launched last fall during Kingpins Amsterdam, Collagen Denim adopts a revolutionary approach to both fashion and function. The fabric incorporates the Umorfil technology. It is also infused with collagen peptide amino acids that are derived from fish scales. Known for their hydrating and soothing properties, these peptides give the fabric the ability to support skin health.
Available in both viscose and polyester variants, the fabric is ideal for garments designed for individuals with specific skincare needs. Some of its unique features include temperature regulation, antibacterial finishes and hydrating properties. The fabric also explores the impact of color and texture on the consumers’ mood and confidence.
The R&D teams of Soorty aim to incorporate this new fabric in innovative projects ranging from fibers and materials to advanced finishing applications. They are particularly targeting adaptive wear as it prioritizes inclusivity and accessibility.
The company also urges consumers to opt for fabrics with fits that maintain closer contact with the skin. This helps the wearer maximize the fabric’s performance, says Eda Dikmen, Senior Manager-Marketing and Communications.
Besides, Soorty is collaborating with brand partners from different markets to integrate this new innovation into their collections in the best possible way that aligns with their unique brand DNAs, adds Dikmen.
A micro-cap player in the textile sector, Lambodhara Textiles reported a 66.49 per cent rise in net profit to Rs 3.18 crore in Q2, FY25. The company’s net sales grew to Rs 60.92 crore during the quarter. It also recorded a 16.08 per cent return on capital employed (ROCE) and a low debt-to-EBITDA ratio of 1.14 during the period.
Delivering impressive results during the quarter, Lambodhara Textiles recorded a 66.49 per cent Y-o-Y rise in profit after tax (PAT) to Rs 3.18 crore. Its profit before depreciation, interest, and tax (PBDIT) also reached an all-time high of Rs 7.84 crore ($946,000).
A micro-cap company in the textile sector, Lambodhara Textiles specializes in the production of synthetic yarns, cotton yarns, and blended yarns. Known for its commitment to quality and innovation, the company caters to both domestic and international markets. Over the years,
Lambodhara Textiles has established itself as a reliable player in the industry, leveraging its expertise in textile manufacturing to deliver superior products.
Although the company faces challenges, including a modest annual net sales growth rate and a high percentage of promoter shares pledged, its financial performance highlights resilience and growth potential.
