{ "docId": "019dd923-5de0-76bd-a16a-5035606772fa", "docSlug": "499423190bd2a1a5", "documentTitle": "The State of Fashion Luxury", "authorId": "McKinsey", "authorName": "McKinsey", "documentKindSlug": "consulting-deck", "documentKindLabel": "Consulting deck", "sourceTypeSlug": "strategy_consulting", "sourceTypeLabel": "Strategy consulting", "presentationDate": null, "orientation": "landscape", "aspectRatio": 1.333, "pageNumber": 6, "pageCount": 53, "prevPage": 5, "nextPage": 7, "slideType": "executive_summary", "function": "summarize", "density": "overcrowded", "nDataPoints": 4, "notes": "This is an introductory 'Letter to the Industry' page from a BoF/McKinsey report.", "elementsJson": [ "paragraph" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-5de0-76bd-a16a-5035606772fa/6", "deckHref": "/decks/019dd923-5de0-76bd-a16a-5035606772fa", "deckJsonHref": "/decks/019dd923-5de0-76bd-a16a-5035606772fa.json", "deckAnchorHref": "/decks/019dd923-5de0-76bd-a16a-5035606772fa#slide-6", "components": [ { "bbox": null, "kind": "callout", "text": "As a result of these strategic choices and economic headwinds, growth in the years ahead will be slower, reaching between 1 and 3 percent annual global growth between 2024 and 2027.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-2e34-7719-b4bc-f411c674ac60", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "annual global growth: 1-3%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd952-2e34-7719-b4bc-f81bcb98e96f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.5, "w": 0.6, "x": 0.35, "y": 0.35 }, "kind": "paragraph", "text": "Several of the industry's growth-driving engines have stalled. Macroeconomic headwinds — especially in the key China market, which grew more than 18 percent annually from 2019 to 2023 — are weighing heavily on the sector. Meanwhile, the luxury client base is becoming more diverse, and clients have a more complex relationship with luxury goods than ever. To that end, one challenge luxury players face is how to engage younger clients without alienating older ones, both through the products brands create as well as through their marketing strategies. Additionally, customers of all ages are becoming more interested in luxury experiences, not just luxury goods. This dynamic creates new trade-offs for clients to consider, meaning personal luxury goods players must exceed higher-than-ever client expectations to win spend over luxury travel and wellness experiences, for example. But luxury's woes are also partly self-inflicted. The sector's rapid expansion over the last five years has led to overexposure and weakened the industry's promise of exclusivity, creativity and craftsmanship. As demand surged, brands increased prices but failed to sufficiently adapt their creative strategies and supply chains to meet new scale requirements, thereby weakening their core value proposition and, ultimately, failing to keep their promise to customers.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3ed0cf56-e5f9-4114-abde-b776b4ef57b8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.6, "x": 0.05, "y": 0.22 }, "kind": "paragraph", "text": "Macroeconomic headwinds, shifting customer preferences and a deteriorating value proposition are weighing on the global luxury sector. The Business of Fashion and McKinsey & Company outline five strategic imperatives for luxury executives.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "48b80f77-20ab-439d-85e7-93867ba570bc", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.3, "x": 0.05, "y": 0.58 }, "kind": "paragraph", "text": "The pace of growth across the industry was remarkable and swift, though luxury “megabrands” with annual revenues over €5 billion ($5.3 billion) used their global presence to drive even greater visibility and desirability. Price increases accounted for more than 80 percent of growth during this period, while volume gains were more moderate. Now, as we step into 2025, the luxury industry is facing a significant slowdown that has hit even top brands hard. For the first time since 2016 (excluding 2020), luxury value creation declined.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b04886cf-9276-4807-b1da-f4937247be0a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.2, "w": 0.3, "x": 0.05, "y": 0.35 }, "kind": "paragraph", "text": "Over the past five years, the luxury industry experienced a period of exceptional value creation. Between 2019 and 2023, unprecedented demand for personal luxury goods — fashion, handbags, watches and jewellery among them — combined with a deep well of supply allowed the sector to achieve a 5 percent compound annual growth rate. Luxury brands outperformed global markets and achieved new profitability records.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b2f8b5e4-de24-4360-9296-daaa6df5988f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.3, "x": 0.65, "y": 0.58 }, "kind": "paragraph", "text": "As a result of these strategic choices and economic headwinds, growth in the years ahead will be slower, reaching between 1 and 3 percent annual global growth between 2024 and 2027. Dynamism in emerging markets such as the Middle East, India and other Asia-Pacific regions will not compensate for single-digit growth in luxury’s core markets such as China and Europe, though we are more bullish on the US where we expect better overall perspectives. With sector recovery out of reach until late 2025 or 2026, the industry must use the slowdown as an opportunity to reflect and recalibrate. Luxury leaders must play a long game rather than relying on quick fixes to their most pressing challenges.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f25aa35f-79fc-45d9-afe5-903018920ee6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.12 }, "kind": "title", "text": "How to Navigate the Luxury Slowdown", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "52e25e71-4c60-46c0-964d-347c828a8356", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.3, "x": 0.05, "y": 0.07 }, "kind": "title", "text": "A LETTER TO THE INDUSTRY", "attrs": null, "subkind": "subtitle", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7e6c62b3-8b87-4b42-9b11-10de9405d4d0", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Audience Definition", "slug": "audience-definition", "agent": "Storyteller", "layer": "slide", "matchId": "875caf35-e7ef-44a9-b970-dfcc79508829", "evidence": "The slide mentions 'the industry' and 'luxury executives', indicating a focus on a specific audience.", "confidence": 0.7 }, { "name": "Executive summary", "slug": "executive-summary", "agent": null, "layer": "slide", "matchId": "0208ade4-fb47-479b-a71b-25b3fc423578", "evidence": "This slide provides a high-level overview of the luxury industry's current state and future prospects.", "confidence": 0.9 } ], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }