Inflation is coming for your closet—the cost of clothing to jump next year, new report shows
The global fashion industry is set for a complete recovery in 2022. But while fashion retailers will breathe a deep sigh of relief as COVID-caused supply and demand constraints finally ease, shoppers will have to reconcile themselves to price jumps in everything from hats to bags to shoes.
Owing to supply-chain snarls, two-thirds of fashion executives said they are expecting to increase prices in 2022, with an average price increase of 3% across all clothing and apparel, this year’s State of Fashion 2022 report by the Business of Fashion and McKinsey & Co. found.
A worrying 15% of executives polled said they planned on increasing prices by more than 10% in 2022.
Inflation in fashion is caused by a combination of material shortages, transportation bottlenecks, and rising shipping costs straining supply and demand, according to the study, which surveyed more than 220 international fashion executives and experts.
The supply and demand crunch is expected to even out in 2022, and the fashion industry is set to grow by 3% to 8% in the next year—surpassing 2019 levels. Recovery is set to be strongest across China and the U.S., while Europe, still bogged down by lockdown restrictions and rising case numbers, will lag behind.
The winners from this past difficult year had two things in common: digital strength and an Asia-Pacific focus.
Sustainability and digitally minded
Two other notable trends emerged in this year’s report. The first is the growing demand for sustainability and, in particular, for circularity and the closed-loop recycling of clothes. While currently less than 10% of the global textile market is composed of recycled materials, according to Textile Exchange, sustainability-focused clothing is expected to become mainstream in 2022.
Around 68% of fashion executives found that the immaturity of technological solutions stopped them from a major scale-up of recycled clothing, while 60% of the same executives were tackling the problem themselves and said they were investing in new closed-loop recycling technology.
The second trend highlighted the growing “metaverse,” which offers opportunities for audience growth and income generation for fashion brands—without sewing a stitch.
Creating and selling NFTs of clothing, and allowing gamers to buy, keep, and trade virtual fashion products—also known as “social commerce”—is expected to grow in 2022, with 37% of fashion executives saying it would be one of the top three things that will impact their business next year.
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