Trends in the Fashion and Textiles Industry 2023
Last year, fashion businesses juggled post-Covid operations with the knock-on effects of Brexit, inflation, rising energy costs and the Russia-Ukraine war. Supply chains were disrupted by the rocketing cost of raw materials, increase in shipping costs and port delays, which are all expected to continue into 2023.
With this in mind, the time is right for fashion businesses to re-evaluate how they produce, distribute and market their collections. If soaring costs are largely due to problems within the supply chain, surely it’s time to leverage technology and build more robust, flexible and faster ways of working?
To help accelerate your business into 2023 with clarity and confidence, Clear Treasury has broken down key trends in the textile industry and the opportunities worth harnessing.
The UK Fashion and Textiles Landscape
In early 2022, the UK fashion and textile industry experienced a burst of post-COVID consumer demand, showing 13% revenue growth in spite of supply chain issues (Business of Fashion and McKinsey State of Fashion survey). Luxury and sportswear brands had the highest economic profits, while discounted fashion proved highly popular too.
Just as the UK’s fashion and textile industries were finding their feet again, growth rates declined in the latter half of 2022. It’s not surprising given the worldwide geopolitical conflict, the highest inflation in a generation and reluctant customers with tighter household budgets.
Challenges remain for the year ahead, a prime example being the anticipated spike in the cost of raw fashion materials. The prices of cotton and cashmere have risen 45% and 30% respectively, year on year. Higher prices will inevitably push shoppers towards more affordable brands, or alternatively, they’ll decide to spend less on fashion.
UK Trade Post-Brexit
The aftershock of Brexit caused fashion business owners to reevaluate their operations in 2022. The Retail X Fashion Sector Report 2022 found that:
- 25% of fashion retailers were considering relocating some or all of their operations elsewhere in the EU to make logistics, staffing and manufacturing easier.
- 39% would move to the EU if they were offered tax advantages.
- 91% wanted a visa scheme to make it easier for creatives to operate across the UK and EU.
On a wider economic scale, the UK’s decision to depart the EU single market reduced investment by 11% and goods and trade by 7% in the second quarter of 2022 (Centre for European Reform’s Cost of Brexit to June 2022).
Wondering how Brexit and the UK’s departure from the EU impacted European customers?
- European customers of UK goods now pay their own local VAT and any tariffs on imports.
- Longer lead times make it harder to buy UK fashion goods and have them delivered promptly to the EU.
- Paperwork for exports could increase prices for EU customers.
However, now the UK is free from EU collective bargaining, it can strike up favourable trade deals with other markets such as the US and China.
Sky-high inflation continues to be one of the key trends in the textile industry. According to McKinsey:
- 85% of fashion executives predict inflation will continue to challenge the market in 2023.
- 58% also believe the fashion market will be weakened by geopolitical tensions, supply chain disruption and the energy crisis.
Since the pandemic, there has been more demand for raw fashion and textile materials. There’s now a shortage of these, resulting in prices surging for cotton, linen, silk and wool, as well as synthetic materials derived from petrol.
Up until October 2022, fuel prices rose by 20.22% and the price of clothing and footwear rose by 8.5%. Now economists are predicting a recession to last throughout 2023, the price of fuel has started to decrease. As such, fashion businesses’ transport costs have fallen and so have their clothing costs. But is this too little too late for consumers? They’re now actively pulling back from spending on fashion, and consequently, retailers have been forced to increase their stockpiles.
As supply chain disruption continues to present challenges in 2023, fashion businesses are moving into alternative ways of producing and manufacturing fashion. McKinsey reported that UK fashion and textiles manufacturers can create new supply chain models aided by improved digitisation and based around:
- Vertical integration – supporting fast fashion demands by bringing major processes in-house, such as design, production, warehousing, logistics, and distribution.
- Nearshoring – mitigating the impact of shipping disruptions by moving key operations closer to the demand location for manufactured products.
- Small batch production – regularly and consistently producing garments throughout the season, rather than ordering in bulk and wasting materials.
Opportunities to Innovate within the Fashion and Textile Industries
Sustainable Materials and Processes
Sustainability is a major trend in the textile industry for 2023 and beyond.
In Just Style’s exclusive roundtable at the 2022 GlobalData Apparel Conference, apparel industry expert Dr Sheng Lu said: "These days, more companies see sustainability as an investment that will provide a financial return in future.”
In the UK alone, fast fashion and throwaway culture causes an estimated £140 million worth of clothing to be sent to landfill each year. Clothing manufacture and sales is still the fourth largest pressure on the UK’s natural resources after housing, transport and food (WRAP Valuing our clothes: the cost of UK fashion).
The demand for raw materials needed to sustain current lifestyles is expected to triple by 2050, equating to almost three planets. The Ellen MacArthur Foundation reported that more than $500 billion of value is lost every year due to clothing underutilisation and the lack of recycling (UK Parliament, Fixing Fashion: clothing consumption and sustainability).
To challenge this, UK fashion businesses should aim to find new markets for recycled clothing and secure new sources of materials. As an example, sustainable cotton can help improve the water footprint of UK clothing, while also reducing carbon emissions. Environmental savings can also be achieved through the use of planet-friendly dyeing technologies.
Smart textiles are textiles that can detect and react to different environmental conditions and stimuli, such as those from mechanical, chemical, electrical and magnetic sources.
Made up of sensors and nanosensors, these intelligent fabrics can be applied to gadgets, smartphones, smartwatches, wristbands, wireless sensors, heart rate monitors, pedometers and motion sensors.
In the world of medicine and healthcare, smart textiles can help create the ideal wound care product. This works by delivering a controlled amount of medication into the skin, which will react in the correct way to a wound and aid faster patient recovery.
As an example from the UK, engineers at Nottingham Trent University are leading a project to create a new smart textile sleeve that will improve the treatment and quality of life for lymphodema patients. With seamlessly integrated flexible printed circuits and electrodes, the sleeve will increase circulation of the lymphatic system, the network of channels and glands which works to remove excess fluid in the body.
Fashion businesses in the UK should consider how they can answer the smart textile world's demand for high-quality fabrics. There are rising requests for smart textiles in the sports and fitness sector, with trending devices including heart rate monitors, pedometers and motion sensors, and small wireless sensors. Fashion businesses could also look to the military and defence industries, where smart textile technology is being used to integrated GPS trackers and protective equipment.
Advanced Apparel Manufacturing
Through advances in apparel machinery technology, fashion manufacturers can adapt to the ever-changing needs of their audience.
One example of this is by replacing outdated human processes, such as using sewing machines, with advanced robotic technology like laser cutting, buttonhole and fusing machines.
Another is 3D rendering, allowing on-demand print of customised garments, while also providing a more accurate depiction of how the finished garment will look. This allows fashion designers to manipulate designs in real-time, ensuring the finished piece matches its specifications perfectly.
Here’s a quick overview of some of the challenges and opportunities the UK’s fashion and textile industries face in 2023:
- Inflation, supply chain disruption and waning consumer confidence are some of the biggest challenges UK fashion businesses face this year.
- Brexit has negatively impacted fashion bosses in many ways, from logistics to manufacturing and staffing. As a result, many businesses are considering relocating some or all of their operations to the EU.
- There are opportunities for UK fashion and textile industries to expand into US, Chinese and Turkish markets.
- A shortage of raw materials in the fashion industry means that cotton, linen, silk and wool have risen in cost and will continue to do so.
- To counter supply chain disruption in 2023, fashion and textiles manufacturers can strengthen their operations through vertical integration, nearshoring and small batch production.
- To help secure a sustainable future for the planet, the UK’s fashion and textile industries need to find new markets for recycled clothing, as well as secure new sources of materials.
- Other current trends in the textile industry include smart textiles, advanced manufacturing and 3D technology to print customised garments on demand.
Discover Clear Treasury’s Currency Opportunities
Protecting your bottom line when operating across borders is no mean feat in today's uncertain financial environment. However, one solution for UK fashion and textile businesses is to mitigate their exposure to currency risk.
This refers to the fluctuating value of the pound against other currencies. As currencies are traded around the clock, their values constantly change. Even slight fluctuations can make a monumental difference to the cost of your cross-border payments.
Where we at Clear Treasury come in is by applying our knowledge and experience to help take the complexity out of your international payments. Our safe and secure online payments platform seamlessly integrates our products and services into your ecosystem, offering a variety of ways to streamline your business's global incomings and outgoings.
When you become one of our valued clients, you’ll be assigned a dedicated account manager. They'll explain how you can use foreign exchange risk mitigation tools, such as stop losses or forward contracts, to track, target or fix exchange rates for currency transfers when making international payments.
With the right treasury management, your business will be able to execute effective foreign exchange strategies and protect your hard-earned profits. Sign up with Clear Treasury today or get in touch to kickstart the transformation of your currency landscape.
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