Yahoo Finance How Fashion Can Grow When the Global Population Starts Shrinking
Fashion is a business that’s long seen growth as the be all, end all — but the style sector might need to start finding a new path forward.
Fertility rates around the world have slowed dramatically in recent decades — many generations are having fewer children — and are now expected to fall below replacement level before 2050, resulting in global population declines.
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The long-term implications for fashion are vast.
As the world transitions to a place with fewer people, retail will face a scramble for market share, an increasing international push and other changes that could reorder the industry in unforeseen ways.
Martin Lindstrom, a consultant who specializes in business transformation and branding, said brands will need to get back to their roots and produce styles that last and that consumers want to invest in, while also reducing their ecological impact.
“Fashion has to go from cost to an investment,” Lindstrom said. “And if they don’t manage to do that soon — it is such a sensitive industry now — I don’t think the fashion houses can keep it alive.”
In many ways, the industry isn’t suited to face the shift. Not only is a shrinking population a big and all-encompassing issue, it’s one today’s chief executive officers and boards may choose to ignore. People historically do a poor job of planning for far-off and complicated problems. See: climate change.
And right now, brands are seeking growth at all levels. Billion-dollar brands aren’t often content to stay that way — they want to expand to $3 billion or $5 billion. Even flat sales are tantamount to failure in the eyes of Wall Street.
Steady state is not a thing fashion or business generally does well. It hasn’t had to — yet.
Since the 1950s, the global population has ballooned from 2.5 billion to more than 8 billion today, according to the United Nations.
Growing a business has required, more than anything else, the ability to ride that wave and bring in more shoppers. But soon, the wave will hit shore.
Researchers raised a warning flag last month in The Lancet medical journal, noting that global fertility rates have fallen from 4.84 percent in 1950 to 2.23 percent in 2021 — just above the 2.1 percent needed to keep the population stable.
By 2050, the fertility rate is expected to fall to 1.83 percent, with the lowest-income countries accounting for an increasing percentage of births. “We broadly found that human civilization is rapidly converging on a sustained low-fertility reality,” the researchers said in Lancet.
The effect will be widespread.
“Low levels of fertility have the potential over time to result in inverted population pyramids with growing numbers of older people and declining working-age populations,” the researchers said. “These changes are likely to place increasing burdens on health care and social systems, transform labor and consumer markets, and alter patterns of resource use.”
The population growth that fed the rise of the modern economy is slowing and will likely end in the decades ahead, and business leaders should contemplate just how they can train the next generation of leaders to be agile enough to cope with that change.
It’s difficult to look ahead. Fashion was thinking hard about e-commerce and the internet in the early 2000s, but didn’t foresee the invention of the iPhone or social media, which upended business plans.
Still, the industry muddled through, and came out larger on the other side. There will be some path from here to the future, even if there is, eventually, an epic battle as brands court the dwindling supply of shoppers in high-income countries.
And many of the things that matter today will continue to be important.
Brands and how they make people feel will matter. Being able to forge a personal connection with consumers will matter. And as with everything else over the last 20 years, digital will matter, too.
“Fashion is not to keep you warm, not ‘I’m wearing clothes to keep myself warm,’” Lindstrom said. “It is to protect an image. It is to do a transformation into another universe. It is to create a sense of belonging with like-minded people. It is to build on my sense of aspiration. All of those factors basically can be replicated virtually.”
While the metaverse has fallen out of fashion, or at least from the white-hot center of attention in the industry, Lindstrom said “we’ll probably very soon find the code to how you actually enter into the virtual world where this is more than just a stupid square avatar jumping around.”
If a move into the metaverse or a scenario where “investment” fashion trumps cost or fast-fashion seem like a leap, the good news is that fashion’s actually pretty good at making these kinds of moves, especially when it can take them one step at a time.
New York’s fashion manufacturers moved from Seventh Avenue to South Carolina to Mexico to China, just like brands moved online and advertising moved from the printed page into social media.
Those changes all caused major disruptions, but fashion pulled through.
“The market’s going to adapt, I think people are going to adapt,” said consultant Jonathan Low, a partner at Predictiv, who specializes in the impact of intangibles like strategy execution.
“Remember when you would walk down Madison Avenue on a weekday and every single man was wearing a blue or gray suit with a nice shirt and a tie,” Low said. “Now you see people wearing Lululemon pants and quilted vests and shoes that look like they were invented on some other solar system. That’s a pretty fundamental change.
“Because of the internet and because of cellular communications, there’s a global market for fashion,” he said. “People are going to do what they have to do to get to it. And conversely, the marketers are going to say, ‘OK, I will sell it wherever I can sell it.’”
Even so, brands — at least those making IRL fashions — are likely to find there are fewer and fewer places to sell as the world gets that much smaller.
To win, players will want to get their minds around the problem now.
The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000. It appears every other Thursday.
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