State of Fashion 2025 Recap: Outlets Unlocking New Opportunities in a Value-Driven Market
The State of Fashion 2025 report, co-published by McKinsey & Company and BoF Insights, paints a nuanced picture for the fashion industry, with significant implications for the outlet segment.
While the global fashion market is set to experience slow growth in the coming years, there are key areas of opportunity that outlets can capitalize on. As the landscape shifts toward more value-conscious consumer behaviors, outlets are positioned as a critical player in the evolving retail space.
The Fashion Industry Outlook: Key Trends and Challenges
The report highlights that the global fashion market is expected to stabilize in the low single digits in terms of revenue growth, reflecting continued economic challenges. While luxury fashion continues to lead in terms of value creation, the report forecasts a notable shift in 2025. Non-luxury segments, including off-price and resale, are set to drive the majority of economic profit. This signals a growing demand for more affordable and accessible fashion, aligning perfectly with the strengths of the outlet sector.
Falling inflation and rising tourism, particularly in Europe, will provide a boost to the industry. However, the report cautions that brands must adapt to a landscape where consumer expectations are higher than ever. Shoppers are becoming increasingly value-conscious, seeking out products that offer quality at a reasonable price. This shift is likely to continue even as some economies show signs of recovery. For outlets, this presents a huge opportunity to attract customers looking for both value and style, offering a compelling and unique brand mix for great prices.
Opportunities for the Outlet Segment
Amid these trends, the outlet business stands out as a key beneficiary. The State of Fashion 2025 report notes that 70% of consumers intend to continue shopping from outlets, even if their financial situation improves. This highlights the outlet sector’s strong appeal, not only to budget-conscious shoppers but also to those who appreciate the value offered by this segment. Outlets are uniquely positioned to meet this demand, offering high-quality goods and renowned brands, typically 30-70% off, all year round.
As inflation slows, and tourism in regions like Europe picks up, outlet centres can leverage these favourable macroeconomic conditions to grow their customer base. Outlets are especially well-positioned in Europe, where rising tourism is expected to drive foot traffic and demand. The return of in-store shopping to pre-pandemic levels also bodes well for outlets, which can capitalize on the growing desire for physical retail experiences. However, the report emphasizes that outlets, as well as brands in general, need to remain agile and continue to refine their customer experience to keep shoppers engaged.
One of the key areas where outlets can differentiate themselves is through exceptional in-store service. As shoppers seek personalized experiences, offering a unique and welcoming shopping experience on-site becomes essential. In addition, having well-trained staff who can provide product recommendations, style advice and personalized service is advantageous. All in all, outlet destinations that offer superior customer experiences can build loyalty and increase repeat visits.
Targeting the Silver Generation
A particularly exciting development for the outlet sector is the rising importance of the “Silver Generation”—consumers aged 50 and older. As this demographic grows in size and spending power, outlets have an opportunity to engage a previously overlooked group of shoppers. The report notes that this generation is becoming an increasingly important driver of global fashion spending. By catering to the specific needs and preferences of older consumers, outlets can unlock new revenue streams and create a more inclusive, diverse customer base.
This could mean expanding product offerings to include styles and sizes that resonate with older shoppers, as well as offering a shopping environment that prioritizes comfort, ease of access and personalized service. Outlets that develop targeted marketing campaigns and store layouts that appeal to this demographic will not only build brand loyalty but also capitalize on a growing consumer segment.
The Resale and Off-Price Segments: A Strong Growth Engine
The report also highlights the growing popularity of the resale and off-price segments—areas where outlets have long been a dominant force. As consumers continue to prioritize sustainability and value, outlets can further invest in these areas, expanding their resale offerings or partnering with resale platforms to cater to the growing demand for second-hand fashion. The off-price segment, in particular, is expected to see significant growth in 2025, driven by a shift in consumer priorities towards products that offer value for money. For outlets, this means an opportunity to expand their offerings in these growing segments and meet the needs of the value-driven shopper.
Outlets as Leaders in a Value-Driven Market
Looking ahead, the outlet segment is poised for success as it aligns perfectly with the broader shifts in consumer behavior. The growing demand for affordable fashion, the resurgence of in-store shopping and the rise of older consumers all present opportunities for outlets to thrive. However, to fully capitalize on these trends, outlets must continue to evolve. By focusing on localized offerings, enhanced customer experiences, and targeted marketing, outlets can not only weather the challenges of 2025 but emerge as key players in the fashion industry.
The State of Fashion 2025 report presents a clear picture: outlets that adapt to these evolving market conditions will be well-positioned to lead the charge in a value-driven retail landscape. With the right strategies in place, outlets have the potential to outperform other retail segments and capture an even larger share of the fashion market in the years to come.