In 2022, consumer confidence indexes in the US, Eurozone and China hit their lowest levels since 2005, and confidence in China once again neared record lows in August 2024. Across markets, shopper uncertainty about macroeconomic conditions remains. In the first half of 2024, consumer confidence was about 10 to 30 points below 2019 averages across the Eurozone, US and China, though confidence levels in the Eurozone and US are ticking up slightly from 2023.
Intent to spend on discretionary categories such as fashion remains low. Over 40 percent of shoppers in the US, UK and Germany are spending less on clothing, footwear and accessories than they did a year ago. In the BoF-McKinsey State of Fashion 2025 Executive Survey, consumer confidence and appetite to spend was ranked by fashion executives as the top risk to growth.
Consumers are not only looking to spend less, but they are also trying to stretch their money further. Over 60 percent of consumers in the US and UK say they are attempting to save money on fashion “often” or “as much as possible.” In the US, this figure is as high as 75 percent.
Shoppers across income levels are trading down, changing the type of product or quantity purchased in pursuit of better value, but their behaviour varies by segment. While value and mid-market shoppers tend to buy from outlets or off-price retailers (>33 percent) or search for the best price for an item (>31 percent), premium shoppers are more likely to leverage “buy now, pay later” services (16 percent) or use resale platforms to save (23 percent). Premium customers embrace certain trade-down behaviours even more than customers from other segments; a greater share say they have purchased a cheaper replica, or “dupe,” of the product they wanted compared to value and mid-market shoppers.
Even as economies improve, value-orientated behaviours are likely to persist
Shoppers are not eager to increase their fashion budgets, even as economic prospects and consumer sentiment improve in some regions. Over 80 percent of shoppers plan to spend the same or less on clothing, footwear and accessories in 2025.
An “inflation overhang,” the idea that customers take time to adjust to higher prices, is not the only dynamic at play. Even customers with growing discretionary spend are prioritising experiences and travel over fashion. In the third quarter of 2024, the top category that US and European customers splurged on was eating out, followed by travel and buying groceries.
The survey also revealed the stickiness of value-seeking shopper behaviour. When asked which categories they would spend on (e.g. groceries, clothing, activities) given higher discretionary spend, over 70 percent say they would continue certain trade-down behaviours in their fashion purchases.
“Value” can take on different meanings. For some, it might mean shopping pre-owned or buying on sale, for others it might mean buying fewer, higher quality items.
Affordability is propelling growth for off-price retailers and outlets
1.8x
— off-price retailer revenue growth between 2023 and 2024 vs the broader market
Off-price retailers have continued to grow revenues and improve profitability despite broader market turbulence, this year’s McKinsey Global Fashion Index (MGFI) analysis shows. Traditional off-price retailers Burlington, Ross and TJX are expected to grow revenues by a weighted average of 4.6 percent in 2024, compared to a 2.6 percent average for publicly listed fashion companies. Ross and TJX were also among the MGFI Super Winners list, leading in industry economic profit in 2023.
Outlet channels are also benefitting from this dynamic. In the first half of 2024, Zalando’s business-to-consumer (B2C) channel profitability rose 1.4 percentage points year on year and revenue grew by 0.6 percent. Meanwhile, e-commerce off-price brands are growing even faster, with players such as BestSecret growing 25 percent in the first quarter of 2024.
Consumer search for value is driving wins in the resale market
41%
— of consumers look to secondhand outlets when seeking apparel deals
The resale market in the US grew 15x faster than the broader clothing retail sector in 2023. By 2025, secondhand sales will account for 10 percent of the global apparel market, and the segment is expected to grow at a 12 percent compound annual growth rate to reach $350 billion by 2028.
The perception among consumers is that they get more value from resale purchases. 60 percent say shopping secondhand apparel gives them the most value for money. In the non-luxury space, players such as ThredUp and Vinted broke even for the first time in 2023. Vinted reports that 65 percent of its buyers prefer to buy fewer, more expensive items that last, rather than more, cheap fashion items.
Some brands have recognised this growth opportunity and are developing their own resale capabilities. For example, Sandro’s resale programme drives customer loyalty by giving sellers either 70 percent of the resale value if they choose to be paid directly, or 100 percent of the resale value if they choose Sandro credit. Meanwhile, Shein launched its own online peer-to-peer resale platform, Shein Exchange, in Europe in summer 2024 after seeing success in the US. In 2023, Shein Exchange gained over 4.2 million new users in the US.
The pursuit of affordable alternatives has given rise to “dupe mania”
1 in 3
— US adults say they intentionally bought a dupe of a premium or luxury product
In a rebrand of what used to be regarded as taboo counterfeits, Gen-Z has popularised “dupes,” or duplicates of more expensive products. The phenomenon has grown beyond Gen-Z, however. Nearly one third of US adults say they intentionally bought a dupe of a premium or luxury product, and the #dupe hashtag on TikTok has nearly 6 billion views.
Shoppers don’t just turn to dupes for one-off trends. Among UK shoppers, 11 percent say they buy a dupe at least once every few months. Half say they do so for the savings, but 17 percent consider dupes as great alternatives even if they could afford the original.
Brands are leaning into this trend. Shein uses influencers who outwardly promote Shein products as dupes, while start-up Quince is built on a “same, but cheaper” principle, producing replicas of luxury basics at affordable prices whilst maintaining quality. In 2023, Quince’s sales tripled, and the brand aims to triple sales again in 2024 to reach $1 billion. Meanwhile, other brands are using the appeal of dupes as a marketing opportunity: Lululemon hosted a pop-up where shoppers could swap out their dupe leggings for real ones — free of charge. The campaign paid off, as 50 percent of those who visited were new customers.
How should executives respond to these shifts?
1. Identify value drivers
Identify the “value proposition” that resonates with customers, whether rooted in quality or affordable prices.
As “value” can take on different meanings, brands will need to identify which value-seeking behaviours drive their customers and tailor their strategies accordingly. Shopper surveys, social listening and analysis of customer relationship management data can all be effective ways to identify what shoppers care about in terms of value.
2. Communicate value
Convince consumers of the defined value proposition through effective brand communication.
Create campaigns that highlight the craftsmanship and quality of products, the innovation behind them or competitive prices to justify a purchase to shoppers.
Leverage non-traditional channels to meet consumers where they are — and where they will be receptive. Organic influencer content, shopper forums and social media platforms such as TikTok can all be powerful ways to influence consumers’ brand perception.
3. Integrate value into the channel and product strategy
Attract value-minded shoppers through alternative channels and differentiated products, while protecting core brand equity.
Leverage owned outlets and resale platforms to attract entry-level shoppers who may one day buy at full price. Additionally, resale can give brands more control over the quality of their secondhand goods in circulation, with the bonus effect of increasing circularity.
Consider “premiumisation” of select product lines to showcase value through quality of materials and durability.
This article first appeared in The State of Fashion 2025, an in-depth report on the global fashion industry, co-published by BoF and McKinsey & Company.