Challenges and Opportunities of the Fashion Sector: What Future Awaits Made in Italy?

These are some of the questions addressed in the new brief by the Sectoral Strategies and Impact Directorate, which examines the state and prospects of the Italian fashion industry, analyzing the strengths that have made this supply chain a globally-recognized example of quality and how the sector is reaction to recent changes, in light of the global geoeconomic context and the challenges posed by the energy and digital transition.

Below are the main findings of the study:

• Made in Italy in the fashion system is synonymous with internationally recognized production excellence and represents an economic and cultural pillar for the country, influencing the entire sector globally.
• About a third of the major European fashion groups choose Italian suppliers, a share that rises to two-thirds for luxury brands, making Italy the world’s leading producer of haute couture.
• The supply chain plays a central role in the national economy, contributing to about 5% of GDP and total employment, with 75 billion euros in value added and 65 billion in exports, mainly directed to non-European markets.
• The success of the Italian fashion system is based on several key factors ranging from excellence in materials and craftsmanship to the offer of tailor-made services for customers, from strong brands supported by efficient distribution networks to small portfolios that allow investments to be concentrated on innovative collections and brands linked to their place of origin.
• Despite its undisputed success, the sector presents some vulnerabilities:
  • Adapting business models to climate change, which threatens the exports of clothing and raw materials used in production;
  • The orientation of operators towards the luxury segment, which makes the sector vulnerable to fluctuations in the purchasing behavior of a small segment of buyers.
  • The aging of ownership and artisanal labor, with reluctance to generational change and negative repercussions in terms of innovation and long-term competitiveness.
• In addition to these structural factors, there are some cyclical issues:
  • Geopolitical fragmentation, with tensions in the Middle East and along the Sino-Russian axis contributing to supply chain instability;
  • The decline in domestic consumption, which has also affected clothing and footwear;
  • The global overproduction crisis of the entire sector, with a consequent rebound effect triggered by the decline of international trade and the slowdown of luxury in the Chinese market.
• The challenges for fashion operators concern the search for new growth spaces that exploit the strengths of Made in Italy to intercept three global trends: sustainability, consolidation, and innovation:
  • The growing environmental impact of the fashion industry is placing companies in front of significant regulatory obligations (especially in the EU) and the need to invest in innovative solutions to improve sustainability and ESG performance;
  • Private equity is favoring aggregation and acquisition strategies among sector players, reducing the risk associated with fashion system assets and focusing on innovative products and services;
  • The application of artificial intelligence and digitalization, although limited due to a deficit of digital talents in Italy, has high potential to keep the fashion industry up to date.