How Big is the Fashion Industry in 2024 and Beyond?

The fashion world drives culture, influences trends, and moves billions of dollars on an annual basis. But have you ever stopped to wonder – just how big is the fashion industry? As consumer habits evolve and technology enables new channels, the total value of the global fashion marketplace has ballooned to an astonishing figure.

The Fashion Industry Was Worth $1.5 Trillion Globally in 2020

According to analysis from McKinsey & Company, the worldwide fashion industry was valued at approximately $1.5 trillion in 2020. This includes everything from high-end luxury brands to fast fashion retailers to sports apparel giants and beyond.

To put that massive $1.5 trillion valuation into perspective, that makes fashion a larger economic sector than industries like automobiles and technology. It‘s also an industry that touches every corner of the globe and employs millions of workers.

The Industry is Projected to Grow Over 5% Per Year Through 2030

The fashion space is also an extremely fast-growing one. McKinsey estimates that between 2021 and 2025 alone, the industry will grow between 5-6% on a compound annual basis. They expect the total market size to eclipse $2.25 trillion by 2025.

Zooming out even further, some analysts predict the industry could reach $3 trillion by 2030 while Bain & Company forecasts predict a $3.3 trillion market size – more than doubling its current size in just a single decade. This rapid growth can be attributed to rising spending power among consumers in emerging economies as well as the expansion of ecommerce allowing more access and convenience when shopping for apparel.

Digging deeper into the growth forecasts, while the overall industry is set to rise over 5% annually, certain segments are outpacing others by an even wider margin:

• Activewear is projected to grow between 6-8% each year through 2025
• Luxury fashion growth should land between 5-7% annually
• More commoditized apparel basics will see slower 3-4% yearly growth
• Footwear also remains a hot category likely to grow at 6%

The US Fashion Market Alone was Worth $426 Billion in 2021

Zooming in specifically on the United States, the US fashion market still accounts for an outsized portion of total global sales. Measurements taken in 2021 found that US apparel and footwear sales totaled approximately $426 billion for the year.

To provide more context around the breakdown – women‘s apparel dominates at $177 billion in sales, followed by men‘s apparel at $129 billion, and footwear rounding out the top categories at $102 billion:

On Average, People in the US Spend $876 Per Year on Fashion

When that $426 billion market is broken down to the individual level, it works out to over $876 per consumer per year spent on apparel and footwear purchases. That figure has steadily risen over time, up from approximately $690 a decade ago in 2010.

Of course, actual spending varies widely based on income levels and personal style preferences. But a nearly $900 average shows just how much of a priority fashion and clothing purchases have become.

Online Shopping Expected to Reach Over 50% of Fashion Sales by 2025

Like many industries, the advent and adoption of ecommerce has had a monumental impact on fashion and clothing sales. Over the last decade, online shopping has risen from just 15% of apparel sales to over 30% currently:

And analysts predict this fast paced growth will continue as more shoppers move online. Projections call for online fashion to exceed 50% market share by 2025 – nearing $1 trillion in annual sales.

The COVID-19 pandemic accelerated this shift, with necessity driving consumers online. And now that shoppers have adapted those digital habits, online is expected to exceed 60% market share in the coming years. For fashion brands, having a robust ecommerce operation is now a requirement rather than a luxury.

Over 90,000 Americans Work in Apparel Manufacturing

With hundreds of billions of dollars flowing through the fashion industry, it has also become a major source of employment. According to 2020 statistics, over 90,000 people work directly in US apparel manufacturing – with many more in adjacent retail and corporate roles.

Globally, over 75 million people work in the textile, clothing and footwear sector – illustrating just how far-reaching the fashion industry‘s supply chain and impact extends. From designers to retail salespeople and every production job in between, fashion provides livelihoods to tens of millions.

Women‘s Clothing Accounts for 63% of Total Fashion Sales

As highlighted in the previous US sales data, women’s fashion accounts for the majority of spending and outpaces men by a significant margin. Women’s clothing makes up approximately 63% of total worldwide apparel sales, compared to the 37% that men’s clothing and shoes contribute.

The higher proportion of women’s sales has been a consistent trend over time. And that split is expected to remain relatively stable moving forward – although rising spending among younger male consumers is closing the gap slightly.

China & Developing Markets Driving Growth

It’s also important to note the crucial role developing consumer markets play as the fashion industry continues expanding so quickly. Regions like China, India, Latin America, Southeast Asia and beyond are seeing rapidly rising middle and upper classes with more disposable income to spend.

In fact, McKinsey found thatGreater China alone was responsible for over 65% of apparel industry global growth between 2015 and 2019:

These countries‘ prospects have immense potential still untapped, as apparel spending per capita remains below developed economies for now. But high growth rates as rising incomes funnel billions of new fashion sales dollars into the global market.

Catering to local tastes and customs in these countries has become vital for brands seeking to compete there. And the growth seems poised to continue as expanding middle classes emerge worldwide.

Supply Chains Adopting AI and Other Technologies

Behind the scenes, fashion and apparel supply chains are leveraging cutting edge technologies to improve visibility, sustainability and meet customer demand.

According to Gartner Research, 87% of supply chain professionals expect to adopt artificial intelligence by 2023. Key use cases for AI implementation include:

• More accurate demand forecasts and inventory optimization
• Automated inspection and quality checks using computer vision
• Predictive analytics to increase on-time order shipments
• Reduced returns and shipping costs through better size and fit analysis

In addition to AI and predictive modeling, radio frequency identification (RFID) tags and internet of things (IoT) sensors are unlocking detailed tracking across production and shipping stages – providing executives and retail partners data for better planning.

Between minimizing waste and energy expenditures, these technologies have begun quantifying major cost saving and green benefits as adoption scales up. And Gartner projects over 50% of large fashion manufacturers will leverage blockchain by 2023 – improving supplier relationships and transparency across tier one, two, and three sources.

Rental and Resale Platforms See Explosive Growth

Alongside the fast evolution of fashion‘s digital operations and backend technology integrations, some consumer behaviors and purchasing preferences are shifting as well. For example, the rising popularity of clothing rental and subscription models.

According to Bain & Company analysis, rental platforms grew over 200% between 2018 and 2022 – outpacing even ecommerce apparel growth rates over that stretch. Rental provides consumers variety, flexibility and deals – a compelling value combination that has shown appeal across age demographics.

Resale also continues gaining adherents, enabling shoppers to capitalize on evolving taste trends while benefiting the environment. This also disproportionately appeals to experience-focused Millennial and Gen Z cohorts.

As these alternative segments eat into a portion of sales, major brands must consider partnerships, investments and even direct-to-consumer offerings to get in on the action.

Virtual Try-On and Other Tech Redefining Experiences

Finally, innovations transforming traditional brick-and-mortar shopping journeys present both opportunities and challenges for retailers to navigate.

Immersive augmented and virtual reality showroom concepts from groups like Obsess allow shoppers to visualize furniture and décor in their own living space. Apparel brands can power similar “try before you buy” augmented reality (AR) and virtual try-on tools through mobile apps as well.

These tactile digital experiences provide convenience missing from simple ecommerce transactions. And the numbers demonstrate encouraging adoption momentum so far:

• 60% of shoppers are interested in AR or VR furniture applications
• 40% have already utilized AR shopping tools
• 80% that try virtual try-on go on to purchase items

With capabilities advancing rapidly, the tangible business impact from enhanced digital engagement seems assured. AI algorithms personalizing recommendations and interfaces based on browsing habits should connect customers with more relevant items as well.

Implementing these technical integrations with legacy systems remains non-trivial. But the customer experience and conversion improvements should justify IT and online marketing investments for digitally forward brands through the 2020s.

In Conclusion

Reviewing the size, scale, and trajectory of the global fashion marketplace shows an industry at an immense size already and growing at staggering speed. As consumer habits evolve and technology unlocks new channels, fashion will likely continue on an upward path from its current multi-trillion dollar valuation.

And more jobs, brands and styles will proliferate as expanding middle classes emerge across China, India, and developing economies. Plus, younger generations increasingly shift spend towards rental offerings, resale platforms and progressive startups.

Of course, sustainability and responsible operating practices remain crucial focal points requiring ongoing improvements.

But with online growth outpacing brick and mortar, while augmented reality and artificial intelligence dissolve barriers between physical and digital, technology factors just as heavily into strategic planning.

One thing seems certain: the sheer power and size of the fashion business shows no signs of fading. If anything, exponential advancements in tech and fulfillment position the industry for even greater expansion in the decade to come by unlocking more flexible consumption models.