It’s thought that by 2025 over 60% of the world’s population will be living in cities. The world has never seen urbanisation at the same rate as today. Modern China is seeing urban growth that’s far larger and faster than comparable urban revolutions of the past, including Britain’s own industrial revolution. India is still not thought to have reached the peak of its growth in urbanisation.
What this means is that the urban centres of the world are now much more likely to be in large emerging markets. And those same emerging markets are responsible for a bigger and bigger share of apparel demand.
According to McKinsey research, 70% of the cities showing the fastest growth in demand for womenswear are in emerging markets.
The pace of this emerging market urban growth in demand means that by 2025, emerging market cities will have helped the global women’s apparel market add $100 bn to its value.
In 2017, emerging markets represented 37% of the market for mid-market women’s apparel. By 2025 this will be more than half the market, thanks to the much faster pace of growth in demand from emerging markets compared to established ones.
It’s a similar story in the luxury sector. In 2017 emerging markets accounted for around 14% of the luxury apparel market; by 2025 it will be around a quarter of this market. Rapid urbanisation in emerging markets means that much of the new demand will come from city dwellers.
There are two aspects of the important trends towards urbanisation. Firstly, more and more consumers are living in cities, meaning fashion audiences are increasingly urban in nature as time progresses.
Secondly, a relatively small number of ‘megacities’ will dominate. Many of these cities aren’t even well-known outside their markets. Forget New York and Shanghai – the growth is coming from places such as Pune, India’s fastest-growing city but by no means its best-known.
Angola’s capital Luanda is also booming. In addition, just 60 megacities will be responsible for a quarter of global GDP.
McKinsey predicts that by 2025 just 600 cities will be responsible for 62% of the womenswear market growth. And much of this focus may be in emerging markets.
16 of the 20 fastest-growing cities for apparel will be in emerging markets. Fashion retailers are advised to understand the needs of urban consumers in emerging if they are to tackle the audiences of the future.
How preferences change
When consumers move to urban areas, their clothing needs and preferences change. For emerging market consumers, this change may be particularly significant.
Urbanisation isn’t just a matter of moving to a more built-up area, it’s also about significant changes to an individual’s work and social life; both of which tend to become more sophisticated in urban areas.
Emerging market urbanisation often shifts workers from agricultural or informal employment to a more formal working environment. Not every worker ends up wearing a suit and tie, but they may need to be dressed in a specific way for their working environment.
Department store workers dress differently to those working in a village market. Urban workers not only tend to need to present themselves differently compared to their rural employment, and their lives are often more complex, meaning they are more likely to have separate clothing for separate occasions. This may include whole sets of clothing for exercise and for socialising.
Urbanisation is also associated with consumers becoming more sophisticated, so they are more likely to become brand-aware and discerning in terms of what they buy.
Cities are often less conservative and more cosmopolitan than rural areas so you may find people move away from traditional dress and dress for a global audience.
Consumers can quickly move away from wearing clothing made from locally-sourced materials made and purchased locally (or even homemade), sourced in informal markets or via small traders, to buying mass-produced clothing from formal retailers and big stores operating global supply chains.
The good news for retailers is that emerging market consumers may pick up some of the slack from more established market consumers who seem to be losing interest in buying clothing.
According to the Financial Times, UK consumer interest in buying new clothing dipped recently and similar trends have been seen in France and the US.
This may be a symptom of a wider consumer trend in mature markets; a loss of interest in buying and consuming products in favour of investing in experiences (and, to a lesser extent, to shared ownership).
For marketers, this impetus demands a localised response. Already marketers are advised to approach mega-cities in emerging markets on a city-by-city basis. Huge markets such as the BRICs are too big to tackle in one go and there are often significant differences between cities including climactic ones.
It’s likely that the best strategy will continue to be one which treats each city separately, rather than focusing on a market basis.