Application of the PESTEL Framework to Identify Trends in the Fashion Industry

Application of the PESTEL Framework to Identify Trends in the Fashion Industry
Student’s Name
Institution
Course Number and Name
Instructor’s Name
Date
Application of the PESTEL Framework to Identify Trends in the Fashion Industry
The fashion industry is changing and this change is partly influenced by the macro-environment. Thus, it is important to analyze the macro-environment to identify emerging trends in the industry. This detailed PESTEL analysis explores the political, economic, social, technological, environmental, and legal factors that influence the fashion industry.
1 Political
Political support is essential for the success of companies in the fashion industry. According to Perera (2017), some of the political factors that should be considered while analyzing the macro-environment include government support of the industry and governmental policies. Political instability also casts uncertainty in the fashion industry and is worth considering. Currently, one of the key political issues that will continue to affect the fashion industry is geopolitical tensions among countries. According to McKinsey (2021), geopolitical trade tensions are some of the key factors expected to disrupt the fashion industry’s supply chain in 2022. Shifting geopolitical alliances affect trade due to increased sanctions, trade disputes, and tariffs. This is already being felt through the war between Ukraine and Russia and the geopolitical tension that has risen as a result. It poses a risk to the global supply chain of the fashion industry because it will impact shipping operations and increase the costs of materials necessary for the success of the fashion industry. McKinsey (2021) adds that such geopolitical risks will mostly affect companies that are too reliant on offline distribution. As such, this comes as a push for more companies to rely on online distribution and other technological tools that can help them engage in digital fashion and circumvent some of the challenges posed by geopolitical tensions.
2 Economic
Economic factors influence the attractiveness of an industry. Some of the economic factors to consider include income levels, unemployment rates, and poverty, among others (Perera, 2017). While clothing is considered a basic need, not everyone in the world can afford decent clothing due to economic factors and this affects how brands in the fashion industry perform. Across the globe, there is a widening gap between high-income and low-income groups and as a result, middle- and low-income groups are spending less on fashion items, especially now that they are still recovering from the pandemic (McKinsey, 2021). However, some companies in the fashion industry stand a chance to succeed in a post-pandemic world. For instance, companies operating in countries such as India where there is a rise in employment levels and a growing per capita income will enjoy a considerably high consumer spending on fashion brands (McKinsey, 2021). As the world recovers economically, so will the spending and buying power of consumers and this will reflect positively on the financial performance of the fashion industry. However, the current global economic slowdown has added to the challenges of digitalizati...