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The State of Fashion:Luxury 2025

McKinsey & Company and BoF Insights report

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Global fashion faces challenging landscape

The ninth annual State of Fashion report by McKinsey & Company and BoF Insights highlights the challenging landscape the global fashion industry faces in 2025. With economic uncertainty, changing consumer behaviors, and evolving market dynamics, the year is expected to be a critical juncture for many brands.

Overview

Economic Challenges: 80% of executives foresee no improvement in the industry, and only 18% rank sustainability as a top concern, down from 29% in 2024. Consumer confidence and spending remain major issues.

Key Drivers: Price sensitivity, the rise of dupes, climate change acceleration, and reshuffled global trade create a difficult environment.

Geographic Shifts: Growth engines in Asia, particularly India, Japan, and Korea, are becoming pivotal as China faces economic challenges.

Themes Driving the Agenda

Trade Reconfigured: Brands are diversifying sourcing to align with evolving trade policies and sustainability targets. Nearshoring and political alignment are critical considerations.

Asia’s Growth Engines: While China slows, India, Japan, and Korea are emerging as vital markets for growth.

Discovery Reinvented: AI-driven curation in e-commerce promises to help overwhelmed shoppers navigate abundant choices.

Silver Spenders: The growing over-50 demographic offers new opportunities for incremental growth, emphasizing the need for inter-generational appeal.

Value Shift: Resale, off-price, and dupe markets are flourishing as consumers seek better value amid persistent economic pressures.

The Human Side of Sales: Enhancing in-store experiences by empowering well-trained sales staff can drive demand for physical retail.

Marketplaces Disrupted: Online non-luxury marketplaces face existential challenges, struggling with declining demand and rising customer acquisition costs.

Sportswear Showdown: Challenger brands are rapidly gaining market share, driving competition in the dynamic sportswear segment.

Inventory Excellence: Advances in inventory management and agile supply chains are key to addressing margin pressures and meeting sustainability goals.

The Sustainability Collective: Collective action is essential to meet decarbonization goals despite consumer reluctance to pay premiums for sustainable products.

Looking Ahead

The industry’s outlook remains sluggish, with revenue growth stabilizing in low single digits. Luxury’s dominance in profit creation is challenged by non-luxury segments for the first time since 2010. Brands that act nimbly to address geographic shifts, demographic changes, and technological innovations will find opportunities amid the turbulence.

Growth in the jewellery sector will be fueled by rising demand from ultra-high spenders and continuous investment from luxury houses in technology and expertise.

The new playbook for 2025 emphasizes adaptability, localization, and sustainability, while redefining value and consumer engagement. The fashion sector must innovate, embrace technology, and prioritize long-term resilience to navigate this period of reckoning successfully.

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JB Insights

Unorganized Jewellers Must Evolve Their Business Without Losing Their Roots

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Nearly 65% of India’s jewellery market is still unorganised. This vast segment, run by local family jewellers, runs on inherited trust, community relationships and generations of craftsmanship. For decades it has been the backbone of the trade: resilient, adaptive and deeply customer-centric.

That backbone is now under strain. Higher gold prices are sapping demand, consumer preferences are drifting towards larger chain stores, and regulatory and cost pressures are rising together. Local jewellers and goldsmiths across the country report a 45% decline in volume, and many family-run businesses are facing a liquidity squeeze.

The central finding of this report is simple: the future does not demand that unorganised jewellers lose their identity. It demands that they evolve their business without losing their roots.

Context

The unorganised sector’s strength has never been scale. It has been proximity. The neighbourhood jeweller knows the family, the occasion, the budget and the history of every purchase. That relationship has sustained the trade through earlier cycles of price volatility, regulation and competition.

What has changed is the speed and the combination of pressures. Gold prices have risen sharply and remain volatile. Organised chains are scaling fast, with marketing budgets, standardised pricing and professional teams that individual family stores cannot match. Customers are better informed and compare prices before they walk in.

The human cost is visible on the shop floor. As one private jeweller from Mumbai put it, “Middle-class buyers cannot afford gold anymore. Their incomes are far too stretched to budget for such a purchase.” His shop in Worli, he says, rarely sees the footfall it once did.

Risks and Pressures

Five challenges define the sector today.

1. Increasing compliance and regulatory pressure. Hallmarking, tax documentation, reporting and record-keeping demand systems and skills that many traditional businesses were never built around. Compliance is no longer optional, and its cost falls hardest on the smallest players.

2. Price transparency and making-charge competition. When customers can compare gold rates and making charges across stores and apps in minutes, margins that once rested on relationships come under direct pressure.

3. Rising marketing and branding costs. Visibility now costs money. Organised players outspend local jewellers on advertising, digital presence and in-store experience, widening the awareness gap.

4. Talent retention and professional team-building. Skilled artisans, sales staff and managers are increasingly drawn to organised employers offering structure, training and career paths. Family businesses struggle to compete on all three.

5. Competition from fast-scaling organised players. Chains bring standardised pricing, schemes, assured quality and wide design choice, precisely the reassurances that unorganised jewellers have traditionally supplied through personal trust.

Taken together, these risks compound each other. A volume decline of 45% makes it harder to fund compliance, branding and talent, which in turn makes it harder to win back volume.

Insights

Trust is still the scarcest asset. Organised retail can copy design, pricing and schemes. It cannot easily copy a relationship built over generations. This remains the unorganised jeweller’s most defensible advantage, but only if it is made visible and backed by modern assurance such as transparent billing, hallmarked products and clear buyback terms.

The problem is rarely the product. It is the system around it. Most distressed family jewellers have strong customer relationships and sound craftsmanship. What they lack is process: inventory discipline, costing clarity, digital records, a defined brand and a trained team.

Transition is a spectrum, not a switch. Between a fully traditional shop and a corporate chain lies a wide middle ground. Semi-organised models allow a jeweller to adopt structure selectively while keeping family ownership, identity and customer relationships intact.

The next generation is the pivot. Heirs who combine inherited trust with modern management training are often the catalyst for change, which is why leadership development is as important as capital.

Strategy

With the right systems, strategy, branding and team, unorganised jewellers can improve profitability, build scalable operations, strengthen customer loyalty and move smoothly towards semi-organised or organised models. A practical roadmap:

Systems. Digitise billing, stock and customer records. Build compliance into daily operations rather than treating it as an annual scramble. Track margins by category so that making-charge decisions rest on data, not instinct.

Pricing. Move to transparent, explainable pricing. Compete on value, service and assurance rather than quietly matching the lowest making charge.

Branding. Turn heritage into a brand: the family story, the years of service, the craftsmanship. Low-cost digital presence, local community engagement and consistent in-store identity can close much of the visibility gap without chain-scale budgets.

People. Invest in training, clear roles and career growth for staff and artisans. Bring in professional managers where needed, and prepare the next generation for leadership early.

Pathway. Choose a deliberate direction: strengthen the traditional model, adopt a semi-organised structure, or build towards an organised format. Each path is legitimate. Drifting without a decision is the only wrong choice.

Conclusion

The unorganised jewellery sector is not a relic. It is a trust network that has carried Indian jewellery for generations, now facing a market that rewards structure, transparency and scale. The real winners will be those who combine traditional trust with modern business practices: keeping the relationship, upgrading the system.

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JewelBuzz is Asia’s First Digital Jewellery Media & India’s No.1 B2B Jewellery Magazine, published by AM Media House. Since 2016, we’ve been the trusted source for jewellery news, market trends, trade insights, exhibitions, podcasts, and brand stories, connecting jewellers, retailers, and industry professionals worldwide.

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