“Status of German Fashion 2024”: Between tradition and digitalisation

The Fashion Council Germany (FCG) and eBay Germany recently published the study “Status of German Fashion 2024”, which, in conjunction with the research institute Oxford Economics, examined the economic significance of the German fashion industry (clothing, footwear, accessories, bags and jewellery). The study also looked at the key challenges and opportunities facing the industry, as well as the impact of global trends such as sustainability and globalisation.

The study was first published in 2021; however, the latest edition focuses on the consequences of the coronavirus pandemic on the industry and its influence on sustainability and market structures. A key finding: From 2019 to 2023, employment fell by an estimated 20 percent, meaning one in five jobs was lost.

“The pandemic exposed many weaknesses in our globalised fashion world – from the fragility of supply chains to the need to rethink our production strategies. But it also showed us the opportunities of accelerated digitalisation, which must now be seen not just as a future trend, but as a necessary prerequisite for the further development of the industry,” summarised Christiane Arp, chairwoman, and Scott Lipinski, CEO of Fashion Council Germany, in the study’s foreword.

The study recommends stronger political support for the industry among synergies within the industry and with other sectors, also strengthening domestic production and the “Made in Germany” label, as well as expanding the digital infrastructure to ensure long-term competitiveness.

“With the publication of the second edition of our study on the status of German fashion, we want to initiate change. The collaboration with eBay Germany and Oxford Economics provides us with valuable, up-to-date insights into the challenges and opportunities facing the fashion industry — especially at a time when we are still experiencing the effects of the coronavirus pandemic and other societal events, and the digital transformation is in full swing. The study clearly shows us: It is time to set the course for a sustainable future,” commented Lipinski in a statement.

Contribution of the German fashion industry

The fashion industry stimulated a total GDP contribution of approximately 70 billion euros in 2023 and contributed 29 billion euros in gross value added (GVA) to the GDP itself. Procurement spending by the industry in other economic sectors stimulated 23 billion euros and consumer spending by employees (in the industry and the supply chain) a further 18 billion euros in GVA. “For every 100 euros that the fashion industry contributed, it supported an additional 140 euros of GVA in the rest of the German economy,” the study found.

In terms of jobs, the fashion industry supported approximately one million jobs in 2023, of which around 620,000 were in the industry itself, a further 210,000 in the supply chain, and 180,000 supported through consumer spending by employees. “This means that for every 100 jobs in the fashion industry, a further 63 jobs were supported in other sectors,” according to the study.

Strengths and weaknesses of the German fashion industry

Among the industry’s strengths is the high level of consumer confidence in fashion products from Germany, which are known for their durability and quality. “The large German sportswear manufacturers in particular are world-renowned and among the largest fashion companies in Europe,” the study noted.

Numerous German companies are also focusing on sustainability and transparency in the supply chain, which gives them an international reputation for being forward-looking and responsible. The industry is also known for its innovative strength, such as the development of new fibres or textile machinery, which keeps it competitive.

Among the weaknesses are high production costs, which have contributed to the relocation of production abroad. This leads to a loss of expertise and jeopardises the industry’s innovative strength.

In addition, it lacks cultural anchoring in international comparison: “Accordingly, the domestic industry enjoys a lower status than in countries such as France and Italy, where the fashion industry is more firmly anchored in the culture,” found the study. This makes it more difficult to recruit specialists and talent, among other things, and the increasing shortage of young talent is impacting the future profitability of the industry.

Long-term challenges

Given the global call for more environmentally friendly production methods and a growing interest in the circular economy and digital innovations, the industry must plan and invest carefully to reconcile technological advances with sustainability values and be a driver of growth.

Legislation, such as the EU Corporate Sustainability Reporting Directive (CSRD), does allow for a uniform regulatory framework, but the implementation of the required detailed sustainability reports presents challenges.

“Compliance is no longer a simple ticking of boxes, but a continuous process that requires transparency at every level. Brands must map their entire supply chain, identify risk areas and work with partners to foster a culture of responsibility. This requires a deep understanding of the various stakeholders involved and continuous commitment,” said Philipp Mayer, CPO and co-founder of Retraced.

Circular economy initiatives, while “positive”, according to the study, can also mean higher production costs and longer production times. “This balance between cost pressure and sustainable practices remains a major problem, as consumers are sometimes not willing to pay a corresponding premium for sustainability.”

Digital innovations such as the Digital Product Passport (DPP), Artificial Intelligence (AI) and technological textile innovations, which are increasingly shaping the industry, have their specific advantages and disadvantages. “The DPP, for example, improves transparency and sustainability, but does not ensure a balance between data transparency and the protection of business interests,” cautioned the study.

AI and technological innovations are useful, but carry the risk of potential job losses and social inequality, or have impacts on people and the environment.

Recommendations

A key recommendation is to promote German craftsmanship. “A successful transformation of the fashion industry requires more than just technological innovations and digital transformation – we also need to invest in the traditional craft professions that form the foundation of our industry,” the study advised.

“The artistry behind the production of high-quality fabrics, precise tailoring and unique designs must not be lost. Innovations, however important they may be, can only reach their full potential if they are built on these artisanal foundations,” the study found.

Therefore, traditional crafts should be combined with modern technologies to make the industry future-proof and secure. “We must therefore equally promote digitalisation and strengthen the skilled trades in order to secure the innovative strength of the industry in the long term, while at the same time preserving our cultural and technological identity,” is the conclusion.

Interviewees from companies such as Mended, Carbon Trust, Rehubs and Retraced also recommend stronger political support for fashion companies that implement sustainability strategies. They also call for more funding opportunities in this area.

Globally, they recommend making German fashion more visible and acknowledging its value - for example, through political support, partnerships and international activities, but also synergies within the industry and with other sectors.

Domestic production should also be strengthened to regain know-how lost through offshoring. Tax adjustments can increase the attractiveness of production in Germany. They also point to the potential of the “Made in Germany” label, especially in terms of sustainability: The German fashion industry could thus stand for responsible production.

At the same time, the experts emphasise the urgency of expanding the digital infrastructure to meet the future requirements of the industry and to remain competitive in the long term. “A dynamic environment such as the fashion industry is shaped by technological advances, changing consumer preferences and global economic conditions. An adaptable and innovative approach is crucial to the long-term success of companies in the fashion industry,” added Mandy Krüger, head of fashion at eBay Germany.

Conclusion

“The fashion industry needs to fundamentally change its mindset – from a ‘take, make, dispose’ model to a circular system that conserves resources and extends the life cycle of products,” the study recommends. This includes the implementation of circular economy principles, which requires innovative materials and design concepts, as well as new business models that promote the reuse and recycling of clothing. “This is not only an ecological necessity, but also an economic opportunity for companies that want to position themselves as pioneers in a sustainable fashion industry,” the study advised.

“The need to transition from a linear to a circular textile industry is being driven by many factors, including growing consumer awareness of sustainability, the urgent need for action on climate change, and an increasingly regulated environment,” summarised Kirraly Antcliff, Petra Schweiger and Chris Deloof of ReHubs.

“Incoming regulations from the European Commission, such as the Waste Framework Directive (WFD), the Ecodesign for Sustainable Products Regulations (ESPR) and the EU Strategy for Sustainable and Circular Textiles, aim to potentially set requirements for recycled content, disclosure of product sustainability information, restrictions on the export of textile waste, and more. In addition, by 1st January 2025, European member states will face the mandatory challenge of setting up separate collection systems for used textiles. To remain competitive, the industry will have to undergo a profound transformation towards circular business models,” stated the experts.

The complete study can be downloaded from the FCG website. The Fashion Council Germany and eBay are also inviting participants to a digital presentation on 14th January 2025.