Macroenvironmental factors affecting fashion retail

Effect of Macro-environmental factors on fashion retail industry

There are several macro-environmental factors affecting the fashion retail industry. While businesses and brands in this industry do not have a significant degree of control on these factors, they must adapt to them to remain competitive and be successful. Industry has seen major changes occurring in the 21st century. The level of competition has grown more intense and the battle for market share has made brands twist their marketing and pricing strategies.

The focus is  now on customers and no brand wants to lose the ones they have earned. Overall, the rush in the fashion world has grown as the fashion landscape has kept changing fast. There are some very important macro economic factors whose effect on the industry is important to consider for they affect the businesses’ profitability and competitiveness.


Technology is something that has greatly altered the way of business in this century. It has altered how we used to shop. More and more customers now shop online. IT has changed customers’ expectations and each one of them wants to be served in the best possible manner. However, technology has helped brand in other areas too.

From supply chain to production and marketing, everywhere technology has brought agility and effectiveness, raising the level of productivity. However, this has also intensified the race as brands are competing against each other to have the best in class technology.

Any brand must use the best technology to remain competitive. In  a way, technology has become indispensable. From websites to apps and even better production systems, it is all essential to remain profitable and retain customers. Technological changes are happening fast and every brand must adapt in order to be successful.

Demographic trends:

Demographic trends also have a deep effect on the sales and profitability of the fashion brands.  The population composition has changed a lot and millennials  and Gen Z are now a large part of the fashion brands’ target market. Their preferences are a lot different from the previous generations. They love fast fashion and do their shopping online mostly. They are more technologically savvy than the previous generations and each one wants to be served in a  customized manner. A large part of the population is aging and the aging population’s needs and demands are different than the general population.  So, these all factors give rise to new needs and new kinds of pressures. Apart from demographic trends, fashion trends also keep changing. New styles come and go fast. There are also cultural and social factors that affect the  business of the fashion brands.

Economic factors:

The role of the economic factors is relatively easier to understand. However, the key thing to note is that  their effect is significant. Economic fluctuations in the global environment can result in rise or decline in the sales of garments. The recessionary period had particularly been difficult for the fashion brands. It was for this reason that the people were trying cost cutting measures which resulted in a reduction in the sales of fashion items.

If the economic condition of an economy is good and the level of employment high, people there would  have enough disposable income to spend on fashion and luxury items.  This leads to better sales and higher profits for the fashion brands. However, this century has seen a recession and several countries in the world are still struggling for their economies to return to normal. Not just this, currency fluctuations and a stronger dollar can also result in a loss of profits for businesses.

Politico-Legal factors:

In the 21st century the politico legal factors too have grown in importance in the context of business. From workers’ rights related laws to environmental laws and country specific laws related to business, there are several laws that  affect the fashion brands.  Trade agreements also have  a significant effect on the business of international fashion brands. Import and export related laws can affect the growth and profitability of the fashion brands.

In this way the fashion retail environment is full of intense level of competition and there are several economic forces that affect the growth and profitability of the fashion retail businesses. From technological to economic and demographic there are several factors affecting the industry and the brands must adapt to this ever changing environment in order to survive the high level of competition.