Markets

Fashion Hit Hardest as European Consumer Confidence Dips

More than half of European consumers are pessimistic about their economies, while the number of people who are confident they can maintain their standard of living for the rest of the year is falling, according to BCG's latest report.

Fashion Hit Hardest as European Consumer Confidence Dips
Fashion Hit Hardest as European Consumer Confidence Dips
In Spain, 23% of consumers are optimistic about the country's economic situation.

C. Oliveras

Dark clouds for consumer spending in Europe. After a year marked by inflation, tariffs and rising geopolitical tensions, pessimism is settling in among European consumers. Fifty-four percent of Europeans feel pessimistic about their economy, seven points more than in July last year. Fashion, moreover, is the sector most affected by this feeling, being the category in which consumption has fallen the most, according to data from Boston Consulting Group (BCG).

 

Data compiled by the consultancy, based on a survey of 16,000 European consumers, put the number of people who are confident in their purchasing power at another 40%, down four points from the previous year. "Consumers' financial caution is cutting deeply into spending," warns BCG's latest report, to the point that only in two categories, food and household essentials, has household net spending not fallen.

 

The category most affected by this cutback is fashion, where Europeans have spent up to 22 percentage points less in the last six months than in the previous six months. For the next six months, moreover, the BCG study also estimates a further generalized fall, which in the case of fashion will slow minimally, to 20 percentage points below the current period.

 

 

 

 

The case of luxury fashion, analyzed separately in the survey, stands out. According to data compiled by the consultancy, net spending on items in this category has fallen slightly in the last six months, but is expected to return to growth by one point in the next six months.

 

This new consumer attitude has also translated into a greater emphasis on price and, in particular, on offers and sales. Fashion is once again at one of the extremes of the ranking, with more than half of consumers saying they actively seek out these offers. A further 73% are also willing to switch brands for the same reason.

 

By country, the trend is particularly pronounced among Italian consumers, with 81% of the total saying they look for deals and discounts, compared with 64% of German shoppers. In Spain, the figure is between the two countries' averages, at 74%, while in France it is 69%.

 

In the case of luxury consumption, another 44% of European consumers are looking for discounts, with another 17% only making a purchase if the item is discounted. The percentage of people willing to switch brands, meanwhile, stands at 54%.

 

 

 

 

"This change is forcing companies to review their strategy toward consumers," the consultancy explains; "value is now one of the priorities when it comes to consumption. To cope with this new reality, and, BCG adds, with the prospect of economic growth returning, companies must respond to the demand for offers and discounts while maintaining profit margins.

 

New portfolio, rationalizing pricing and controlling margins are the three keys mentioned by the consultancy. With spending down, companies must prioritize the most profitable product areas with strategic value, while investing in innovation to combine price and quality.