New York’s fashion industry is yet to recover, but what can be done to save it?

New York Fashion Week (NYFW) SS25 remains ongoing, and while previously cloaked in the shadows of its European counterparts, the increased presence of celebrity front-rowers and the inclusion of brands once dedicated to Paris or Milan could signal a return to its original status. The city’s wider industry has also been undergoing a revival after a period of pandemic-induced lacklustre sales and operations that had left it unsure of its future. But what can be done to help New York’s recovery journey?

It was this question that McKinsey set out to answer in a new column entitled ‘At a crossroads: New York’s status as a global fashion capital’, in which the consultancy firm explored both what went wrong and what could go right for the Big Apple. To formulate its advice, McKinsey and the Partnership for New York City spoke to industry leaders, reviewed economic data and researched media and third-party studies in order to establish where exactly the local industry was vulnerable.

Decline in inflation-adjusted gross regional product, for example, began in 2014, according to the Bureau of Labor Statistics consumer price index by Lightcast, dropping further between 2019 to 2020 by 19.6 percent – and it is yet to recover. Employment in the industry has also been falling over the past decade, particularly during Covid, when a sudden drop from just over 160,000 employees to under 125,000 could be seen. In the present day, the industry now employs 50,000 fewer people than it did 10 years ago.

Decentralisation of production and a drop off in multibrand retail

While there is hope for retail, with Manhattan’s retail availability rate sitting at 15 percent in 2023, the lowest it's been in nine years, this sector has also faced challenges, particularly with the closure of large-scale multi brand stores such as Barneys New York and Opening Ceremony. Production has further been decentralised, reducing the workload taking place in and around New York City and moving manufacturing and suppliers overseas, leaving just prototyping and sample production in the hands of local workers.

With these factors in mind, McKinsey proposed actions to help bolster growth in New York’s industry, and called on leaders across the fashion value chain to work together on carrying out such efforts. Here is what the firm suggests;

Supporting initial designer activation

McKinsey noted that while the state was populous in brands, retailers and fashion schools, there was a need to emphasise the beginning of a designer’s career. This could be done through the provision of accessible services and a community, such as a physical hub for emerging designers where they can utilise workspaces and a wider network of support.

Helping emerging brands scale and commercialise

Following this, McKinsey noted that support needs to remain in place in order to aid talent in scaling their labels. There is a particular lack of access to capital beyond the first year of a brand’s life, the firm noted, as well as a diminishing design-dedicated accelerators that could help in the first steps of designers. This could come in the form of involvement from financial institutions that can offer traditional funding. Exposure to industry-leaders, consumers and the possibility of a physical storefront were cited as benefits to related educational programmes and could therefore help in commercialising a brand.

Building a more capable and diverse workforce

Schools were cited to have an important role in “enriching the talent ecosystem” in the report, where employer course collaborations, a widening of skills and increased on-campus activity from employers were outlined as notable strategies to support this. McKinsey also emphasised the need for diversity, equity and inclusion support, with initiatives to help underrepresented candidates highlighted as critical to the cause.

Revitalising industry demand for New York fashion

For this piece of advice, McKinsey suggested refreshing the purpose of New York Fashion Week, expanding it from its initial focus on the industry to become a “broader catalyst” for the city itself. This could involve raising the visibility of what the wider city has to offer, establishing connections with other local industries and hosting shows in more accessible locations to ensure both logistical and networking benefits. The firm said that such efforts could help in sustaining the demand for local fashion from international players, while uplifting commercial districts outside of NYFW could bring life back to the city elsewhere.