The changeable nature of fashion extends well beyond its seasonal changes of what to wear. In recent years, one of the industry’s most dramatic changes involves New York City’s position as a global fashion capital.
Within the United States, New York City has the country’s highest concentration of fashion sales, talent, and employment. Activities related to fashion—which we define as fashion retail, wholesale, and distribution, along with textile, apparel, footwear, and jewelry manufacturing—contributed more than $50 billion in direct sales, $45 billion in indirect sales, and more than 130,000 jobs in 2022. New York is also home to prominent design schools, including the Fashion Institute of Technology and New School Parson’s School of Design. Over 2,600 graduates in the city across all schools received fashion-specific degrees and certificates in 2022. And all of the top ten fashion brands have a retail presence in New York, given its prime position in commerce and tourism. The city is home to three of the most important fashion industry publications—Vogue, Harper’s Bazaar, and Women’s Wear Daily, as well as some of the largest advertising companies in the world.
The local ecosystem drives a virtuous circle that attracts and rewards not just brands but also retailers, designers and shoppers, suppliers and producers, importers and distributors, the media, education, investors, real estate owners, trade shows and other events, and industry associations. Maintaining New York’s prominence will require efforts throughout the region’s fashion ecosystem. In this article, we describe the crossroads at which New York’s fashion industry finds itself, and then we suggest actions for enabling it to maintain and expand its impressive legacy.
Powerful trends transforming the industry
New York City’s fashion industry has a rich heritage (see sidebar, “What makes New York fashion unique”). However, according to research conducted by McKinsey and the Partnership for New York City, the health of the industry has fundamentally changed. Analysis of interviews with industry leaders and reviews of economic data through 2023, fashion media, and third-party studies points to key indicators of the New York fashion sector’s vulnerability.
This research shows that the local industry’s inflation-adjusted gross regional product—the final market value of all fashion goods and services produced in NYC—started to decline in 2014. After a sharp drop of 19.6 percent from 2019 to 2020, the industry has yet to recover (Exhibit 1).
Employment in the industry has been shrinking for a decade, and the COVID-19 pandemic hit local fashion industry workers especially hard (Exhibit 2). The industry now employs 50,000 fewer people than it did just ten years ago, with declines of 30 to 50 percent in apparel and textile manufacturing jobs alone. Overall, fashion’s recovery has lagged that of other sectors, such as health services, education, and leisure and hospitality.
Furthermore, the talent pipeline may be shrinking. Completions of New York fashion education fell by 30 percent in 2022 from a peak in 2016 (Exhibit 3). During the same time period, by contrast, national college graduation figures grew.
Brick and mortar retail remains a bright spot, but the landscape has changed. In the fourth quarter of 2023, the Manhattan retail availability rate (which encompasses 11 prime corridors, including Soho, Fifth Avenue, and Madison Avenue) was at 15 percent, the lowest rate in nine years, following the 2014 low of 10.3 percent, and asking rents continued their upward trend—up 5.4 percent year over year, marking the fifth consecutive quarterly increase, though retail rents are down as compared to pre-pandemic times. However, many multibrand specialty stores that cultivated and showcased emerging brands have been shuttered; examples include Barneys New York, Henri Bendel, Opening Ceremony, and Lord & Taylor. Industry experts say the disappearance of these stores has made it more difficult for new designers to get traction with buyers and shoppers.
Other shifts involve manufacturing. Greater decentralization of production has reduced the amount of work taking place in and around New York City.The square mile of the Garment District in Midtown once hosted a complete ecosystem of manufacturers, designers, and suppliers. Today, most manufacturing has moved to far less expensive locations overseas, leaving New York with mostly prototyping and sample production.
New York Fashion Week (NYFW) also has undergone substantial changes in recent years. Key American brands have shifted their presentation to fashion weeks overseas to reach more international buyers and press. Recently, however, NYFW has shown signs of resurgence, with attendance spiking and designers such as Thom Brown returning to the NY catwalk.
Potential causes of historical trends
Five themes that emerged from our research and conversations with industry leaders, described in McKinsey’s 2024 State of Fashion report. These may help explain the shifts in the fashion industry in New York:
- Rise of e-commerce. New York continues to be known as a destination for flagship retail stores, but the increasing adoption of e-commerce has created greater competition for brick-and-mortar retailers. To stay ahead in an increasingly digitized landscape, brands are rethinking their store footprints and focusing on experiential, community-building retail in smaller markets away from New York.
- Decentralization of influence. Technology, especially social media, has shifted the landscape of fashion influencers. The new breed of tastemakers can be anyone and anywhere. Their impact diminishes the formerly outsized influence of New York City–based magazines and tastemakers.
- Industry consolidation. The fashion industry, especially in luxury, has undergone heavy consolidation led by European conglomerates. About 98 percent of the economic growth in the luxury segment of public fashion companies is controlled by four companies based in Europe: Hermes, Kering, LVMH, and Richemont. As a result, independent brands are finding it harder to compete.
- High costs of living and doing business. The costs of office space and retail space in New York are among the highest of fashion capitals in the United States and abroad, and they continue to rise. At the same time, the high cost of living could make it more difficult to attract and retain talent.
- Lack of support to scale up. Building and scaling a successful fashion brand requires support from a network of investors, mentors, and retailers. Industry leaders tell us that designers and brands see New York as a more challenging place to find and secure this support, with fewer mentorship opportunities and more limited institutional funding than in decades past. And the reduction of retail venues raises concerns about where new designers can showcase their brands.
I don’t know who can make this happen, but it’s about funding. How do you get support when you’re at the next level? You’re known and established. You have the proven track record. Your clothes are selling. What’s next to help you grow?
Industry executive
How to support New York’s fashion ecosystem
Despite this challenging backdrop, industry and civic leaders say New York can rise to the occasion, as it has for hundreds of years. They’re optimistic for several reasons, beginning with the city’s diverse and international population that other fashion capitals, such as Copenhagen, Milan, and Paris, are unparalleled by.
While significant strides have been made in advancing New York’s fashion industry, unlocking its full potential requires a sharper focus on execution and delivery. Leaders across the fashion value chain can continue working together to attract, develop, and retain talent, but success will hinge on concerted action, coordination, sustained awareness, and investments.
Actions that might help bolster growth in retail and tourism include activating talent, helping emerging brands to scale, building a capable workforce, and revitalizing industry demand.
Supporting initial designer activation
New York is the most populous city in the United States and the home of top brands, retailers, and fashion schools. Therefore, the city is well positioned to attract and develop plenty of fashion talent. Nevertheless, it may be falling short as an affordable location for designers at the beginning of their career.
Activating more talent and providing them with the services and sense of community they need requires congregation and centrality. One approach is a central designer campus—a shared and easily accessible physical hub where emerging designers can work side by side. They can enjoy subsidized workspaces, pooled resources such as photographers and “fractional” (part-time or on-demand) executives, a materials library, programming, and mentorship from industry players. All of these features can unlock logistical and creative advantages and overcome initial setup challenges.
A few enablers can help sustain design campuses. For example, a skilled operator could manage programming, recruitment, facilities, and industry connections. Success also requires a viable business model, such as ownership of the building to keep rents reasonable, and the engagement of industry leaders who can provide mentorship, connections, and credibility.
Helping emerging brands scale and commercialize
After overcoming initial activation challenges, talent needs support to scale. A lack of access to capital that continues beyond the first year remains an industry pain point; options are limited for established designers looking to reach the next milestones of their careers.
Our interviews with industry leaders also underscored the lack of accelerators devoted to design. An accelerator program could connect designers with mentors and investors across business life cycles. These mentors and investors may make fixed investments in return for equity and may connect with a wider network of other funders, retailers, buyers, and media who can help brands grow. Other accelerators in New York could help designers navigate a wide range of options suited to individual interests and aspirations.
The answer [to survivorship] is to create a campus for the younger designers and have them be supported by very talented retailers or even executives.
Industry executive
The long-term success of accelerators generally requires the participation of industry leaders with the know-how and expertise to support talent in different stages of their journeys, the involvement of financial institutions that can provide more traditional funding, and a rigorous approach to identifying emerging creative talent with true commercial potential.
Exposure to consumers also is vital for commercializing talent, particularly now that many retail destinations for discovery have closed. A storefront in a prime high-traffic location could give a rotating mix of emerging designers opportunities to experiment with products, merchandising, and actual shoppers, as well as the chance to reach a wider audience. The space could provide subsidized short-term leases and operate as a “white box” (a commercial space ready for occupancy) where brands could set up in just a couple of days, in contrast to more time-consuming and capital-intensive setups.
To capture attention in today’s crowded marketplace, a storefront needs a team with a keen curatorial eye for design and merchandising, along with access to a strong pipeline of emerging brands, a dedicated sales and operational team, and compelling marketing and events to drive awareness and foot traffic. A prime location is another key to reaching style-savvy, high-income shoppers.
One example of such a storefront is 12 Piccadilly Arcade in London—described as a pop-up boutique offering emerging and indie brands in a prime shopping district between Mayfair and St James Place. It is supported by a partnership of the Westminster City Council, Heart of London Business Alliance, and the landlord, GPE. The partnership provides brands with free pop-up space to raise their profiles and grow.
Building a more capable and diverse workforce
In industries around the world, we see ecosystems flourishing where talent comes from more diverse backgrounds and has broader knowledge and experience.
Schools can play an important role in enriching the talent ecosystem. They can collaborate more closely with employers, for example, to ensure that education programming meets the industry’s current needs. In fashion, this could include helping students become fluent not just in design but also in merchandising, finance, supply chains, and marketing. Employers could play more active roles on campus through course sponsorships, guest speaking opportunities, and programs that help students get practical, on-the-job experience.
I think New York produces great design talent. But there’s still a gap in the business side of fashion.
Retail executive
The industry also needs ongoing support for diversity, equity, and inclusion. Initiatives could include recruiting more candidates from underrepresented populations and offering financially viable internships and job opportunities, perhaps including grants and housing benefits to supplement salaries, since volunteer roles favor students from affluent backgrounds.
We have found that the most successful partnerships between schools and employers have dedicated people on both sides with a clear strategy and objectives to make it work.
Revitalizing industry demand for New York fashion
While it is important to support initiatives that attract and develop talent, equally pivotal is the need to sustain demand for New York fashion. For generations, the city has attracted international buyers and press who have outsize impacts on the success of brands. Now is the time to embrace the city’s diversity to reengage a global audience.
New York Fashion Week, for example, could raise the industry’s visibility by celebrating all the city has to offer. It could extend programming to include a wider array of events. Fashion weeks in Paris and Copenhagen, for example, have featured executive roundtables on pressing topics such as climate change and sustainability, helping to expand interest and the breadth of attendees.
Fashion Week is industry-focused, but it could be a broader catalyst for New York. No one is focused on making it a city multiplier.
Industry executive
New York might also help the fashion industry connect with other local industries, especially hospitality, food, and entertainment. South by Southwest in Austin is one example of a successful cross-industry event, celebrating “the convergence of tech, film, music, education, and culture.” In 2024, it included movie and TV premieres; conferences on AI, climate change, fashion and beauty, and many other topics; and a competition where 45 tech companies pitched their ideas to industry experts, early adopters, and venture capital and angel investors. In New York City, this model could help catalyze many industries, including fashion.
The input of NYFW attendees and industry leaders suggests that hosting events in a single or just a few more accessible locations could create more concentrated gatherings. In addition to logistical benefits, this could increase organic connections and maximize networking opportunities, which buyers, journalists, and other industry figures say they want.
Outside of NYFW, New York City is pursuing many efforts to make its commercial districts more vibrant to nurture its already strong consumer economy, including tourism and retail foot traffic. The “New” New York Panel, for example, aims to transform business districts into places where people can live, work, play, and shop 24/7. Repurposing space and filling vacancies more quickly also could help move the needle on revitalizing NYC fashion.
Common elements of long-term success
The industry and its allies could consider a broad array of interventions to bolster the city’s fashion ecosystem. But in our experience serving a range of industries around the world, we’ve found that most successful and sustainable interventions share some characteristics:
- Champions to help corral and convene. Effective interventions may benefit from champions capable of bringing together diverse stakeholders. In the case of fashion, a mechanism enabling communication, collaboration, and alignment across key stakeholders in the ecosystem—industry leaders and councils, local government, schools, real estate, and others—could help drive success. A coordinated forum could help track the pulse of New York’s fashion sector, align on a vision and objectives, and activate existing and new citywide initiatives.
- Win–win value propositions among stakeholders. For example, as curated storefronts help designers and brands demonstrate commercial viability, landlords and nearby businesses could benefit from fresh buzz and foot traffic. Accelerators could benefit emerging designers while giving corporate partners and investors early access to up-and-coming talent.
- Self-sustaining mechanisms. New strategies and programs could improve longevity without a constant need for external funding. These could include diverse revenue streams for various initiatives, strategic corporate partnerships, and robust alumni engagement that diminish the need to continuously seek new support or sponsors.
- Fit-for-purpose solutions. Tailoring solutions to the unique needs of the fashion industry is important. From a financing perspective, for example, venture capital might not align with fashion industry dynamics. More traditional financing partners might be more suitable—say, individual or strategic investors who are well versed in the fashion business and take a longer-term view.
- Engaged industry stakeholders. The active involvement of industry leaders—from established brands to strategic investors to retailers—could include investments, mentorship, or hiring emerging talent. Identifying and bridging gaps in industry partnerships may help foster a more interconnected and supportive ecosystem.
- The right operators. Selecting operators with the right capabilities, authority, and expertise for particular interventions could drive success. Some could be developing programs for a central designer campus or accelerator; others might provide real estate expertise for a storefront. In any case, operators who align with the unique demands of each initiative can help it succeed and endure.
A call to action
Without targeted interventions to support the fashion ecosystem, the New York fashion sector may become less relevant on the global stage. In that case, it also would contribute less to the city’s economy and its appeal to talent, consumers, and tastemakers worldwide.
Now more than ever, this critical moment requires a collaborative effort among private and public players in fashion and adjacent industries to revitalize the sector. Together, they can find new ways to support fashion talent with more resources, infrastructure, and connections to develop new brands. As a result, New York could retain and reinforce its leadership in what it has always represented—entrepreneurship, creativity, diversity, and innovation—while preserving its enduring legacy as the fashion capital to the world.