Author: Achim Berg, Anita Balchandani, Dale Kim, Andrea De Santis, Sarah André and Meera Singh

Read the latest version of The State of Fashion report by McKinsey & Company and BoF Insights here.The performance of the luxury segment over recent times has been outstanding, with one season after another characterised by soaring demand and impressive bottom-line outcomes. Brands forged deep connections with their core constituencies and ignited their creativity. This, in turn, has spurred certain consumers to trade up and seek out ever-higher levels of indulgence. Meanwhile, the continuing expansion of digital engagement and e-commerce has created a turbocharged effect — fuelling demand, unlocking new insights and promoting competition.However, as the global economic cycle turns,…