Nearshoring Gains Popularity in Fashion; 71% to Adopt by 2025

Nearshoring is becoming increasingly popular in the fashion industry, with 71% of fashion brands planning to adopt this strategy by 2025, according to a McKinsey report. Mexico is emerging as a key player in this trend, particularly for US companies that benefit from the USMCA trade agreement and geographic proximity.

Nearshoring reduces delivery times and lowers carbon footprints by cutting down transportation distances. These advantages are particularly important in the fashion industry, where speed and flexibility are crucial, and environmental concerns are growing among consumers. The shift also addresses disruptions in global supply chains caused by the COVID-19 pandemic and geopolitical issues.

Mexico’s role in nearshoring is highlighted by its significant production and export activities directed toward the U.S. market. Carlos Ibarra, chairman, IB Group, a Mexican holding company managing international fashion brands, pointed out that Mexico exports nearly US$700 billion (MX$13.2 trillion) each month, with 80% of this output going to the United States.

The trend is also positively impacting employment and consumer spending in Mexico. The arrival of new businesses and brands is generating jobs and increasing the local population's purchasing power. This boost in disposable income is evident from rising sales during events like El Buen Fin, which saw transactions increase by MX$17 billion from 2022 to 2023.

Moreover, nearshoring is enhancing product availability and delivery efficiency while driving the introduction of new product lines and international brands in Mexico, thus increasing market competition. Companies like IB Group are leveraging this trend, managing prominent brands such as Champion, Express, and Charles & Keith within the country.