As per McKinsey report, Fashion leaders are no longer debating whether disruption will continue—they are preparing for a world where disruption is permanent. As the industry heads into 2026, economic volatility, shifting consumer values, and rapid advances in artificial intelligence are redefining how fashion businesses compete, operate, and grow.
Here are the 10 most important forces shaping the fashion industry in 2026, drawn from the latest insights by The Business of Fashion and McKinsey.
1. Constant Change Is the New Normal
Executives have moved past uncertainty and into acceptance. In 2026, “challenging” has replaced “uncertain” as the dominant mood across leadership teams. Trade tensions, tariffs, and geopolitical shifts are no longer shocks—they are baseline conditions that brands must continuously adapt to.
2. Tariffs Are Redrawing Global Trade Maps
US tariffs have emerged as the single biggest obstacle for fashion leaders. Brands and suppliers are being forced to rapidly reconfigure sourcing, production, and logistics, accelerating the shift toward diversified and regionalized supply chains.
3. Growth Remains Muted Worldwide
The global fashion industry is expected to post low single-digit growth again in 2026. Macroeconomic instability continues to dampen consumer confidence, particularly in the US, where sentiment fell to pandemic-era lows in 2025.
4. Value-Conscious Consumers Are Here to Stay
Across markets, consumers are spending more cautiously. Many are trading down, prioritizing value and reallocating discretionary budgets toward health, well-being, and long-term life goals rather than frequent fashion purchases.
5. North America Faces Heightened Pessimism
Sentiment toward North America has deteriorated sharply. More than one-third of executives now view the region as unpromising for 2026—double the share from last year—reflecting weaker demand and persistent cost pressures.
6. China Shows Early Signs of Stabilization
While still challenging, confidence in China is improving. The share of executives viewing the market as unpromising has dropped significantly, with sportswear and performance-led categories emerging as relative bright spots.
7. Luxury Is Betting on Creative Resets
After a difficult 2025, the luxury segment is expected to see modest improvement. Brands are investing heavily in creative leadership changes, new collections, and physical retail, particularly in the US, where luxury retail space expanded sharply in early 2025.
8. AI Has Become a Business Necessity
Artificial intelligence is no longer optional. Over 35 percent of fashion executives already use generative AI in functions such as customer service, content creation, product discovery, and search. The focus is shifting from experimentation to enterprise-wide transformation.
9. Marketing and Sales Will See the Biggest AI Gains
Automation powered by generative AI is expected to deliver the largest productivity gains in marketing and communications. Roles are evolving toward higher-value creative and analytical work, while routine tasks are increasingly automated.
10. AI Is Changing How Consumers Shop
AI-powered agents are becoming the new shopping interface. Consumers are using large language models to search, compare, and receive personalized fashion advice—turning AI chatbot responses into the new form of SEO. As agentic commerce accelerates, brands must rethink discovery, visibility, and influence.
