Fashion Industry 2026: Navigating Economic Turbulence and Consumer Shifts

The fashion industry in 2026 faces a daunting year with economic uncertainty and shifting consumer behavior, according to the BoF-McKinsey State of Fashion report. Executives highlight concerns over consumer confidence, trade dynamics, and cost pressures while exploring AI integration and sustainability to adapt and grow.

The global fashion industry is on the brink of a difficult year in 2026, as outlined in the BoF-McKinsey State of Fashion report. Economic uncertainty and ever-changing trade dynamics are leading executives to prepare for a tougher environment amid unpredictable consumer behavior.

The report indicates that 46% of fashion executives foresee a decline in conditions, a notable increase from the previous year, while only 25% expect improvements. Concerns over consumer confidence are growing, particularly in the United States, where the consumer confidence index has plummeted to its lowest since 2020 amid geopolitical instability and inflationary pressures.

Executives are identifying deglobalization and tariffs as intensifying risks, with 40% citing these issues as significantly more problematic than before. With expectations for low single-digit growth in 2026, companies are increasingly focusing on AI integration and sustainable practices, aiming to maintain competitiveness in a value-driven market.

(With inputs from agencies.)