While in the past, fashion leaders facing the volatility of global affairs were unsure of what awaited them, they now appear to have accepted that constant change is simply the new normal.
“Challenging” has overtaken “uncertainty,” as the word executives surveyed in the “State of Fashion 2026” report use most frequently to describe the industry in 2026, with tariffs cited as the top hurdle. 46 percent say they expect conditions to worsen next year, while 36 percent see North America as having little or very little promise. A quarter believe industry conditions will improve in 2026.
Many leaders feel pessimistic and do not expect an easy road ahead: 46 percent say they expect conditions to worsen next year, compared to 39 percent in last year's survey.
By geography, 36 percent see North America as having little or very little promise, double the number last year, according to the The state of fashion 2026 report. The first report of this type was published in 2016.
But not everyone is so depressed. Among respondents, a quarter believe industry conditions will improve, up from a fifth in 2025, suggesting some players see pockets of opportunity.
Sentiment toward China is finally improving, even as conditions remain difficult: 28 percent see the market there as unpromising in 2026, up from 41 percent ahead of 2025.
The main agenda for the fashion industry next year will be to adapt to this new environment where commerce, consumer behavior and technology continue to change rapidly. Agile brands that can adapt quickly will likely be the winners, the report notes.
Under turbulent conditions, including volatile input costs, supply chain disruptions and slow growth, that are testing fashion's economic model, artificial intelligence (AI) is moving from a competitive advantage to a business necessity.
Companies are reshaping their workforces accordingly, with some existing jobs becoming more AI-focused, allowing roles to shift toward higher-value creative and analytical tasks.
To take advantage of this technological shift, companies must redesign their processes and compete for AI talent (looking beyond the fashion ecosystem to find it) while protecting the essential creativity that makes fashion tick.
Business leaders must shift their focus from small pilots and experiments that can only deliver incremental changes toward a more fundamental reassessment of how their organizations operate. And although it's still in its infancy, agent AI is changing the way people work and collaborate, so fashion companies will have to figure out how they can take advantage of this emerging technology as well.
AI is also transforming the way people shop. Customers are turning to great language models to search for products, compare offers, and receive personalized recommendations.
Some are already using AI as style and wardrobe consultants, seeking advice on what to buy and where to buy it, making the presence of fashion brands in AI chatbot responses the new search engine optimization.
This dynamic will only become more pronounced as agent trading accelerates in the second half of the decade, the report says.
Building customer loyalty is becoming an important front line in the battle for customers, with more than half of executives citing retention strategies as a key issue that will shape the industry in 2026.
To retain (and attract) customers, brands will need to give them what they want, and that increasingly means offering value. While luxury players raised prices without corresponding improvements in product quality or creativity, design-driven brands in the mid-market elevated their products and in-store experiences.
Now, the mid-market is the fastest growing segment, replacing luxury as fashion's primary value creator. Meanwhile, smart glasses that combine fashion and technology have become the fastest-growing accessory category, with more product launches expected in 2026.
High prices remain a major barrier for aspirational customers, and more potential luxury buyers are focusing on their personal well-being – body, mind and health anyway – a trend the survey first detected in 2017. Next year will inevitably be another year of dislocation for fashion companies. In a flat market, only those companies that capture the hearts and minds of customers will manage to grow and gain market share, the report adds.
Fiber2Fashion News Desk (DS)
