Report
The State of Fashion 2026
The State of Fashion 2026
Published by BoF and McKinsey Company
McKinsey & Company and The Business of Fashion have published their annual State of Fashion report. The report covers a range of issues shaping the sector, including weak economic growth, changing consumer behaviour, tariffs and trade, AI, new technology, resale and the continued evolution of the luxury market.
The report identifies ten key themes that are expected to influence the industry over the coming year.
The trends highlight changing consumer expectations, the growing importance of value and the increasing role of AI. For fashion and jewellery brands, these shifts create both challenges and opportunities. Consider how they may affect your customers, products, marketing and sales channels, and what they mean for your brand’s future e-commerce strategy.
Customers are becoming more selective about what they buy, where they spend and what makes a product worth its price. Across fashion and lifestyle, brands need to communicate clearly why their products matter and what sets them apart. For jewellery brands, this puts greater emphasis on design, quality, craftsmanship and the emotional value behind a piece.
At the same time, AI is becoming an increasingly important part of how consumers discover products and how businesses operate. From AI-powered product search and personalized recommendations, these developments are changing both the customer journey and the way brands connect with their audiences. For fashion and jewellery businesses, this creates new opportunities, but also raises the need to adapt their digital strategies and customer experiences.
These shifts have practical implications for your brand, and can influence how your brand positions your products, communicate value, develop your e-commerce strategy and build customer relationships.
Global Economy
Theme 01: Tariff Turbulence
US tariffs are reshaping global fashion trade and putting additional pressure on costs across the industry. The US imports around 89 percent of the apparel and leather products sold in the country, making fashion particularly exposed to changes in import duties. Brands and suppliers are responding by adjusting prices, shifting sourcing to lower-tariff markets and looking for greater efficiency. The report points to a more fragmented and unpredictable trading environment, where flexibility in sourcing and supply chains will become increasingly important.
Theme 02: Workforce Rewired
AI is beginning to reshape the fashion workforce, with automation expected to change both existing roles and the skills companies need. Repetitive and transactional tasks are among those most likely to become automated, while employees are expected to focus more on creative, analytical and higher-value work. For fashion companies, the challenge is not only adopting new technology but also developing the skills needed to use it effectively. The report highlights upskilling, recruitment of new AI talent and strong change management as key priorities.
Consumer Shifts
Theme 03: The AI Shopper
AI is changing how consumers discover and evaluate fashion products. Shopping-related searches on generative AI platforms increased sharply between 2024 and 2025, and almost a quarter of global consumers already use generative AI as a starting point for shopping. As AI tools become more integrated into the customer journey, brands will need to make their product information and digital content easy for AI systems to understand and recommend. The report also points to the potential rise of autonomous shopping agents, which could significantly change digital commerce in the years ahead.
Theme 04: Jewellery Sparkles
Jewellery is emerging as one of the strongest-performing categories in fashion, with unit sales growth expected to outpace other categories. The appeal is linked to several consumer trends, including a desire for products that feel lasting, personal and valuable, as well as growing interest in self-gifting. Jewellery is also becoming more central to everyday fashion rather than being reserved for special occasions. According to the report, the category is forecast to grow in volume at almost four times the rate of clothing over the coming years.
Theme 05: Smart Frames
Smart eyewear is emerging as an important new category at the intersection of fashion and technology. AI-enabled glasses are becoming more accessible as prices fall and new products enter the market, with global shipments of smart glasses increasing significantly in 2025. The report expects the smart eyewear market to exceed $30 billion by 2030. For fashion and eyewear brands, the opportunity lies in combining technology with design, while partnerships between fashion and technology companies are likely to play an important role in the category’s development.
Theme 06: The Wellbeing Era
Wellbeing is becoming increasingly important to consumers and is influencing how they spend, live and define their identities. This creates new opportunities for fashion brands to connect with consumers through products, experiences, communities and partnerships linked to health and wellbeing. The report points to the growth of “third spaces” and wellness-oriented experiences as one example. At the same time, brands need to approach the category carefully, as credibility depends on integrating wellbeing in ways that are consistent with their existing identity and values.
Fashion System
Theme 07: Efficiency Unlocked
Fashion companies are under increasing pressure to improve efficiency as costs rise and traditional sources of competitive advantage become less effective. Scale, low-cost sourcing and discounting are no longer enough to support healthy growth on their own. Technology, automation and better processes can help companies reduce costs and improve productivity, while freeing up resources for areas that create differentiation. The report therefore sees efficiency not simply as a cost-cutting exercise, but as an increasingly important foundation for future growth.
Theme 08: Resale Sprint
The secondhand fashion market continues to grow as consumers look for greater value, particularly as prices in the primary market increase. Resale has moved from a niche activity to a mainstream part of fashion, driven by established marketplaces and changing consumer attitudes. The report expects the secondhand market to grow two to three times faster than the broader fashion and luxury markets. For brands, this creates both operational challenges and an opportunity to reach new customers, strengthen perceptions of quality and build additional revenue streams.
Theme 09: The Elevation Game
Fashion brands across different price segments are seeking to strengthen their market positioning by offering greater perceived value to consumers. Value-focused brands are looking to differentiate themselves from ultra-low-cost competitors, while brands in the affordable luxury and premium segments are seeking to appeal to consumers who are increasingly priced out of traditional luxury. However, moving towards a more premium position requires more than raising prices. Brands need to ensure that their products and overall brand experience justify the prices charged. In a cautious consumer environment, delivering clear and credible value to consumers is becoming increasingly important.
Theme 10: Luxury Recalibrated
The slowdown in luxury is prompting brands to rethink a growth model that has relied heavily on price increases. Between 2023 and 2025, around 80 percent of luxury market growth is estimated to have come from higher prices rather than increased volumes. The report suggests that this approach cannot continue indefinitely, with luxury brands instead refocusing on creativity, craftsmanship, product quality and customer relationships. The result is a broader recalibration of luxury, with brands looking to rebuild trust and strengthen the value behind their prices.
