From ‘Uncertainty’ to an Era of ‘Constant Challenge’: BoF and McKinsey’s ‘The State of Fashion 2026’ Report Unveils Survival Strategies

The year 2026 for the global fashion industry can no longer be described by the ambiguous term ‘Uncertainty.’ Instead, a new normal era of ‘Constant Challenge,’ where unpredictable change has become routine, is fully underway.
According to the ‘The State of Fashion 2026’ report jointly released by the British fashion media Business of Fashion (BoF) and McKinsey & Company, global fashion executives are pessimistic about next year’s market environment, yet they cite ‘agile adaptation’ as their top priority solution.
46% of executives surveyed predicted that industry conditions would worsen in 2026, an 8-percentage-point increase from the previous year. The analysis suggests that the vague anxiety that dominated the industry over the past decade has now transformed into concrete ‘challenges.’ The keyword most frequently chosen by executives to describe 2026 was ‘Challenging,’ with trade disputes, tariff barriers, and weakened consumer sentiment cited as the underlying reasons.
Amid this pessimistic outlook, the industry presents ‘Adaptation’ as the key agenda that will determine success or failure. To navigate the waves of the macroeconomy, only flexible brands that abandon old practices and respond quickly to change can survive.

Consumers in the 2026 fashion market are expected to be more sensitive to ‘Value’ than ever before. The report emphasized a clear value proposition as a prerequisite for securing brand loyalty.
In fact, while the luxury market, which had focused on price increases, has slowed, ‘Mid-market’ brands that have enhanced design and quality have emerged as alternatives to luxury, becoming key players in value creation. This is because consumers are beginning to open their wallets for their own well-being and practical utility rather than simple ostentation.
This trend is also evident in growth rates by category. The ‘Jewellery’ market, which offers clear investment value even amid an economic slowdown, is expected to see strong demand continue until 2028. Additionally, the ‘Resale’ (second-hand) market, which pursues rational consumption, is being integrated into mainstream distribution channels, which is also noteworthy.

In the technology sector, artificial intelligence (AI) has been identified as a ‘game changer’ reshaping the entire industry. Executives cited AI as the ‘biggest opportunity factor,’ more important than sustainability or product differentiation.

The report analyzes that AI is not limited to simply improving work efficiency but is transforming the entire consumer shopping journey. The number of consumers using large language models (LLMs) to search for and compare products is increasing, and the emergence of ‘AI shoppers’ that will handle everything from price monitoring to purchasing is forecasted. Therefore, it is urgent for brands to revamp their digital infrastructure so that AI can select their products and to focus all efforts on securing semantic data.
Based on this analysis, BoF and McKinsey have selected 10 key themes that will define the fashion industry in 2026.

1. Tariff Turbulence
Changes in U.S. tariff policy are redrawing the global trade map. Under pressure from rising costs, brands must diversify their sourcing, and large suppliers must increase efficiency through automation. ‘Agility’ to respond immediately to macro shocks is the key to survival.
2. Workforce Rewired
As AI adoption accelerates, existing roles are being reorganized around AI. Companies urgently need an ‘upskilling’ strategy that places talent in creative and analytical high-value-added roles instead of reducing simple repetitive tasks.
3. The AI Shopper
The emergence of ‘autonomous AI agents’ that perform shopping on behalf of consumers is forecasted. Brands must optimize their e-commerce data so that not only people but also AI models can recognize and recommend their products.
4. Jewellery Sparkles
Despite the economic downturn, the jewellery category is expected to maintain its unique growth trajectory. Competition among fashion brands to preempt the jewellery market, which simultaneously satisfies self-expression desires and investment value, is expected to intensify.

5. Smart Frames
‘Smart eyewear,’ which combines fashion and technology, is expected to become a mainstay of the wearable market. Stylish products equipped with multimodal AI are set for a major launch in 2026, and competition to preempt the $30 billion market is expected to begin in earnest.
6. The Wellbeing Era
Consumers now seek emotional connection and wellbeing from fashion brands. Customers fatigued by stimulating content are opening their wallets to brands that support their physical and mental health.
7. Efficiency Unlocked
In a low-growth phase, the old ‘economies of scale’ no longer work. Companies must maximize productivity by adopting new technologies and reinvest the resources saved from this into differentiated growth drivers.
8. Resale Sprint
Consumers burdened by rising prices of new products are moving en masse to the second-hand market. Resale is no longer a niche market, and brands are emphasizing the establishment of their own resale strategies to diversify revenue models and enhance brand value.
9. The Elevation Game
To avoid competition with ultra-low-price brands, many brands are aiming for ‘Upmarket’ movement. The ‘elevation’ strategy of improving product quality and providing unique experiences is expected to intensify.
10. Luxury Recalibrated

The luxury industry, which can no longer guarantee growth through price increases alone, has begun to adjust its strategy. The urgent task has emerged to regain the trust of returning customers by focusing on the essence of creativity and craftsmanship.