4. 2026 Technology in fashion outlook

Artificial intelligence reshapes apparel industry's operational framework

Artificial intelligence (AI) has firmly transcended its designation as a technical novelty, developing into the crucial interface between consumers and brands and reshaping the operational structure of the apparel industry. This technology is no longer merely a tool, but is rapidly becoming the operating system of our platform, as described by Kuo Zhang, president of Alibaba.com. The transition is imperative for executives facing a market defined by turbulence as the new normal amid escalating tariffs, geopolitical complexity, and pressure from ultra-fast fashion platforms.

Successful navigation in 2026 will demand more than pilot programs; it requires a strategic overhaul centred on robust data infrastructure. The essential lesson is fundamental: your masterdata must be on order, warned Gordon Smit, chief technology officer of Dutch lingerie company Hunkemöller. Without a clean, centralised database capable of consolidating information from webshops, apps, and brick and mortar retail, the promise of AI for efficiency and deep personalisation remains constrained.

Design and product development: increased efficiency and creativity

Generative AI and three-dimensional (3D) technology are fundamentally accelerating the creation process. AI is now deeply integrated into the design workflow, providing realistic images from sketches and virtual models and giving designers infinite possibilities. Spanish brand Desigual is fully engaged in this hybrid approach, using its Awesome Lab program to explore generative AI applications across product design and personalised marketing. New Spanish start-up Artiso, founded by former Mango innovation lab executives, has emerged with a platform that manages the entire creative flow, from mood boards and sketches to production-ready tech packs.

In the prototyping phase, 3D technology is directly impacting sustainability and cost reduction. Hunkemöller is actively experimenting with 3D design to drastically reduce the volume of physical samples, aiming for one in place of four or five per design/style. Platforms like CLO 3D and Browzwear continue to serve as the industry standard for three-dimensional garment simulation. Speed remains essential, with competition driving the reduction of time-to-market down to weeks or days in some sectors.

Further upstream, technological investment is focused on next-generation materials. Portuguese company Altri acquired the Swiss firm AeoniQ to develop biodegradable alternatives to polyester and nylon, which possess similar properties to synthetic fibres but with a significantly reduced environmental impact.

Styling and personalisation: custom experiences drive sales

The consumer expectation for a highly personalised experience is non-negotiable in 2026. Approximately thirty percent of active users already rely on AI for shopping and style advice, treating the technology as a personal stylist and emotional anchor. Spanish brand Mango introduced Mango Stylist, an AI-powered assistant integrated into its existing assistant, Iris, that offers custom recommendations and complete looks accessible via chat.

Hyper-personalisation yields measurable returns. Saks Global’s AI-driven personalised homepage for Saks Fifth Avenue elevated revenue-per-visitor by seven percent and drove a nearly ten percent conversion improvement. Furthermore, addressing the pervasive issue of incorrect fit remains a top priority; poor sizing is a major factor in high return rates. Belgian multibrand retailer SKM implemented the AI stylist Liv, developed by Contour Lab, which advises on the best size and helps reduce the online return percentage. Globally, Google expanded its AI functions with a try on me tool, which projects clothing onto a user’s photo and adjusts for how the fabric drapes.

Finally, AI is shifting product discovery away from keyword reliance. Pinterest is leveraging generative AI and Visual Language Models to translate visual cues—silhouettes and colours—into searchable metadata, allowing users to initiate search with an image rather than text.

Content and copywriting: ensuring brand consistency and reach

Generative AI has cemented its role in content production, drastically boosting efficiency and consistency. Companies are using the technology for large-scale automated product descriptions and marketing content. Belgian shoe company Torfs uses Nano Banana, Google Gemini’s image generator, to create up to thirty different digital looks from a single photo shoot.

The race for digital visibility is transforming from SEO to Generative Engine Optimisation (GEO). Content must be structured to be recognised, understood and recommended by AI systems, emphasising accurate data, a consistent tone of voice, and emotional appeal.

For major retailers, the sheer demand for content often justifies large-scale technical solutions. H&M is explicitly using AI to create digital twins—replicas of real models who are compensated and retain ownership of their likeness. This addresses the explosion in content demand and reduces the carbon footprint associated with flying models globally for shoots. However, the ethical and legal risks remain substantial, exemplified by the accidental appearance of an accused murderer's image as a model on ultra-fast fashion platform Shein, highlighting the fragility of control systems amidst automation.

Visual merchandising and inventory: smarter stock and store decisions

AI is directly applied to the core profitability levers of forecasting, pricing, and allocation. Demand forecasting is a crucial application, with AI models assisting in improving prediction accuracy, which drastically reduces overproduction. Approximately one in three retail executives now leverages AI for demand forecasting. Mitch van Deursen, CEO of VMI ai software company WAIR, sees customers' bottom line profit improve over 10 percent.

Pricing strategy presents one of the largest levers for profitability. German footwear brand Tamaris, in collaboration with 7Learnings, employed predictive pricing which raised profitability and lowered the average discount rate by five percent. Hunkemöller uses machine learning models to pinpoint precisely when and by how much a product should be discounted, yielding better margins than manual methods.

In allocation, AI helps ensure garments arrive in the correct locations for the right customer at the right time. Torfs developed an in-house AI model for merchandise allocation and defining productspace. While the technology achieved up to a 50 percent increase in sales for reallocated shoes, one challenge was securing adoption from long-time employees, who had to adjust to an algorithm making decisions previously made by humans.

Customer service and engagement: scalable assistance and loyalty

AI-powered agents are fundamentally transforming customer service into a scaleable, 24/7 operation. Agentic AI, capable of autonomous reasoning, planning, and action, is central to this shift. Walmart partnered with OpenAI to integrate its products into ChatGPT, enabling a seamless chat and buy format. Similarly, Target also launched a curated shopping experience within ChatGPT.

Internally, AI frees up employee time for more valuable tasks. Levi’s Strauss & Co. introduced the Stitch AI assistant via a mobile app to provide store teams with access to product information and operational procedures.

Critically, AI is being leveraged to generate personalised, empathetic experiences. Consumers demonstrate a tangible reward for this: they are 1.7 times more likely to pay a higher price if they feel an emotional connection. Loyalty programs serve as the bedrock for cultivating this bond, with companies like Voyado highlighting that loyal customers can generate over seventy percent of client revenue.

Finance and operations: streamlining internal processes

In internal operations, agentic AI is automating and simplifying enterprise-level workflows. Levi’s is developing an AI orchestration platform in partnership with Microsoft to integrate a super-agent with specialized sub-agents across IT, human resources, and operations. In logistics, AI and robotics deliver dramatic efficiency gains. Dutch outlet platform Otrium implemented an AI-driven Autostore robotic system that optimized order picking, resulting in a 70 percent reduction in warehouse workforce and quicker customer service. Inditex invested in Spanish start-up Theker Robotics, which develops AI-powered robots for process automation.

For financial security, AI is advancing fraud detection and payment systems. Singapore-based Ant International is integrating iris authentication into its smart glasses solution, GlassPay. This technology uses AI and Liveness Detection to prevent fraud by comparing over 260 biometric features to verify the user’s identity.

Sustainability and compliance: ethical, data-driven decisions

For 2026, sustainability has shifted from preference to prerequisite, driven by consumer demand for proof-based evidence and complex new regulations like the EU’s Digital Product Passports (DPPs).

AI is an essential catalyst for the circular economy. The second-hand fashion and luxury market is projected to grow two to three times faster than the first-hand market through to 2027. AI-powered sizing tools significantly reduce the need for wasteful returns. Dutch logistics company Bleckmann leverages its returns infrastructure to run Trade-In programs with its Renewal Workshop, refurbishing and reselling used items. Norwegian brand Db Journey uses unique SKUs to track the condition of each pre-loved item for complete transparency in its resale program. Separately, the resale platform SecondSense uses AI to build a resale price index for luxury items by aggregating market data.

In environmental technology, US company Claros Technologies secured funding to scale its system for destroying PFAS (forever chemicals) in wastewater, which has demonstrated a 99.9 percent destruction rate in trials.

Retail technology and in-store AI: enhancing the physical experience

The modern sales ecosystem is now decisively omnichannel, with online and offline becoming two halves of a single retail organism. The retail environment of 2026 demands strategic integration.

The physical store is transforming into a curated, AI-supported showroom. Gen Z consumers actively seek tech-led environments featuring digital try-ons or AI styling. Companies like loook.ai are democratising augmented reality (AR) mirrors for in-store activation, allowing customers to visualize clothing virtually. AI is empowering store associates, freeing them from repetitive duties so they can focus on personal consultations and emotionally engaging interactions. Levi’s Stitch app provides mobile access to product knowledge and operational data for its staff. Additionally, the French start-up LiveCrew addresses a major data gap by providing store associates with a platform to gather data on customer visits that do not result in a purchase, helping brands better understand merchandising shortcomings in brick and mortar.

Conclusion

The technological shift in the apparel industry is not incremental, but structural. Generative AI is developing into the decisive interface that determines which products are seen and purchased. Viewing AI merely as a technical tool is acutely short-sighted; the immediate challenge lies in achieving true end-to-end integration across fragmented business functions.

Success in 2026 and beyond will be defined by an enterprise's capacity to connect operational agility with a brand proposition that feels intentional, grounded, and culturally attuned. Strategic investment must be directed toward data integration, emotional brand management, and trustworthy AI interaction to retain customer loyalty and secure commercial visibility in the algorithmic age.

As Jörgen Andersson, chief creative officer of Swedish retailer H&M, advised: The AI train has left the station, so don’t stay on the platform — get on board and figure out where you sit.

This 2026 Outlook is based on more that 25 articles, interviews and reports published on FashionUnited. It was written with the help of AI

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