Fashion prediction 2026: Between caution and course correction

If 2025 was the year fashion learned to live with uncertainty, 2026 is shaping up to be the year it decides what to do with it.

Many of the pressures that defined the past 18 months will not magically disappear on January 1st. Tariff uncertainty remains a structural concern, particularly as trade tensions between major economic blocs continue to ebb and flow. Inflation may have cooled in parts of Europe and the United States compared with its 2022–2023 peak, but higher interest rates and housing costs are still reshaping consumer priorities. And while luxury’s post-pandemic boom feels firmly in the rearview mirror, the question for 2026 is no longer whether demand has softened, it is how brands adapt to a permanently altered landscape.

Slowing growth and restrained appetites

According to Bain & Company, the global personal luxury goods market slowed sharply in 2024 and was broadly flat in 2025, with growth driven less by volume and more by price increases and a narrow cohort of high-spending clients. McKinsey’s most recent State of Fashion report similarly notes that fewer than one-third of fashion executives expect strong growth in the near term, a marked contrast to the optimism that followed Covid-era reopening. These signals suggest that 2026 will not be a return to easy growth. But stagnation does not necessarily mean stasis.

Discipline

For large fashion groups and retailers, 2026 will likely bring more of the operational discipline that began to take hold this year. Inventory control, once overshadowed by expansion and marketing spend, has become central again. In the US and Europe, promotional intensity increased in 2025 as retailers worked through excess stock, and analysts expect discounting to remain part of the landscape in 2026, albeit more targeted and data-led. The days of blanket sales as a traffic driver appear numbered, replaced by loyalty-based incentives and tighter buy planning.

Luxury, in particular, faces a reckoning. The rapid price inflation of the past five years — with some flagship handbags doubling in price since 2019 — has met visible resistance. In China, where Bain estimates luxury spending declined year-on-year in 2024 before stabilising in 2025, consumers have become more selective, favouring heritage, craftsmanship and perceived long-term value over logo-heavy novelty. That shift is echoed elsewhere. In the US, luxury department store footfall has yet to return to pre-pandemic levels, while resale and repair services continue to grow, underscoring a more considered approach to consumption.

Yet it is precisely within this restraint that a silver lining is emerging.

Smaller, independent and local brands entered 2025 with fewer buffers, but many have ended the year more resilient than expected. Platforms such as Shopify have reported steady growth in merchant sales volumes, particularly among niche brands with strong direct-to-consumer strategies. Consumers may be buying less, but they are buying more deliberately, and often closer to home. Euromonitor data shows that in several European markets, local and regional fashion brands gained share in 2024–2025, supported by storytelling around origin, production and values.

Resilience & authenticity

Authenticity, once an overused buzzword, has become a measurable differentiator. Shoppers are increasingly sceptical of sustainability claims without substance, yet responsive to tangible signals: transparent pricing, visible craftsmanship, repair services, and products designed to last. This aligns with a broader recalibration in fashion’s value proposition. Rather than chasing novelty at speed, brands are finding traction in fewer, better products, a shift that benefits smaller producers who were never built for volume at scale.

Retail, too, is quietly evolving. Physical stores are no longer expected to do everything. In 2026, their role will skew further toward experience, service and community, while transactions continue to migrate fluidly between online and offline. In Europe, experiential retail formats, from in-store ateliers to cultural programming, have shown higher dwell times and conversion rates than traditional layouts, according to multiple retail property groups reporting on 2025 performance.

Retail evolution

So will 2026 be “more of the same”? In macroeconomic terms, perhaps. The industry is unlikely to escape volatility, geopolitical risk or cautious consumers anytime soon. But strategically, it feels different. The excesses of recent years, overpricing, overproduction, overexposure, are being questioned not just by critics, but by balance sheets.

For fashion brands and retailers willing to listen, 2026 offers an opportunity to rebuild trust, sharpen identity and right-size ambition. Growth may be slower, but it may also be healthier. In a market where attention is scarce and loyalty must be earned, doing less with greater clarity could prove to be the most radical move of all.