Research indicates that some of the larger brands are less well represented and covered on AI assistants, while many disruptive challenger brands feature more prominently, Anita Balchandani, the report’s co-author and senior partner at McKinsey in London, told a recent webinar.
This year’s dominant themes in the global fashion industry include agentic AI, the growth of the resale market, the quest for operational efficiency and strategic renewal in the luxury sector, according to The State of Fashion 2026 published by McKinsey and the Business of Fashion.
Tariffs are the top concern of executives surveyed, and the second-most-cited concern was how to unlock efficiency.
A second variant of this is agentic search on brand websites. The brands and retailers doing more in this space are absolutely seeing a lot of customer growth in agentic search traffic, she noted.
Nine in ten consumers cite being part of a like-minded community as a top driver of brand connection. Therefore, brands must think about the shift from attention to retention, said Gemma D’Auria, another co-author and senior partner at McKinsey in Milan.
“We also see that consumers expect more from the brands they interact with; short-lived interactions and the “dopamine hits” are losing their allure. Consumers are looking for more meaningful, sustained connections with brands that reflect their values and evolving identities,” she noted.
Resale is set to grow two to three times faster than the first-hand market in 2027, she said, noting that brands have started to embrace this channel, and some of the early concerns—about authenticity and lack of control over product—have abated.
Tariffs are the top concern of executives surveyed, and the second-most-cited concern was how to unlock efficiency, said Colleen Baum, the third co-author and senior partner at McKinsey in New York.
“The levers that the industry has traditionally relied on—a little improvement in sourcing and in full-price sell-through—will no longer be sufficient to deliver lasting efficiency. The focus here is on finding the next step—through technology, AI, and innovation—that will allow not only investment back into the business but also some of that margin to reach the bottom line,” Baum told the webinar.
Tariffs have increased prices for apparel and leather goods by roughly 35 per cent from a first-cost perspective, and the sector is among the most affected by tariffs in an inflationary market, she said.
In parallel, consumers are becoming more value conscious, with 70 per cent saying they plan to spend less and 80 per cent indicating value-seeking behaviour—waiting for sales or perhaps shopping around at different retailers for an item that they want. These factors have significantly affected working capital and inventory days on hand, she added.
Fibre2Fashion News Desk (DS)