As we step into 2026, the fashion industry stands at a pivotal juncture, grappling with a remarkable transformation that is reshaping consumer behaviours and brand strategies alike. According to the latest report by Business of Fashion and McKinsey & Co, the global fashion market, valued at a staggering $1.7 trillion (£1.2 trillion), is navigating through significant shifts driven by rising operational costs, evolving consumer values, and the rapid integration of artificial intelligence (AI).
AI: The Driving Force Behind Change
Artificial intelligence has firmly established itself as a game changer in the fashion sector, no longer just a futuristic concept but a present reality deeply embedded in supply chains. By 2030, it is projected that as much as 40% of the workforce in developed economies will require reskilling, as generative AI automates approximately one-third of working hours across various industries.
In the realm of fashion, AI is already making waves in customer service, logistics, and inventory management, enhancing operational efficiency while simultaneously revealing significant skills gaps. Notably, AI is revolutionising product discovery. Searches on AI-driven shopping platforms saw an astronomical increase of 4,700% between 2024 and 2025, with 41% of consumers now placing greater trust in AI-generated search results compared to traditional advertising. This shift could herald a reduction in sponsored posts, paving the way for more personalised and conversational shopping experiences, potentially leading to AI “agents” that handle price comparisons and transactions on our behalf.
The Rise of Emotional Connection
In the UK, consumer sentiment is shifting away from fleeting microtrends and excessive product launches towards a desire for deeper emotional connections with brands. The report indicates that nearly nine out of ten consumers believe belonging to a community associated with a brand fosters loyalty more effectively than influencer marketing.
In response to this trend, brands are beginning to establish “third spaces” that blend retail and social interaction, encouraging consumers to engage not just financially but emotionally. This trend, still in its nascent stages in the UK, reflects a broader global movement away from mere consumption towards investing in lifestyles and experiences. With 62% of consumers expressing strong emotional ties to their favourite brands, integrating wellness into brand strategies is becoming essential. The global wellness market is anticipated to grow by up to 6% annually through 2028, positioning brands that authentically incorporate wellness as frontrunners in a competitive landscape.
Resale Market Gains Traction
For UK shoppers, the most tangible change is the burgeoning resale market. As financial pressures mount, the second-hand fashion sector is outpacing the primary market, with the UK leading the charge thanks to its long-standing appreciation for charity shops, car boot sales, and vintage finds. Everyday wear and occasion outfits dominate this resale trend, reflecting a shift in consumer priorities towards value and sustainability.
Platforms like Vinted have surged in popularity, returning to profitability in 2023 and achieving over 330% profit growth in 2024. By early 2025, Vinted emerged as France’s largest apparel retailer by sales volume. A significant 60% of global consumers are expected to engage in resale shopping by 2026. Retailers are also adapting; Selfridges’ innovative Reselfridges initiative merges trade-ins with specialised partnerships, aiming for 45% of sales to be circular by 2030. For consumers, the appeal of resale lies in both value and ethical reassurance, while brands view it as a strategic avenue for customer acquisition and long-term loyalty.
Economic Headwinds and Resilience
However, this transformation unfolds against a backdrop of economic uncertainty. Rising trade tariffs, increasing duties, and faltering consumer confidence are significant challenges facing the industry. A staggering 76% of fashion executives acknowledge that trade disruptions will substantially hinder growth in 2026, while 78% pinpoint declining consumer confidence as the most pressing threat.
Despite these hurdles, there are signs of resilience among consumers, with nearly one-third still willing to “splurge” on products they deem worthwhile. Categories such as jewellery are outperforming others, as purchasers gravitate toward items that hold emotional significance and perceived longevity. Concurrently, brands are streamlining operations, moving upscale to avoid the pitfalls of low-cost competition, and exploring innovative products like AI-powered smart eyewear, projected to burgeon into a $30 billion global market by 2030.
The overarching message from the State of Fashion 2026 report is clear: the brands that will thrive in the UK market are those that prioritise genuine value—emotional, ethical, and financial—amidst an evolving shopping landscape.
Why it Matters
The transformation unfolding in the fashion industry is not merely about trends; it is a reflection of shifting consumer priorities that demand authenticity, emotional engagement, and sustainability. As brands adapt to these changes, they must navigate economic challenges while fostering deeper connections with their customers. This pivotal moment offers an opportunity for companies to redefine their strategies, ensuring they remain relevant and competitive in a rapidly evolving market. The future of fashion hinges on understanding and responding to these emerging consumer values.
