According to the 2025 report by McKinsey & Company and BoF “The State of Fashion 2025”, in 2025 the fashion industry finds itself operating a complex and volatile landscape. After years of disruption—from the pandemic to economic uncertainty—brands are being forced to rethink how they operate. Profit margins are tight, and with inflation and cautious spending, companies are being pushed to do more with less resources, leading to an overall less positive outlook on the year ahead.
At the same time, consumers are changing. Today’s shopper is increasingly price sensitive and has shown to be less willing than hoped to pay extra for planet-friendly products. Consumers searching for value are however driving the resale market, and the drive for affordability is propelling growth for off-price retailers and outlets. Many consumers are shopping digitally, comparing prices, leading to the in-store experience as a crucial differentiator. To drive growth, companies are recommended to rely on older generations (“Silver Spenders”), as younger consumers are more financially squeezed than other cohorts. 
While governments are introducing stricter regulations on sustainability, factors like complexity, fragmentation and consumer sentiment are barriers to sustainability targets. As a result, brands, suppliers and innovators are struggling to make progress, finding difficulties in raising funds or quitting production altogether. However, sustainability can also be an opportunity for the fashion industry by shifting the focus on cost-effective decarbonisation, rethinking long-term supplier contracts and analyse data in a more granular way. 
On a global scale, supply chains are being restructured. Geopolitical shifts and rising costs are pushing companies to diversify where they source and manufacture. Emerging markets in the Global South are starting to play a bigger role, both as production hubs and as growing consumer bases.
Finally, attracting and retaining talent is becoming just as important as designing the next big collection. Internally, brands are realizing they need to cultivate new skills—especially in tech, data, and customer care, supported by employee incentives and rewards. 
In short, 2025 will be a year of transition. The fashion industry is being reshaped by economics, technology, sustainability, and a more demanding consumer. The brands that succeed will be the ones that stay agile, act with purpose, and keep pace with a rapidly changing world.