Download the full 2026 Apparel Industry Trends Report here.

This free trends report outlines industry perspectives and expert advice from our team of retail consultants. You can view an excerpt of the report below, and if you’d like to discuss any of the trends or other challenges in the apparel space, connect with our team today.

Key Apparel Industry Trends

In part due to tariff and general geopolitical uncertainty, customers are being more discerning with purchases. Consumers, especially Gen-Z, are searching for differentiated value with each purchase and will continue to do so moving into the second half of the 2020s. Differentiated value can come as lowered price points, sustainability commitments, personalization, high premium, and conscious marketing. However it’s delivered, brands that clearly communicate value performed better in 2025 and are positioned to continue doing so in the year ahead. 

Despite a difficult market, there are pockets of growth. Jewelry is gaining share as consumers lean into self-expression and purchases that feel more enduring. Wearable technology is also gaining traction. With strides in AI and digital offerings, companies are becoming leaner and faster than ever before, which they will need as they move into another uncertain year. Apparel companies positioned to win in 2026 and beyond will pair a clear value promise with streamlined operations and a practical approach to AI and digital execution.  

Clarkston’s apparel consultants have highlighted the top apparel industry trends that businesses should consider and keep top-of-mind throughout the year:

1. Navigating Tariff Impacts
2. Exploring Multi-Country Sourcing
3. Meeting the Needs of Value-Seeking Shoppers
4. Watching the Growing Jewelry Sector
5. Wearable Technology Gaining Popularity
6. Looking into AI and Cost Cutting

Trend 1:

Navigating Tariff Impacts

The apparel sector has especially felt the impacts of Trump’s tariff negotiations in 2025. The U.S. imports 89% of apparel and leather products sold in the country, leaving the apparel sector as one of the most impacted.   

Most companies regard tariffs as the most pressing challenge to the industry moving into 2026. Victoria’s Secret, for example, reported approximately $100 million net tariff impact in 2025. Tapestry, consisting of Coach, Kate Spade, and Stuart Wiseman, reported the total expected impact on profitability from tariffs at around $160 million, representing nearly 230 basis points of margin headwinds.  

However, despite the tariff burdens, most U.S. apparel companies are attempting to avoid price hikes due to concerns about consumer spending. Instead, many are pursuing gradual increases over time while attempting to absorb the near-term hit. 

URBN describes its approach as “gentle price increases” to preserve value for customers. Colombia Sports is similar attempting to absorb the impact of tariffs by not altering prices of their seasonal product line, but rather offsetting over time with gradual price increases, vendor negotiations, expense efficiencies, and other mitigation tactics.  

To support longer-term cost control, many companies are also optimizing inventory through SKU reduction. Tapestry, for example, reduced handbag styles by over 30% in the fall, allowing them to further streamline their offerings. Value apparel brands like Bershka and H&M reduced SKUs by 15-25% between 2023 and 2025.  

In addition to lowering overhead and supply costs, SKU discipline can free up capital and help brands react faster to shifts in consumer sentiment. As companies plan for sustained uncertainty and ongoing cost pressure, leaner inventories are likely to continue. 

Trend 2:

Exploring Multi-Country Sourcing

Multi-country sourcing is also becoming a core lever for long-term cost control. Companies have already been diversifying beyond China, with the share of apparel and textiles sourced from China down by 6% between 2019 and 2023. This is in part due to the fragility of single country sourcing, as exposed by COVID-19, but additionally due to the rising labor and shipping costs.  

Many companies have shifted more production to other Asian markets, specifically Vietnam, Bangladesh, India, and Cambodia, due to lower labor costs. Vietnam has been a particularly prominent sourcing destination for U.S. apparel retailers, with Vietnamese exports up 35% between 2015 and 2020. Diversification across Vietnam and other Asian hubs is expected to continue into 2026. India is also attempting to capitalize on this shift, with the government investing about $2.5 billion in incentives and reforms aimed at encouraging foreign sourcing and manufacturing.  

While Asia is unlikely to lose its central role given established manufacturing infrastructure, nearshoring is gaining renewed attention as shipping costs rise and tariff outcomes remain uncertain. Shipping costs between the U.S. and Asia increased sharply, skyrocketing 165% between December 2023 and February 2024.  

Nearshoring isn’t a new topic – it became a buzzword in the corporate boardroom especially in the late 2010s and early 2020s. However, despite the buzz, the shares of imports to Europe and the U.S. from nearshoring countries has remained flat since 2019. Limited manufacturing capacity has been a major constraint, despite advantages in labor rates, shipping costs, and tariffs.  

Renewed interest in nearshoring will likely lead to improved capabilities moving into the second half of the 2020s. Foreign direct investment in nearshoring manufacturing has increased by 20% in the last five years, and the Americas Act, if approved by Congress, would dedicate $14 billion to apparel subsidies and investments in nearshoring capabilities. Mexico is emerging as a key nearshoring hub for the U.S., and heading into 2026, nearshoring investment is expected to continue, supporting expanded Mexican manufacturing capacity. 

Continue reading by downloading the full report below.

Download the Full 2026 Apparel Industry Trends Report Here

Read last year’s Apparel Industry Trends Report here.