Moderate consumption
As in 2025, global consumption of clothing and footwear remained moderate in 2026. Growth in demand for clothing slowed in the three main consumer markets – the European Union (EU), the US and China. However, the situation varied by region: whilst demand was relatively resilient in the US and sluggish in Europe, clothing sales in China showed virtually zero growth during the first eight months of the year. This slowdown in clothing consumption – one of the expenditure categories most likely to be deferred – is taking place against a backdrop of inflationary pressures, fuelled in particular by rising energy prices, as well as rising interest rates. In 2027, the easing of inflation is expected to support the sector, although the risk of persistently high energy prices could continue to curb consumer spending on textiles and clothing.
Against this backdrop of uncertainty and fragile demand, cost-conscious consumer behaviour is therefore likely to persist, reinforcing the long-term downward trend in spending on clothing (as a percentage of household retail sales). This is expected to continue to drive demand for low-priced clothing offered by fast-fashion retailers and online ultra-fast fashion platforms. This context is also fuelling interest in value-for-money alternatives, such as “dupes” (low-cost imitations) and special offers. At the same time, it is also fuelling the expansion of the second-hand market, with the growth of specialist shops and online platforms such as Vinted. In response to the boom in this segment, fashion brands and retailers have dedicated part of their shops to selling second-hand items. This is the case, for example, with H&M, which has created second-hand sections in some of its shops.
Fashion retail sector under pressure
This environment presents further challenges for fashion retailers, which have already had to adapt to increased competition posed by the rise of online sales. This situation, combined with the growing role of the internet and social media, has led fashion boutiques and brands alike to rely increasingly on these tools as part of their marketing strategy. The sluggish climate for clothing consumption makes it all the more important for sector players to use these tools.
The situation is also putting pressure on the profitability of fashion retailers and limiting their ability to raise prices. Clothing retailers have already seen pressure placed on their profitability in recent years. The EBITDA margin of listed companies fell from a median of 11.5 per cent in 2021–2022 to less than 10 per cent in 2024–2025. Fashion brands that sell their products directly through their own shops are expected to better withstand price pressures, as they generally operate with higher margins. Their median EBITDA margin stood at 15.9 per cent globally in 2024–2025 (compared with 16.5 per cent in 2021–2022).
Robust technical textiles sector
Although it may seem paradoxical, consumers’ interest in fast fashion and ultra-fast fashion goes hand in hand with a growing interest in more responsible and environmentally friendly clothing production. As a result, fashion brands – including the fast-fashion giants – are incorporating sustainability into their strategies.
The trend will continue to benefit certain parts of the supply chain. This is expected to be the case for recycled fibres (7.6 per cent of textile fibre production in 2024). Nevertheless, the market share of recycled fibres has stagnated in recent years, largely due to higher production costs. Furthermore, the widespread use of fibre blends in textiles poses significant challenges for post-consumer recycling.
The appeal towards more responsible production could also benefit man-made (or manufactured cellulosic) fibres. Derived from natural materials, primarily wood, they enjoy a more favourable image than synthetic fibres. Furthermore, their production does not require the use of pesticides, insecticides or large quantities of water, unlike cotton. That said, growing environmental awareness will also fuel concerns about deforestation, to which the production of man-made fibres may contribute. European deforestation regulations, which will ban the import of products associated with deforestation from 30 December 2026, could therefore affect certain items made from man-made fibres.
Apart from environmental concerns, technical textiles intended for the medical and defence industries, or used in specialist sports and outdoor clothing (20 to 25 per cent of the clothing and footwear market), are expected to continue benefiting from stronger demand. By contrast, the outlook for the home textiles segment – the second-largest use of textile fibres after clothing – will remain fragile, mirroring the global construction sector. The luxury sector is also experiencing mixed conditions. The slowdown in household consumption in China could continue to drive demand for affordable products.
Textile fibre prices faced with oil market volatility
Despite an economic climate characterised by weak demand for textile products, fibre prices have risen sharply in 2026 as a result of rising energy prices. As synthetic fibres are derived from petrochemicals, the price spike has driven up their prices and, in turn, those of natural fibres. In August 2026, cotton prices were up 35 per cent compared with February of the same year, whilst Chinese polyester traced a similar trend. Mirroring the oil market, fibre prices are expected to moderate in 2027 but remain higher than before the start of the crisis in the Middle East. Moderate growth in consumption by spinning mills and high stock levels are likely to put downward pressure on prices. However, a further surge in oil prices triggered by a geopolitical event could nevertheless fuel another price hike.
Another risk that could drive up commodity prices is related to the climate. Global fibre production is heavily concentrated in countries that are particularly vulnerable to climatic hazards. According to the World Bank, more than 75 per cent of the population of China – which accounts for 73 per cent of global chemical fibre production and 29 per cent of global cotton production – and of India – which accounts for 21 per cent of global cotton production – were affected by a climate-related disaster in 2024. This vulnerability increases the risk of supply disruptions and, consequently, price pressures.
When textile fibre prices rise, clothing and footwear manufacturers emerge as the weakest links in the clothing value chain. In 2021, the sharp rise in the price of yarn and fabrics sold by textile manufacturers was only very partially passed on to the retail prices charged by garment manufacturers. The rise in fibre prices could therefore once again squeeze clothing manufacturers’ margins this year. This vulnerability stems from the significant proportion of raw materials (yarn, fabric and trimmings) in their production costs, estimated at between 40 and 60 per cent. Furthermore, their ability to pass on these cost increases to their customers remains limited, given the power imbalance in favour of fashion brands and the fragility of end-consumer demand. Moreover, clothing manufacturers often have little room for manoeuvre when it comes to optimising their purchasing, as the sourcing of raw materials is frequently dictated by their clients.
It should be noted that climate-related risks not only affect the production of textile fibres, but also the entire clothing value chain (yarn, fabric and garments), which is heavily concentrated in countries vulnerable to climate-related hazards, such as China, Bangladesh and Vietnam.
Gradual reconfiguration of the supply chain
Last updated: October 2026
Textile-Clothing