The State of Fashion in 2025: Navigating Change with Adaptability, Value, and Sustainability
Guest posts |
Each year, the Business of Fashion partners with McKinsey & Company to develop a 150+ page report titled ‘The State of Fashion’ where they highlight the 10 most pressing themes of the industry for that year. In our article last year, we referenced this report, as Climate Urgency was one of those 10 pressing themes of 2024. This year, 2025, the urgency has reigned true, yet the industry at large has not taken the necessary steps in action accordingly.
In this article, we will briefly outline the 10 themes for 2025, discuss our key takeaways from the report, and clarify what action steps we identify based on this and how Brazilian cotton is at the forefront of navigating change in 2025.
top 10 industry themes from The State of Fashion 2025 report
Please find the ten themes listed below. For a more in-depth analysis of each theme, be sure to check out the summary here or the extended report here.
Please note that while we worked to make the description of each theme more brief, the words themselves are derived from the sources listed above, as per The State of Fashion report.
- Trade Reconfigured
– Sourcing diversifies amid rising costs, political alignments, and sustainability targets. - Asia’s New Growth Engines
– Leading international fashion brands to look to other Asian markets [aside from China]. - Discovery Reinvented
– Shoppers experience curated fashion content via AI. - Silver Spenders
– Inter-generational appeal unlocks growth with 50+ market. - Value Shift
– Brands to consider value over everything as cost-conscious consumers drive the market. - The Human Side of Sales
– Human connection and enhanced store experiences boost demand. - Marketplaces Disrupted
– Luxury and non-luxury e-commerce platforms continue to decline and must adapt to survive. - Sportswear Showdown
– Innovation and unique brand stories are key in sportswear growth to compete as challenger brands gain traction. - Inventory Excellence
– Technology supports smarter inventory planning in an effort to accommodate margin pressures, sustainability regulation, and avoid excess stock. - The Sustainability Collective
– With barriers including cost and value chain complexity, decarbonization efforts are falling short of targets, and the climate crisis is accelerating. Inaction is not an option.
insights from the report: adaptability, value, sustainability
While each of the ten themes can be discussed at length regarding Brazilian cotton and our work at Cotton Brazil in this evolving landscape, we want to focus on three takeaways.
The importance of:
– adaptability
– value
– sustainability
adaptability is imperative
“The old playbook is now obsolete; the industry will need a new formula.” (Business of Fashion)
A number of the themes outline a shift in focus for many brands and consumers alike. The ability to adapt, adjust, and adopt new ideals is growing whether you are considering alternate trade routes and nearshoring, customer experience, who that customer is, and what they expect from the brand and products they choose.
“In short, the negative environment predicted by many in the fashion industry this time a year ago has now manifested. There is still growth to be found, but economic uncertainty, geographic disparities as well as shifting customer behaviour and preferences mean seizing it will require navigating a maze of compounding challenges at every turn. Consequently, 2025 is likely to be a time of reckoning for many brands. The upshot is that there is still opportunity to be found for brands that move nimbly and are quick to adapt to upheavals in a chaotic marketplace.” (The Business of Fashion)
As detailed under the first theme, Trade Reconfigured, it is essential to “partner with industry stakeholders, such as regulators and manufacturers, engaging in collaborative planning and setting aligned targets to tackle sustainability goals at scale”. At Cotton Brazil, we work hard to collaborate with industry leaders worldwide to provide consumers with the best products. We invite you to check out our latest quality report to learn more.
value defined by consumer expectations
Value has become a key driver for price-conscious consumers. And while willingness to pay more for sustainability has not increased as the industry (and the Earth <3) hoped, the perceived value of a product does. This can be challenging, as value can mean different things to different people, as reflected in themes four and five: Silver Spenders and Value Shifts. It is important that brands identify what their consumer perceives as high value and communicate accordingly.
The idea of “more bang for your buck” can be integrated with innovative technologies, versatile wearing occasions, innate circularity from point of design, resale value, takeback programs entitled by the brand, and the quality of fabrication, to name a few.
Brazilian cotton’s role as a high-value material aligns with this consumer shift. Brazilian Cotton’s three pillars—quality, traceability, and sustainability—also align, as they are key drivers that improve a product’s real and perceived value. Cotton’s inherent durability and versatility (among countless other qualities) make it a high-value raw material.
sustainability needs to be addressed
Approaching sustainability from a value perspective can help to improve its saleability.
The question is clear. In a time when the phrase “unprecedented times” is in our everyday jargon, why on earth would brand executives choose to deprioritize sustainability? The environment is declining while government requirements are increasing, yet executives and consumers are deprioritizing sustainability. The answer to the ‘why’ is price.
“Consumers’ willingness to pay a premium for sustainable goods remains unclear. In the US and UK, for example, 61 percent of consumers rank price as a more important consideration than sustainability in fashion purchases.”
In addition to the many global challenges—such as high margins, tariffs, inflation, tight lead times, and environmental factors—the industry also faces a “$1 trillion required investment in the global fashion supply chain to achieve decarbonization”. However, according to the State of Fashion report, “it is likely more economically viable than executives think.”
The report notes that “brands can reignite progress if they focus on working with the broader fashion ecosystem.” This entails collaboration with brands and stakeholders, suppliers and manufacturers, focusing on “a dual mission addressing profitability and sustainability together.” Reducing their emissions through “joint investments” can be approached by committing to emission-reduction initiatives, rethinking supplier contracts with a focus on decarbonization, and improving data transparency across the value chain to set realistic sustainability targets.
As sustainability regulations and transparency expectations increase, our traceability innovations become increasingly imperative in operations. Organizations like Make the Label Count are advocating for transparency in fiber sourcing. This movement is especially relevant for cotton producers, ensuring that natural fibers like cotton are properly recognized for their environmental benefits. Labels like this can address consumers’ increasing expectations for value.
action steps: education, partnership, and innovation
Based on the report, there are countless actionable steps brands, executives, and suppliers alike can take. In this article, we’ll close by focusing on the following three:
The importance of:
– education
– partnership
– innovation
educating the consumer to enhance value
The industry at large must work to educate the consumer of the value correlations to sustainability. As cost is continually predicted to increase, differentiation is at the “top of executives’ priorities this year… whether through new designs, customer experiences or finding new customer niches.” According to the report, “With the exception of a handful of brands, the industry has yet to unlock a marketable, at-scale value proposition for sustainable fashion.” We see this as an opportunity. The responsibility has been placed on brands to “actively engage and educate consumers to ignite demand for sustainable products.”
We hope that education moves past the brands and that the industry as a whole takes on the challenge of educating the consumer. At Cotton Brazil, we have a culmination of blog posts ranging from event coverage to trend analysis and sustainability exploration.
partnering across supply and value chains
Partnering across the supply chain to educate the consumer is one point. The next is collaborating throughout the value chain, “instilling a partnership mentality, working from a single source of truth (known as a “platform approach”) and connecting decision making across functions.” This is to help streamline inventory, avoiding overstock, among other challenges as mentioned in theme nine, Inventory Excellence, including “rapid trend cycles, unpredictable seasonality, lengthy supply chains, and product and channel complexity”.
innovation for a better future
Finally, innovation continues to be at top of mind. Whether it’s AI’s involvement in improving customer experience (as seen in theme three, Discovery Reinvented) or enhancing data transparency technology (theme ten, The Sustainability Collective), incorporating digital innovations is critical for success in the fashion sector and beyond.
growing for a better future
Change is the only constant. While many could feel discouraged after reviewing the State of Fashion 2025 detailed report, we are inspired to continue our efforts and promote a natural raw material and mission that aligns deeply with the future of fashion. As highlighted in theme six, The Human Side of Sales, human connection is at the core and ethos of growth. Together, we are proud to be growing for a better future.
