Lectra analysis: Navigating volatility in the global fashion industry

The global fashion industry is currently grappling with significant uncertainty in 2025, with only one in five sector leaders anticipating an overall improvement this year. This instability is driven by a confluence of factors, including consumer confidence reaching its lowest levels since the pandemic, a reduction in discretionary spending, and the complex global geopolitical landscape, further compounded by the imposition of U.S. tariffs.

Lectra, a key provider of Industry 4.0 solutions for the fashion, automotive, and furniture sectors, has analysed real-time data from its AI-driven solution, Retviews, to pinpoint the repercussions of this challenging environment on global brands. The analysis indicates that growth in 2025 is expected to be primarily volume-driven, necessitating a strategic shift for brands. Notably, for the first time since 2010, the market is projected to be led by non-luxury brands.

Lectra analysis reveals success factors in volatile climate

Antonella Capelli, Lectra’s EMEA president, explained the critical success factors in this volatile climate. She stated that "Assortment optimisation, increased sell-through (i.e., the percentage of products sold compared to those available), and more accurate market monitoring will be crucial to success, even in such an uncertain environment."

Capelli further emphasized the role of technology: "Knowing how to leverage technology to obtain and analyse real-time market insights is therefore essential for adjusting your pricing approach, ensuring alignment with consumer expectations while also meeting business performance and inventory management needs. At Lectra, our mission is to accompany brands along their digital transformation journey, offering them the best tools to make well-informed decisions."

Retail brands reinvent strategies

The current market dynamics, characterised by a slowdown in luxury fashion performance globally and a progressive consumer shift away from fast fashion, have prompted mainstream retail brands to reinvent their strategies. Some are adopting a more premium approach, even recruiting new talent to penetrate the luxury market, while others aim to reposition themselves to enhance brand image.

The Retviews study confirms this trend, showing that European mass-market fashion brands are expanding their product ranges beyond the 25 euros threshold and reducing the quantity of products in lower price categories. For instance, Zara increased its assortment share in all price ranges above 34 euros, and Uniqlo saw an increased share of items priced between 17 euros to 34 euros and 76 euros to 85 euros. U.S. brands are also exhibiting a similar shift towards higher price ranges in their pricing strategies. However, brands must remain acutely aware of consumer cost-consciousness and adjust pricing strategies in real time based on market trends.

Inflation and tariffs impact pricing

Inflation and potential tariffs are also influencing pricing. According to Retviews data, annual price increases in 2025 are higher in the European market, with average prices rising from 38 euros in 2023 to 40 euros in 2024, and reaching 42 euros in 2025. In the United States, average prices increased from 57 dollars in 2023 to 63 dollars in 2024, and 64 dollars in 2025.

The long-term impact of potential U.S. tariffs could lead to significant pricing changes. In Europe, the anticipated success of non-luxury brands is already driving pricing shifts in trending categories compared to 2024. This includes increases in non-luxury leather goods (20 percent for bags, 23 percent for wallets/cases), entry-level T-shirts (8 percent), and Ivy League-style polo shirts (4 percent). Conversely, leggings saw a 3 percent price decrease, impacted by the activewear boom that has led to mainstream fashion brands lowering prices and reducing assortment in this category.

Fashion brands rethink discounting strategies

Discounting strategies are also evolving. Analysing market trends and consumer preferences is crucial for identifying products that can be discounted without compromising margins, such as mass-produced leggings where consumer interest is declining. In Europe, discounts commenced slightly earlier in 2025 than in previous years, with over 15 percent of inventory discounted by early January, rising to over 40 percent within a week due to seasonal sales.

While the average discount rate in 2025 was lower than in 2024, the average value of around 20 percent remained stable for a longer period. Brands like Uniqlo, for instance, maintain consistent low prices year-round to safeguard their brand image as a provider of essential basics, rather than focusing on seasonal sales. In contrast, major brands like Zara and Mango still rely on traditional seasonal sales, leading consumers to anticipate steep reductions and often delay purchases.