The perspective below is informed by the latest State of Fashion 2026 research from McKinsey & Company and Business of Fashion, combined with my own experience building infrastructure inside the reverse logistics layer of retail. The data is clear. The patterns are consistent. And what’s emerging across both the research and the field is a gap between how the industry talks about the future and how it actually operates.
“Constant change is simply the new normal.”
— McKinsey & Company
The fashion industry is no longer planning around cycles. It is operating inside continuous volatility. Tariffs are shifting supply chains, costs are rising, and demand is becoming less predictable. The traditional retail model of plan →produce → sell is under pressure from every direction. What once felt like temporary disruption has become the baseline operating environment.
At the same time, executives are responding in familiar ways. Nearly three-quarters expect to raise prices, while consumers are actively “rethinking their spending, seeking value.” That tension defines 2026. Higher prices are colliding with more selective demand, and the impact extends beyond the point of sale. Sell-through slows, return rates increase, and inventory sits longer. The financial consequences do not disappear—they accumulate.
“Customers are spending more on secondhand…in the search for value.”
— McKinsey & Company
Resale is one of the most visible themes in the report. It is growing quickly, becoming mainstream, and increasingly positioned as both a revenue stream and a sustainability strategy. The underlying driver, however, is more practical than aspirational.
“Affordability is a key driver for shopping secondhand across consumer cohorts.”
This is a value story. Consumers are turning to resale to spend less, not necessarily to consume more responsibly. That distinction matters. Resale performs well when products are desirable, in good condition, and priced correctly. It is inherently selective by design.
The implication is straightforward. As resale scales, it captures the highest-value inventory and leaves the rest behind. Growth in resale does not eliminate excess inventory. It redistributes it.
“Circular approaches…were highlighted as areas where executives see potential to create value."
— McKinsey & Company
Circularity is back in focus, but the definition remains too narrow. It is often equated with resale, which only represents one outcome within a much larger system.
Every product has multiple possible paths once it enters the market. It may be kept, returned, resold, donated, or recycled. Most brands actively manage only a portion of these outcomes. The remainder is handled manually, inconsistently, or without visibility.
This is where value erodes.
Circularity is not a channel strategy. It is the coordinated management of all product outcomes. What gets resold is only one part of the equation. What does not get resold is where the majority of inefficiency—and opportunity—sits.
“Executives identify scaling AI…as the single biggest opportunity.”
— McKinsey & Company
Investment in technology is accelerating, particularly across AI and digital capabilities. Current applications are concentrated in areas like marketing, merchandising, forecasting, and customer experience. Efficiency efforts are similarly focused on sourcing and demand planning.
These are important levers, but they are concentrated upstream. Very little of this investment is directed toward what happens after the sale. Reverse logistics continues to operate with less structure, less visibility, and less optimization than any other part of the system. This imbalance is significant, as it represents one of the largest sources of margin leakage across retail operations.
“Automation of cost-intensive processes frees up resources…”
— McKinsey & Company
Efficiency is becoming a priority as growth becomes less predictable. However, the industry’s definition of efficiency remains incomplete. Improving sourcing, forecasting, and cost structures addresses only part of the problem.
A meaningful portion of cost sits in returned, unsold, and excess inventory. These outcomes are increasing as consumer expectations rise and purchasing becomes more selective. Without addressing how this inventory is handled, efficiency gains elsewhere are diluted.
The opportunity is not limited to selling more effectively. It extends to recovering value from products that have already been produced and are no longer moving through primary channels.
The Disposition Maturity Model: How Circularity Actually Scales
Resale provides a useful precedent. Its growth followed a clear progression from fragmented experimentation to structured partnerships and eventually to fully integrated infrastructure. Control increased over time, data improved, and economics followed.
Other disposition paths—donation and recycling—are now moving through a similar progression.
In the earliest stage, decisions are made locally at the store or warehouse level with little coordination or tracking. This approach is easy to implement but creates inconsistency and limited visibility. In the next stage, brands establish programmatic partnerships with nonprofits or recyclers, introducing rules and some reporting. This adds structure but remains fragmented and disconnected from core systems.
More advanced retailers are beginning to move toward integrated routing. In this model, decisions are centralized and often powered by software. Products are routed dynamically across resale, donation, and recycling based on cost, condition, and outcome. This is where meaningful efficiency gains and data visibility begin to emerge.
The most mature stage uses this data to inform upstream decisions. Patterns in returns, resale eligibility, and waste are used to refine forecasting, production, and merchandising strategies. At this point, circularity becomes predictive rather than reactive.
Resale reached scale when it became infrastructure. Donation and recycling will follow the same path.
“Use a pilot-test-learn-scale approach…”
— McKinsey & Company
This shift in operating model aligns closely with how startups function. Startups operate in uncertainty, test quickly in real environments, and adapt based on direct feedback. Enterprise partnerships play a critical role in this process, shaping product development and accelerating iteration.
This dynamic creates a level of responsiveness that is difficult to replicate within more rigid systems. Retailers do not need to build this capability internally from scratch. They can access it through partnerships with companies designed to operate this way.
The objective is not to eliminate risk entirely. It is to contain it through structured testing and faster learning cycles.
“The apparel and footwear industry is among the most exposed…”
— McKinsey & Company
Rising costs amplify the impact of inefficiency. Tariffs increase the cost of goods, while slower sell-through and higher return rates increase the cost of holding and processing inventory. Each unit carries more financial weight, and the margin for error narrows.
Excess inventory is no longer a secondary issue. It represents a direct and growing cost burden. The way it is handled has a measurable impact on overall profitability.
What to do next
Retailers are not lacking in strategy. The gap is in execution.
Reverse logistics should be treated as a core margin lever, with clear ownership, measurement, and optimization. A multi-path disposition strategy is essential, integrating resale, donation, and recycling into a unified system rather than managing them as separate initiatives. Testing should focus on routing decisions, not just individual channels, to understand how inventory moves across outcomes. Post-purchase data should be captured and used to inform future production and merchandising decisions. Speed of execution matters, and partnerships that enable rapid testing and iteration will provide a meaningful advantage.
Final thought
Resale is growing as consumers seek value. Waste is increasing as the system absorbs more pressure. These trends are not in conflict—they are connected. The opportunity is not to choose between resale and waste reduction. It is to implement the infrastructure that manages both.
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