Fashion Retail Trends in Australia: Where Growth Is Shifting and What Retailers Need to Watch

Fashion retail loves a simple market story. Growth. Slowdown. Recovery. Decline.

The trouble is, the Australian market is becoming much harder to describe with a single word.

At Apparel²¹ Day 2026, Salim Biskri from BDO framed the shift in a way that gets much closer to what fashion businesses are dealing with:

“This is not a seasonal change, not really a cyclical change. We think it’s a structural change.”

That changes how retailers should read the market. A difficult trading environment does not mean every category is struggling at the same rate. Growth in one part of fashion can sit alongside margin pressure somewhere else. Customer behaviour is changing, channel expectations continue to evolve, and some business models are adapting faster than others.

For fashion leaders looking at the next 12 to 24 months, the more useful question is not whether the market is up or down. It is where the movement is happening, what is driving it, and whether the business is positioned to respond.

What Are the Biggest Fashion Retail Trends in Australia?

The fashion retail trends highlighted at Apparel²¹ Day point to a market becoming more fragmented.

Salim's presentation identified stronger momentum across areas such as athleisure and activewear, performance footwear, children's wear, premium and luxury, and online direct-to-consumer models. At the same time, parts of the mid-market, non-athletic footwear, formalwear and retailers with limited online integration were facing more pressure.

There are wider forces sitting across those category differences too. Promotional activity is putting pressure on margins. Returns and reverse logistics are adding cost. Customers have become accustomed to moving between physical and digital channels. Sustainability continues to influence the market, while AI is beginning to change how retailers think about the future shopping journey.

Put together, this makes averages less useful on their own.

A growing fashion market does not guarantee growth for every fashion business. A pressured market does not mean opportunity has disappeared either.

The detail underneath the headline matters more.

The Fashion Market Is Splitting Into Different Speed Lanes

Salim had a good phrase for it:

“It’s a market splitting in different speed lanes.”

That is a better way to think about Australian fashion retail than assuming the whole market is travelling in the same direction.

Athleisure and activewear were highlighted as areas benefiting from shifts in working and lifestyle habits. Children’s wear was another growth area discussed, with quality, sustainability and repeat purchasing helping support the category. Performance footwear, premium and luxury, and online D2C were also part of the stronger-growth picture presented.

Elsewhere, the picture is less comfortable. Mid-market apparel faces pressure from faster and lower-cost competitors. Formalwear continues to respond to changes in how people work and dress. Non-athletic footwear has different growth dynamics from performance footwear, while businesses with limited online integration face their own constraints.

The practical takeaway is that category-level performance matters.

A headline industry figure may look encouraging while an individual assortment, channel or customer segment is moving in the opposite direction. Retailers need enough visibility into their own business to know which speed lane they are actually in.

Why Repeated Discounting Can Change Customer Behaviour

Promotions are part of fashion retail. The risk appears when the customer begins to assume the promotion is the real price.

Salim put the issue directly:

“Discounting doesn’t just hurt the margin. It changes the consumer behaviour.”

The session went further, arguing that repeated discounting can encourage customers to wait, weaken price integrity and eventually affect brand equity.

That is what makes promotional intensity more than a margin conversation.

A discount may solve an immediate inventory problem or generate a short-term sales lift. But if customers learn that another promotion is always around the corner, full-price demand becomes harder to protect.

For senior teams, the useful question becomes less about whether promotions work. Plenty of them do. It is whether the business understands what behaviour it is training over time.

That connects directly back to positioning. A brand competing on price will make different promotional decisions from one trying to protect a premium proposition. Problems emerge when the customer is receiving mixed signals about which proposition the brand actually stands for.

Fashion Retailers Are Already Changing How They Respond

The Apparel²¹ Day session also looked at how global retailers are adjusting to a less predictable operating environment.

Examples included rationalising store portfolios, concentrating investment in stronger locations, managing excess or legacy inventory more deliberately, using different production approaches depending on the product, and investing in repair or product-life initiatives.

Zara was discussed as an example of using a hybrid production model, with more time-sensitive products produced closer to its core market while other ranges continue through a broader sourcing model.

The value of those examples is not that every retailer should copy the same model.

They show that response is becoming more selective.

Stores do not all need the same investment. Products do not all need the same sourcing model. Inventory does not deserve equal commitment simply because it already exists. Channels should not automatically be managed as separate businesses.

The common thread is a willingness to look at the operating model and change where the numbers no longer support the old assumptions.

Five Priorities for Fashion Retailers Over the Next 12 to 24 Months

Toward the end of the session, Salim brought the discussion down to five priorities. They give fashion leaders a useful framework because they move the conversation beyond observing trends and into deciding what to do with them.

1. Get Clear on the Value Proposition

The first priority was clarity around how the brand intends to compete.

Salim framed the choice around affordability on one side and brand community or premium positioning on the other, with a warning that trying to do both can create problems.

Most fashion businesses will sit somewhere between those extremes, but the broader point still holds. Product, pricing, customer experience and promotional behaviour need to make sense together.

If the proposition says premium while the trading calendar constantly teaches customers to wait for markdowns, the customer will notice the contradiction.

2. Put Cost Discipline Back Into the Growth Conversation

Salim's second priority had perhaps the sharpest line of the session:

“Margin recovery is not going to come from hope or better market opportunities.”

Salim’s point was that businesses still need to manage the costs already inside the operation, including logistics and occupancy.

That means growth needs to be read alongside the economics behind it. Which products are generating profitable volume? Where is inventory tying up capital? Which channels create avoidable fulfilment cost? Which stores or locations justify further investment?

Waiting for the trading environment to become easier is not much of a strategy.

3. Treat Omnichannel as a Capability, Not a Slogan

This one barely needs rewriting:

“Treat omnichannel as a capability, not as a slogan.”

Salim's follow-up is what makes it useful. The question is not simply stores versus online. It is how the network works together across fulfilment, convenience and customer experience.

That shifts omnichannel from a marketing idea into an operating model.

Can the customer see accurate availability? Can an order move through the network without teams manually piecing together what happened? Can stock be used intelligently across physical and digital channels? Can the business understand performance across the whole customer journey rather than reporting each channel in isolation?

Apparel²¹ explores this in more depth in The Benefits of Omnichannel Strategies for Fashion Retail. 

4. Keep Sustainability in the Operating Agenda

Sustainability featured in the session both as a consumer consideration and as something larger retailers increasingly need to address through reporting and business practices. Circular models and resale were also discussed as emerging parts of the fashion landscape.

For retailers, that pushes sustainability beyond campaign language.

Product lifecycle, sourcing decisions, inventory waste and the amount of stock that ultimately moves through markdown or disposal all have operational consequences.

The commercial question is how sustainability fits into the way the business buys, produces, moves and manages product, rather than treating it as a separate conversation once the collection is already on the floor.

5. Start Preparing for AI Before the Shopping Journey Changes Again

The final priority looked further ahead.

Salim raised autonomous AI shopping agents as one development that could change the shopping experience.

Exactly how quickly that behaviour develops remains to be seen, but the operational question is already relevant.

AI-driven discovery and shopping will still depend on the quality of the information underneath it. Product data, pricing, availability and customer information need to be accurate enough for increasingly automated experiences to work.

For fashion retailers, preparing for AI therefore does not begin with finding the flashiest AI feature.

It begins with the less glamorous work of making sure the business knows its products, customers, inventory and performance well enough for new technology to do something useful with that information.

What Do These Fashion Retail Trends Mean Operationally?

There is a common thread running through nearly every trend in Salim's presentation: retailers need to make decisions with a clearer view of what is happening across the business.

That becomes harder when inventory, stores, ecommerce, orders and reporting operate through separate systems.

A promotion changes demand. Demand changes inventory. Inventory affects fulfilment. Fulfilment affects customer experience and cost. Those relationships are already connected commercially, even when the systems behind them are not.

This is where the technology conversation becomes relevant.

Apparel²¹ Retail brings inventory control, merchandise planning, retail back office and POS functionality into one retail environment, with stock, order and sales information available across the business.

For retailers dealing with growing channel complexity, Apparel²¹ also looks at this problem in its guide to connected fashion retail software, particularly the operational pressure created when stores, ecommerce and fulfilment are working from disconnected information.

The aim is not to turn every market trend into a software problem.

It is to recognise that responding quickly becomes much harder when leadership cannot see clearly what is happening with sales, stock, margins and operations.

The Market Is Moving. The Useful Question Is Where.

Salim closed the Apparel²¹ Day session by describing an Australian fashion sector being reshaped by technology, consumers, margin pressure and a new competitive landscape. Some categories are accelerating, others are declining, and different business models are responding in different ways.

That is probably the most useful way to read the current fashion retail trends in Australia.

There is no single direction of travel.

For fashion leaders, the job is to understand where demand is moving inside their own market, whether the economics behind that growth still make sense, and whether the operation can change quickly enough when the answer shifts.

Clear positioning helps. Cost discipline helps. A genuinely connected channel model helps. So does having reliable information underneath the decisions.

The market may be splitting into different speed lanes. The important part is knowing which one your business is in, and whether you intended to be there.

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Frequently Asked Questions

What are the biggest fashion retail trends in Australia?

The Apparel²¹ Day session highlighted uneven growth across fashion categories, greater pressure on margins, high promotional intensity, continued development of ecommerce and omnichannel retail, sustainability, and the emerging impact of AI on the shopping journey. The important theme is that different categories and business models are moving at different speeds.

Which fashion categories are showing growth in Australia?

In Salim Biskri's Apparel²¹ Day presentation, stronger areas included athleisure and activewear, performance footwear, children's wear, premium and luxury, and online D2C. These were presented as category-level signals rather than evidence that every business within those categories will experience the same performance.

Why is profitability under pressure for fashion retailers?

The session pointed to a combination of promotional intensity, foreign exchange exposure, returns and reverse logistics, and competition from ultra-fast fashion as sources of margin pressure. Retailers therefore need to look beyond sales growth and understand the cost and margin behind that revenue.

How can discounting affect a fashion brand?

Discounting reduces margin directly, but repeated promotions can also influence customer expectations. Salim argued that customers can become accustomed to waiting for discounts, which may weaken price integrity and eventually affect brand equity.

What does omnichannel capability mean in fashion retail?

Omnichannel capability means physical and digital channels work as parts of the same retail network. Salim described the issue in terms of how stores and online operations work together across fulfilment, convenience and customer experience, rather than treating the decision as simply stores versus ecommerce.

What should fashion retailers prioritise over the next 12 to 24 months?

The five priorities presented at Apparel²¹ Day were a clear value proposition, stronger cost discipline, genuine omnichannel capability, sustainability and preparation for AI-driven changes to retail.