Kearney 2026 Index: Fashion Shifts From Compliance to Circular Value

The report, which evaluated 241 brands across 21 countries, shows the industry average score climbing to 3.7 out of 10, up from 3.4 last year. Despite this progress, a profound execution gap persists: while roughly three-quarters of brands maintain moderate activation, only 3% to 7% have achieved extensive implementation. The threshold to reach the top tier has increased, signaling that the bar for operational maturity is rising.

Nora Kleinewillinghoefer, Kearney partner and co-author, notes that the shift forces executives to rethink their investment strategy. Capabilities like product data tracking and post-use systems are now baseline requirements. Brands that treat these solely as costs of compliance risk stagnation, whereas those that integrate them into core design and sourcing decisions gain a distinct commercial advantage. Outdoor and premium luxury sectors currently lead this transition, though service-based models like rental and resale remain dependent on specific consumer demand and scalable economics.

To bridge the gap between compliance and performance, Kearney identifies four critical management shifts. These include building reusable product records, embedding circular trade-offs into finance and operations, establishing clear accountability across supply chain partnerships, and prioritizing portfolio economics that account for residual value. Success in the coming years will depend less on the sheer number of circular initiatives and more on how effectively brands leverage these systems to improve their bottom line.