Table of Contents

1. Key Highlights
2. Introduction
3. What the BCG survey actually measured — and why net spending matters
4. Which fashion items consumers still buy — and which they abandon
5. Why discounting has become a baseline behavior
6. The economic forces behind tightened apparel spending
7. How retailers are responding — inventory, pricing, and assortment tactics
8. The unequal impact across fashion tiers: luxury, midmarket, and fast fashion
9. Sustainability goals collide with short‑term economic pressures
10. Real‑world responses and emerging models
11. The circular economy’s fragile momentum
12. What investors and supply‑chain partners should watch
13. Policy and macro context: why consumer confidence matters beyond sales
14. Practical strategies for brands to survive the downturn and emerge stronger
15. Early signals of recovery and the path back to full‑price selling
16. The long view: will this reshape European fashion consumption permanently?
17. FAQ

Key Highlights

• A Boston Consulting Group survey of over 20,000 consumers across 11 European countries finds widespread pessimism: 56% feel negative about the economy and 53% are worried about daily personal finances—both figures at multi‑year highs.
• Spending is concentrated on essentials; groceries and pet care show the only positive net spending (driven by price increases), while fashion records the largest net drop, with accessories, handbags, and formalwear taking the heaviest hits.
• Discount-driven buying is entrenched: 63% of consumers now only purchase apparel at a discount, and 73% in fashion specifically—forcing retailers to rethink pricing, inventory, and sustainability strategies.

Introduction

European consumers are retrenching. A large, cross‑country survey by Boston Consulting Group, conducted with NativeResearch and polled last April, documents a clear shift in household priorities: clothing has become a discretionary casualty of growing financial stress. After years of supply chain shocks, inflationary pressure, and energy cost shocks, shoppers are conserving cash and redefining what counts as essential. The consequences reach beyond sales figures. They alter product assortments, accelerate the dominance of discount channels and resale, and complicate sustainability agendas that depend on stable demand and premium product offerings.

The BCG findings are unambiguous. More than half of Europeans say they feel bad about the economy; consumers would prefer to save a hypothetical windfall rather than spend it; and fashion, above all other discretionary categories, faces “pure abstention.” The resulting consumer behavior offers a test case for retailers of every size and market position. Brands will need to balance short‑term survival—through promotions and inventory management—against longer‑term questions about pricing power, brand equity, and environmental commitments.

This article translates the BCG survey into practical implications for brands, retailers, policymakers, and consumers. It explains where spending has held up, which fashion subcategories remain resilient, how discount dependence is changing the market, and what strategic responses can reduce risk while preserving value and sustainability goals.

What the BCG survey actually measured — and why net spending matters

BCG’s study polled more than 20,000 consumers across 11 European countries in April. The key emotional barometer is straightforward: 56% of respondents reported feeling negative about the broader economy—the highest level since BCG began its annual survey in 2024. Personal finance anxiety rose sharply as well: 53% reported worries about daily finances (up from 40% in 2024), and roughly six in ten expressed concern about having enough money for retirement.

BCG used net spending to gauge short‑term behavior. Net spending equals the share of consumers who increased spending minus those who decreased it. This measure captures momentum and direction more clearly than raw spending figures, because it shows whether categories are gaining or losing consumer attention.

Two categories bucked the downward trend: groceries and pet care. Both showed positive net spending—but BCG stresses that this is a price‑driven effect. Consumers are not necessarily buying more food or pet supplies; rising prices are inflating spending totals. Fashion sits at the other extreme: negative net spending driven by deliberate abstention rather than mere price sensitivity. The difference matters for forecasting demand: price‑driven increases can stabilize when inflation abates, but abstention signals a structural reordering of priorities.

Which fashion items consumers still buy — and which they abandon

BCG’s category breakdown reveals a nuanced picture. Not all apparel is equal. Everyday, functional pieces have retained relatively more traction than luxury or occasionwear.

• Footwear: –12 points net spending. Core categories like sneakers and everyday shoes have seen declines but fared better than premium categories.
• Casual wear: –13 points. T‑shirts, jeans, and sweatshirts are down but remain more resilient than formal pieces.
• Sportswear: –14 points. Athletic apparel has softened but holds more redistributive value, often used for athleisure and daily comfort.
• Formal and evening wear: –20 points. Occasion‑driven purchases are collapsing as events are postponed or deprioritized.
• Handbags: –23 points; accessories: –22 points. High‑ticket and signaling items are among the hardest hit.

This segmentation reflects a fundamental recalibration of value. Consumers prioritize utility, comfort, and longevity over adornment and status signaling. The decline of handbags and accessories—typically higher margin items for many brands—exposes retailers to disproportionate profit erosion.

Why discounting has become a baseline behavior

Value-seeking behavior is now routine. Nearly two thirds (63%) of consumers say they will only buy apparel at a discount, consistent with last year’s level. In fashion specifically, 73% adopt this behavior. The permanence of discount dependence carries several implications:

• Profit compression: When discounts become expected, gross margins erode. Retailers that compete primarily on promotional tactics risk a race to the bottom.
• Inventory dynamics: Heavy discounting reduces the ability to clear seasonal inventory profitably, increasing the frequency of markdown cycles and raising the cost of holding unsold goods.
• Brand dilution: Persistent promotions recalibrate consumer perceptions about a brand’s intended price point and prestige, complicating long‑term brand strategies.
• Channel shifts: Discount dependence fuels growth in off‑price retailers, outlet channels, flash sales, and resale platforms—channels that often capture customers permanently.

Discounts serve as a short‑term traffic driver and cash flow fix. They also lock in a behavioral expectation that can be expensive to reverse.

The economic forces behind tightened apparel spending

Several macro factors underpin consumers’ reluctance to spend on new clothes.

Real incomes and inflation: Stagnant wage growth combined with multi‑year inflation has squeezed discretionary budgets. When households prioritize groceries, energy, and housing, apparel drops further down the list.

Interest rates and savings behavior: Higher borrowing costs increase the urgency to save. BCG reports that over half of consumers would save a hypothetical cash windfall of up to a 15% income increase—demonstrating a precautionary preference that suppresses marginal consumption.

Uncertainty about the future: Concerns about retirement and job security shape present consumption. When retirement risk is high, consumers defer nonessential purchases.

Shifting personal priorities: The pandemic accelerated remote work and casualization trends. These changes reduced the frequency of formal or occasion wear purchases even before the current financial squeeze intensified.

The interaction of these forces explains why spending shifts are both deep and structurally embedded rather than transitory reactions to short spells of uncertainty.

How retailers are responding — inventory, pricing, and assortment tactics

Retailers face conflicting pressures: the need to maintain cash flow and footfall while protecting margins and brand perception. Several common responses have emerged:

Aggressive promotions and markdowns: Many chains have amplified promotional activity to move stock, often leaning on broader discounts or multi‑buy deals. While effective at clearing inventory, this approach diminishes full‑price selling opportunities.

Tighter inventory management: Retailers are ordering less and narrowing SKU breadth to reduce capital tied up in merchandise. Reduced assortment reduces the risk of unsold goods but can also depress consumer choice.

Faster production cycles for essentials: Brands are prioritizing reliable, core items that sell consistently—basic tees, durable denim, staple footwear—while cutting back on experimental or fashion‑forward collections.

Channel rebalancing: Off‑price and outlet formats gain share as consumers hunt bargains. Direct‑to‑consumer brands are creating outlet channels or partnering with discount platforms to protect full‑price channels.

Resale and rental partnerships: Some retailers integrate resale or rental options to capture cash‑constrained consumers who still want variety and newness. These services can extend product lifecycles and create second‑hand revenue streams.

Promotions targeted by segment: Brands are increasingly deploying data‑driven offers aimed at high‑intent segments to limit widespread promotional exposure.

Each response contains tradeoffs. For example, prioritizing discounts can rapidly recover cash but undermines long‑term pricing power. Conversely, cutting assortment reduces risk but may drive customers to competitors with deeper variety.

The unequal impact across fashion tiers: luxury, midmarket, and fast fashion

The fashion industry is stratified, and each tier faces distinct effects.

Fast fashion: Discount culture could appear to favor ultra‑value players that already sell on low price points. Yet, many fast‑fashion retailers rely on volumes and short lead‑time turnover; when consumers abstain entirely, volume falls too. Fast fashion players may respond by accelerating promotions, tightening assortment, or expanding into off‑price sub‑brands.

Midmarket brands: These firms are most vulnerable. They neither have the margin cushion of luxury houses nor the cost scale of ultra‑value retailers. Erosion of discretionary spending squeezes their middle ground, forcing repositioning either upmarket (for quality and loyalty) or downmarket (via promotions) — a perilous balancing act.

Luxury segment: Luxury is generally more insulated because purchases are less price‑sensitive and often linked to wealthier consumer segments. However, luxury sales that depend on younger aspirational buyers or travel retail can suffer when broader consumer confidence falls. The collapse of handbags and accessories spending suggests even aspirational purchases are constrained among broader buyer cohorts.

Brands that can demonstrate durability, timelessness, and enduring value—rather than trend‑driven disposability—stand a better chance of maintaining pricing power.

Sustainability goals collide with short‑term economic pressures

Sustainability programs rely on multiple economic assumptions: consumers will pay a premium for sustainable goods; circularity programs will recapture value; and investments in traceability and greener materials will be recovered through brand equity and loyalty. The BCG data complicates these assumptions.

Discount dependency undermines the business case for higher‑priced sustainable alternatives. When 73% of fashion buyers only purchase at a discount, asking them to pay a premium for better materials or transparent supply chains becomes a tougher sell.

On the other hand, economic pressure can expand the attractiveness of circular options. Resale and repair services offer value for money and extend the lifecycle of garments, aligning with both cost and environmental agendas. Yet scaling circular models requires investment in infrastructure, logistics, and consumer education—investments that are harder to justify when top‑line revenue is under pressure.

Retailers must therefore balance short‑term survival with long‑term commitments. Some strategies can serve both goals: selling higher‑quality garments that last longer reduces return rates and supports margin, while also aligning with sustainability aims. Integrating resale channels can capture lost revenue and reduce waste, but success depends on efficient operations and clear consumer value propositions.

Real‑world responses and emerging models

Several observable market responses illustrate the strategic spectrum.

Resale platforms: Second‑hand marketplaces have grown as shoppers seek lower prices and variety. Platforms that provide authentication and quality signals (for example through grading or curation) help maintain trust and command higher price recovery for sellers and the platform.

Rental and subscription services: Rental models provide access to variety without ownership costs, appealing for special occasions or pattern change. These models particularly suit consumers who want an aspirational experience without the expenditure of owning high‑ticket items.

Value innovation: Some brands reinvent their offer around low‑cost, high‑quality essentials, emphasizing durability and longer use cycles. This reduces churn and builds customer relationships that are less promotion‑dependent.

Localized and shorter supply chains: To reduce working capital and lead times, brands shorten supply chains and increase proximity sourcing. This supports faster replenishment and lower markdown risk—but requires upfront operational shifts.

Data‑led personalization: Precision targeting reduces broad discounts by offering tailored promotions to segments with higher conversion probabilities, preserving full‑price ranges elsewhere.

A notable example is how multi‑brand e‑tailers and marketplaces adjust. They often promote private‑label basics during downtimes while retaining curated higher‑margin collections for premium segments. Brick‑and‑mortar players emphasize service and experience—altering stores to offer repairs, alteration services, or in‑store recycling incentives that build customer retention.

The circular economy’s fragile momentum

Circular economy initiatives—repair, resale, take‑back schemes, and material recycling—remain central to industry sustainability promises. Yet the economics are fragile when consumers prioritize price above all.

Take‑back and recycling programs usually depend on scale and stable retail margins to fund reverse logistics and material processing. When retail margins tighten, funding for collection and recycling becomes harder to justify internally, slowing circular investments.

Resale offers immediate value capture and can be integrated with omnichannel strategies. Brands that own resale channels can keep a larger share of the resale margin and maintain backlinks to original products, strengthening loyalty. However, resale also risks cannibalizing full‑price sales if not carefully managed.

Repair services align well with value‑seeking consumers: extending a garment’s life is cheaper than replacement. Retailers can monetize repair through service fees or subscriptions. Embedding repair into the customer journey (offering in‑store or partner repairs, repair kits, or online tutorials) can create recurring touchpoints that deepen relationships even when new purchases decline.

What investors and supply‑chain partners should watch

Investors and suppliers must adapt metrics and expectations. Traditional KPIs tied to inventory turnover and same‑store sales may be inadequate in a market where full‑price sell‑through rates decline.

Key indicators to monitor:

• Net spending trends by category and country: early signals of structural shifts.
• Discount depth and frequency: persistent deep markdowns predict margin erosion.
• Resale and rental uptake: volume and recovery rates indicate circular viability.
• Inventory age and off‑price channel share: long aged inventory signals strategic misalignment.
• Average transaction value (ATV) and repeat purchase rates: help distinguish between temporary promotions and sustained loyalty.

Suppliers should renegotiate lead times, minimum order quantities, and payment terms to reduce the capital burden on retailers. Contract flexibility—smaller batches, reorders, and shared risk mechanisms—becomes a competitive advantage.

Private equity and investors may shift valuation models, placing higher weight on brands with diversified revenue (services, resale, rental) and disciplined inventory practices.

Policy and macro context: why consumer confidence matters beyond sales

Consumer sentiment affects fiscal decisions and policy choices. When households hoard cash, economic multipliers decline, reducing demand across sectors beyond fashion. Policymakers monitor consumer confidence as an early warning for broader demand weakness.

Energy price volatility, housing affordability, and labor market softness are policy levers that influence household budgets. Measures that stabilize real incomes—targeted subsidies, tax relief, or social protection—can free up discretionary spending over time. For the fashion sector, stabilizing macro variables improves predictability and enables investment in sustainability and innovation.

Trade and regulatory policy also matter. Policies that incentivize circular models—such as extended producer responsibility, standardized labeling, or tax incentives for repair—can reduce the cost gap between sustainable and conventional offerings. Conversely, regulatory uncertainty or abrupt changes can deter long‑term investments in greener supply chains.

Practical strategies for brands to survive the downturn and emerge stronger

Brands must act on multiple fronts simultaneously: protect near‑term liquidity, preserve brand equity, and prepare for recovery. Practical measures include:

Refocus assortments: Prioritize categories that retain demand—durable basics, footwear for daily use, and versatile sportswear—while temporarily reducing fashion‑forward or occasion assortments.

Differentiated pricing strategy: Use targeted, data‑driven promotions rather than broad markdowns. Create limited‑time bundles or loyalty‑exclusive offers to avoid resetting public price expectations.

Enhance value communication: Emphasize durability, fit, and total cost of ownership. Educate consumers about product quality and repairability to justify price points.

Invest in circular channels: Build or partner with resale and rental platforms to monetize second‑hand value. Integrate buy‑back schemes and condition grading to maintain trust.

Operational flexibility: Negotiate smaller, more frequent orders with suppliers. Expand near‑sourcing where feasible to shorten lead times and reduce inventory risk.

Customer retention through services: Offer alterations, repairs, and care guidance. Subscription-based models for staples or curated boxes can secure recurring revenue.

Cost discipline with targeted investments: Cut discretionary marketing spend but preserve customer data analytics, service excellence, and supply chain reliability—areas that improve conversion and reduce waste.

Scenario planning: Prepare multiple demand scenarios and align inventory, marketing, and capital plans accordingly.

Each measure reduces risk without sacrificing the ability to scale when demand normalizes.

Early signals of recovery and the path back to full‑price selling

History shows that consumer behavior can revert when macro conditions improve. Key conditions that could restore full‑price selling include sustained wage growth, falling inflation, and a return of consumer confidence. Even then, the path is likely uneven across categories.

Signals to watch for recovery:

• Declining discount dependency: fewer consumers insisting on discounted price points.
• Uptick in occasion spend: rising demand for formalwear and accessories as social life normalizes.
• Improved full‑price sell‑through: fewer markdowns and shorter inventory aging.
• Resale market stabilization: resale shifting from purely value-driven purchases to mainstream fashion consumption.

Recovery will favor brands that preserved core relationships during the downturn and that invested in trust, quality, and service.

The long view: will this reshape European fashion consumption permanently?

The BCG findings suggest a meaningful behavioral shift rather than a short blip. Several durable changes are likely:

• Higher baseline savings and lower discretionary elasticity: Consumers may remain cautious about nonessential spending for an extended period.
• Acceleration of circular commerce: Resale, repair, and rental models will capture a larger share of consumption even as new purchases resume.
• Segmentation tightening: Midmarket brands may face ongoing pressure unless they redefine their value proposition.
• Elevated importance of basics and utility: Comfort and longevity will hold more consumer mindshare than trend cycles.

These shifts imply that brands should not simply wait for past patterns to return. Instead, they should redesign offerings, pricing frameworks, and operational models around lower elasticity, greater demand volatility, and a stronger bid for circular value.

FAQ

Q: How severe is the decline in fashion spending compared with other categories? A: According to BCG’s European survey of more than 20,000 consumers, fashion recorded the largest negative net spending across measured categories. Groceries and pet care were the only categories with positive net spending—largely driven by inflation—while fashion showed “pure abstention,” indicating a deliberate choice to reduce clothing purchases.

Q: Which fashion subcategories are most affected? A: The worst performers include handbags (–23 net spending), accessories (–22), and formal/evening wear (–20). Footwear (–12), casual wear (–13), and sportswear (–14) have held up relatively better but still show declines.

Q: Are consumers buying less because prices are lower or because they have changed preferences? A: Both forces operate but in different categories. For groceries and pet care, higher spending reflects price increases rather than higher volumes. Fashion’s net decline is characterized by abstention—consumers decide not to buy—indicating a change in priorities rather than purely a price reaction.

Q: What does “only buy at a discount” mean for brands? A: It means a substantial portion of consumers expect promotions, which depresses full‑price sell‑through and margins. BCG finds 63% of consumers across categories will only purchase apparel at a discount, and this rises to 73% in fashion, signaling a structural reliance on promotions.

Q: How should a midmarket brand respond? A: Midmarket brands should protect cash flow via targeted promotions, streamline assortments to focus on durable, high‑turn items, invest in data analytics to improve targeted offers, and explore circular channels like resale or repair to capture value from consumers trading down.

Q: Does this trend undermine sustainability efforts? A: It complicates the business case for higher‑priced sustainable products, but it can also accelerate circular models like resale and repair, which align cost savings with environmental goals. Success requires careful operational investment and clear consumer value communication.

Q: Will luxury brands be affected? A: Luxury is relatively insulated but not immune. Brands dependent on younger, aspirational customers or travel retail could see demand erosion. Luxury houses that emphasize craftsmanship and long‑term value will fare better.

Q: How long might this pullback last? A: The timing depends on macroeconomic developments—real wage growth, inflation, interest rates, and consumer confidence. Structural changes such as higher savings rates and increased circular consumption could persist beyond a near‑term recovery.

Q: What metrics should industry watchers monitor? A: Watch net spending by category, discount depth and cadence, inventory age, off‑price channel share, resale volumes and recovery rates, ATV, and repeat purchase behavior.

Q: Are there opportunities for new business models? A: Yes. Resale, rental, repair services, subscription models for essentials, and data‑centric personalization offer pathways to capture value when consumers deprioritize new purchases.

Q: What should policymakers consider? A: Policies that stabilize household incomes, support affordable energy and housing, and incentivize circular business practices can influence consumer budgets and support a smoother transition toward more sustainable consumption patterns.

Brands and retailers face a clear choice: adapt to a lower‑spend reality with smarter, more flexible operations and value propositions, or risk margin erosion and brand dilution through perpetual discounting. The BCG data does not merely flag a temporary slump; it signals a recalibration of priorities that will shape European fashion consumption for years. Those who adjust pricing, inventory, and service models while investing selectively in circular and quality‑focused strategies will be best positioned to weather the downturn and capture value when confidence returns.