Executive Memo | How to Cut Costs While Investing for the Future

Fashion is facing a convergence of threats. In November 2025, US consumer sentiment fell to nearly the lowest on record, and remained well below pre-pandemic rates in the UK, Europe and China. Barring a reprieve from the US Supreme Court, tariffs will hit profit and loss statements hardest in 2026, after the inventory retailers pulled forward when the duties were announced has been exhausted, forcing them to either raise prices or sacrifice margin.

Shoppers continue to spend, but even those with money are doing so selectively and hunting for value in an uncertain economic environment.Between rising costs and pickier customers, retailers must preserve cash flow and prepare for tough times.

But companies that want to win in the long run must simultaneously continue investing in areas that will drive growth, from Al-powered operations to supply chain flexibility.

The balance is precarious. The savviest investments will serve both the top and bottom lines.

In this memo to BoF’s Executive Members, learn more about:

• Why prioritising topline growth over margin protection may be the right strategy - with critical caveats about cash flow
• Where to cut costs strategically without damaging customer relationships
• How AI and innovation can deliver measurable operational gains
• Surgical pricing approaches that maintain margins while preserving brand equity
• Incorporating flexibility into a business model for long-term gains