US fashion companies shift focus from sourcing expansion to supplier performance driven by AI and regional stability

US fashion companies are shifting away from a race to add ever more sourcing countries and towards a sharper focus on how their supplier networks actually perform, as artificial intelligence, traceability and regional balancing increasingly influence buying decisions.

That is the central message of the 2026 USFIA Fashion Industry Benchmarking Study, which suggests the next stage of apparel sourcing will be defined less by chasing the lowest-cost alternative and more by building...

supplier bases that can withstand disruption while still meeting speed, compliance and inventory demands.

The study, based on responses from executives at 30 leading US fashion companies, points to four broad changes likely to shape sourcing over the next two years: consolidation of supplier networks, a more settled relationship with China, selective nearshoring and a wider role for AI in day-to-day sourcing work.

While companies continue to operate across a wide spread of markets, the emphasis is no longer simply on expansion. Respondents said they sourced apparel from 49 countries in 2026, compared with 46 the previous year, and about 65% of large firms used 10 or more sourcing markets. Even so, fewer businesses are now looking to add more countries or vendors. Instead, buyers are pruning and strengthening existing supplier bases, pursuing strategic partnerships and trying to balance flexibility, capacity and regional risk.

That shift has coincided with changing utilisation patterns across the map. Guatemala, Egypt and Jordan have taken on a bigger role, while reliance on China, Vietnam and Bangladesh has eased.

China remains important, but in a different way from the years when many companies were trying to cut exposure as aggressively as possible. Only 12% of respondents said they sourced more than 30% of their apparel from China, and most placed less than 10% there. The country’s share of US apparel imports has also slipped behind Vietnam and Bangladesh. Yet the study suggests that de-risking may be reaching a plateau: many firms appear to have settled on a preferred level of exposure, while still relying on China for its vertically integrated supply base, ability to handle smaller minimum orders, faster turnaround and manufacturing depth.

Nearshoring, meanwhile, continues to be constrained by product mix. CAFTA-DR utilisation rose to 76%, but sourcing in the Western Hemisphere is still concentrated in basic items. Planned orders in the region are dominated by T-shirts, mentioned by 67% of respondents, followed by activewear at 33% and bottoms at 27%. Limited textile variety, uncertainty over trade policy and weaker capability in more complex products remain major obstacles to broader growth.

Technology is becoming more central to how companies manage those decisions. According to the study, firms use AI in an average of three business areas. Demand forecasting and inventory planning led the way at 56.3%, while 50% used AI for sustainability tracking, risk management and sourcing or cost optimisation. Another 43.8% said they applied it to customs, compliance and tariff management.

That broader technology push is being mirrored across the sector. Platforms such as Retraced and TrusTrace are positioning AI and data tools around traceability and compliance, while systems from companies including Sourcio and BlueCherry are targeting sourcing efficiency, supplier management and visibility. The common thread is clear: brands and suppliers are increasingly expected to combine operational reliability with digital transparency.

The study implies that the winners in the next phase of apparel sourcing will be those able to deliver both. Capacity alone will not be enough. The advantage is likely to lie with suppliers that can provide traceable product data, responsive production, flexible execution and the speed to adapt when demand or policy changes.

Source: Noah Wire Services