<![CDATA[Purpose: This study aims to analyze business model innovation strategies of local fashion MSMEs in improving competitiveness against imported thrift products based on Generation Z preferences and purchasing power in Denpasar City. The study addresses the increasing competitive pressure faced by local fashion businesses due to the growing popularity of imported thrift products among young consumers.Research Methodology: This study employs a descriptive qualitative approach. Data were collected through semi-structured interviews with local fashion MSME owners and Generation Z consumers in Denpasar City. Informants were selected using purposive sampling based on specific criteria, and data collection was conducted until reaching data saturation. The data were analyzed using thematic analysis to identify patterns related to consumer preferences, purchasing behavior, and business innovation strategies.Results: The findings indicate that Gen Z purchasing decisions are influenced by price, product quality, design uniqueness, local identity, and storytelling value. Although thrift products offer affordability, local fashion MSMEs can strengthen competitiveness through product innovation, digital marketing, customer relationship management, customization services, and cultural-based branding strategies.Conclusions: Business model innovation enables local fashion MSMEs to compete beyond price advantages by creating differentiated value through identity, exclusivity, and consumer experiences.Limitations: This study is limited by its qualitative approach and focus on MSMEs and Gen Z consumers in Denpasar City, which may restrict broader generalization.Contribution: This study contributes to the literature by providing insights into how local fashion MSMEs develop adaptive innovation strategies to respond to thrift market competition and changing consumer preferences.]]>
