"Identifying a category called The Rainbow Runway, it allows people to really feel part of it more so than just wondering 'shall we go shall we not'," Napier City Business manager Pip Thompson said.
Thompson said the event had previously "sometimes been seen to target a certain type of demographic" and this year they are wanting to "be more diverse" and welcoming and inclusive of everybody.
She said the Napier City Business Inc team felt strongly that the competition needed to become more inclusive and the Art Deco Festival needed to make some changes to the Fashion on the Foreshore competition.
They communicated their Rainbow Runway event with Art Deco Festival director Greg Howie, who was "entirely in support" of introducing the new category.
Napier City Business has been working with the Metropolitan Club to support delivery of the event.
Napier Art Deco Festival fashion programme curator and director of the Metropolitan Club Rose Jackson said fashion was "a vital form of cultural and creative expression".
"We want everyone attending the Art Deco Festival to feel safe, comfortable and welcome taking to the catwalk to express their personal interpretation of Art Deco style."
Napier City Business is also offering to walk the runway with entrants who feel more comfortable with an ally.
• Fashion on the Foreshore is free and held on February 21, from 1pm-2.30pm at the Sound Shell.