Will demand for sustainable supply chains end the era of fast fashion?

sustainable logistics

Fast fashion is often a term used to describe a highly profitable business model based on replicating ideas from the catwalk or celebrity culture and turning them into garments in high street stores. The industry can be characterised by several marketing factors such as low predictability, high impulse purchases, a shorter life cycle, and high volatility of market demand. To be profitable, fashion retailers need to take the ‘speed to market’ approach to capitalise on fashion that is not in the stores of their competitors.

The industry is highly influenced by social media, often accelerating the fashion cycle and encouraging the appearance of what has been labelled ‘micro-trends’; apparel that witnesses a rapid rise and fall in popularity. This often influences consumers to buy and discard clothing at a much faster rate to keep up with trends. McKinsey and Company found that globally people discard their clothing nearly twice as quickly as they did 15 years ago. As a result, fashion products’ carbon footprint is one of the largest, creating even more greenhouse gases than aviation and shipping industries combined because almost all fashion products are outsourced and transported internationally.

Fast fashion profits soared during the pandemic as retail giants like Boohoo were able to capitalise on the e-commerce boom, with gross profit rising 19% y-o-y. The company was also able to take advantage of the decline of more traditional retailers during the pandemic; It acquired high-street brands like Oasis, Dorothy Perkins, and Warehouse between June 2020 and February 2021. Due to the speed of their supply chain model, the company was able to capitalise on fashion trend cycles during the pandemic, such as the shift towards loungewear and activewear.

However, early evidence suggests consumer habits may be moving away from fast fashion. A survey conducted in April 2020 by consultants McKinsey with the aim to capture consumer sentiment at the onset of the COVID-19 pandemic found that 58% of people are now less concerned about fashion, prioritising whether they actually like the garment, comfort and quality. Two-thirds of people are planning to buy more durable items and 71% intend to keep the clothes they own for longer.  During the pandemic, C2C platforms witnessed a surge in usage and are predicted to continue growing. Traffic on C2C site Depop surged to 90% over the course of April 2020.

A UBS forecast released in April 2021 stated that the high volume and cheap approach of fast fashion retailers may start to fall out of sync with customers who are increasingly more environmentally aware, as consumers begin shifting towards sustainable purchasing preferences. According to UBS, fast fashion could face a revenue decline of 10-30% in the next decade as consumers become more aware of the environmental and human costs of apparel production.

Consumer concerns with sustainability are not expected to disappear anytime soon. UBS reported that fashion’s environmental footprint is front-page news, and scrutiny will be fuelled by the continuation of public pressure campaigns. Apparel companies may soon find they can no longer rely on fast fashion supply chain models as they face increasing pressure to slow down their manufacturing and reduce their output.

It may now be the case that sustainable supply chain models no longer provide a competitive edge to businesses but are rather a consumer necessity. According to Retail Analyst Rukmini Durge, “providing transparency in supply chain and manufacturing and closing the loop of apparel life cycles through recycling initiatives has become pertinent for companies”.

Source: Transport Intelligence, 28 October 2021

Author: Nia Hudson