The Fast-Fashion Industry Could Be at Risk — What Can Brands Do to Survive?
Over the past few decades, the fast-fashion segment has enjoyed exponential growth aided by ultra-affordable prices, speed to market and a seemingly constant crop of new styles. However, the cultural shift away from disposable garments and toward circular wares in recent years — particularly in light of the COVID-19 pandemic — threatens to upend the sector as retailers know it.
According to UBS analysts, fewer consumers will opt for fast fashion as they become more aware of the environmental and social costs of producing such items. A new report from the financial services firm found that the sales of low-value, high-volume apparel, footwear and accessories could decline 10% to 30% over the next five to 10 years.
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“In the case of fast fashion, we think it possible that changes in consumer behavior — along the lines of ‘flight shaming’ or shunning plastic — will eventually crystallize as the negative environmental and social impacts become more widely recognized,” analyst Victoria Kalb and her team wrote in a research note to clients.
To maintain relevance with their increasingly eco-conscious customers, retailers are taking actions to further sustainability both within their workforces and through their merchandise: This year, Sweden-based H&M debuted “Innovation Stories,” a series of collections dedicated to promoting the use of sustainable materials, technologies and production processes within the garment industry. Forever 21 also launched a program to swap conventionally grown cotton for organic cotton starting at the end of last month.
What’s more, Zara parent Inditex SA pledged at its annual shareholders’ meeting two years ago that 100% of the cotton, linen and polyester it uses will either be more sustainable, organic or recycled by 2025. Such fabrics account for roughly 90% of all raw materials used by the corporation’s brands.
However, UBS analysts suggested that these efforts might not be enough to rescue fast-fashion retailers. Instead, they explained that reducing output is “absolutely crucial,” even proposing a complete “system redesign” — that is, selling and disposing of fewer items as well as creating longer-lasting products.
“Whether the garment is conventionally produced with a significant environmental footprint — the cotton used in a T-shirt is organic, the polyester in a fleece is recycled or the garment or shoe is vegan, which, incidentally, often means plastic — becomes largely insignificant when set against the sheer quantity of items produced and discarded,” Kalb and her team wrote.
That said, UBS stressed that its conclusion is merely a “base-case” prediction for retail. It attributed the rise in the number of companies releasing new sustainability targets and commitments — think sportswear giants Nike and Adidas, Vans owner VF Corp. and department store Nordstrom, among others — to consumer concerns over fashion’s heavy environmental footprint.
“We believe it is possible that retailers who emphasize sustainability ranges may, in the short term, take market share,” the analysts added. “The compounding effect of consumers buying fewer items but also shifting the purchases they do continue to make to items that they perceive to be more sustainable could be severe.”
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