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Will fast fashion ever die?

Zara, H&M, and Uniqlo used to be supply chain innovators. Now Shein is showing what ultra numble supply chains can do.

Image copyright: Alex Citrin-Safadi
This story was published on our The Forecast newsletter, A look at emerging industries and trends around the corner.
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Image copyright: Alex Citrin-Safadi

Hi Quartz members,

For the last two years, there’s been very little reason to shop for clothes. With fewer outings and social occasions during the pandemic, theoretically the need for new outfits has diminished.

But that hasn’t happened. Instead, clothing sales in the US rose in the last year, surpassing 2020 and even pre-covid-19 numbers.

People are buying lots of stuff—retail sales are soaring—but they’re still watching their wallets, so fast fashion giants in particular are reaping the rewards. Inditex, the parent of Zara, reported record revenue in 2021 that jumped nearly 40% from 2020, while H&M’s annual sales grew by more than 10% (pdf). The global fast fashion market is expected to grow from $68.6 billion in 2020 to $163.5 billion in 2025, averaging a growth rate of 19% per year.

But overconsumption of fashion comes with rapidly rising costs to the planet. McKinsey estimates that nearly three-fifths of all clothing ends up in incinerators or landfills within a year of being produced, and more than 8% of annual global greenhouse gas emissions are produced by the apparel and footwear industries.

What’s more, the number of garments produced each year has doubled since 2000 and exceeded 100 billion for the first time in 2014, McKinsey estimates—nearly 14 items of clothing for every person on Earth. Fast fashion brands in particular have been blamed for creating a culture in which products are low-quality and highly disposable. Social media has encouraged people to buy new outfits that may only be photographed once.

Activists have proposed “slow fashion” as an antidote to the problem. The movement advocates buying less, choosing goods that are made to last or second-hand, and mending products instead of replacing them. 

But clothing is being consumed at greater quantities as more people around the world join the middle class and gain disposable income. Clothing purchases in developed economies have long evolved past their function. Many shoppers buy new products because clothing is a way to express themselves creatively and signal an identity to others.

In short, consumers are able to buy so much because of nimble supply chains enabled by technology. The question is, should they?

The backstory

Back before the days of fast fashion, apparel brands used to design new two collections—spring-summer and fall-winter—and it would take months for products to go from conception to stores.

That changed starting in the early 2000s, when brands like H&M, Uniqlo, and Zara made important changes to how they managed supply chains. Inditex, the parent company of Zara, pioneered the vertically-integrated supply chain to put out 24 collections a year, about one every two weeks. The result was a huge selection of styles, all accessibly priced.

Today, fashion is getting even faster. Shein, for example, adds over 2,000 new products every week to its website. Shein has a nimble network of vendors, which produce small batches and allow the retailer to take on less risk. Styles can be replenished easily if a product sells well; if it sells badly, it reduces the amount of leftover inventory that needs to be sold at a discount or destroyed.

This ultra-fast business model is more efficient. While Shein earned a reported $15.7 billion in revenue in 2021, more than double the year before, Millennial fast fashion retailers like Forever 21 and Arcadia Group (Topshop’s former parent) are falling into bankruptcy.

But it could come with other costs; Shein has not disclosed any environmental commitments, which Fast Retailing (Uniqlo’s parent), H&M, and Inditex have started doing. The company has also been very opaque in how it treats workers.

The supply chain of the future

Despite ethical and environmental concerns, Shein’s disruptive way of doing business is a sign of where the supply chains—for textiles and for many other goods—are headed next. Traditionally, manufacturers created and shipped clothing in large volumes because it made those clothes cheaper for the retailer and, ultimately, more affordable for the consumer.

“Many companies…deliver only container loads of products to customers to minimize transportation time, freight costs, and the number of deliveries,” wrote Hau L. Lee, a professor and director of the Stanford Global Supply Chain Management Forum, in Harvard Business Review. “When demand for a particular brand, pack size, or assortment rises without warning, these organizations are unable to react even if they have the items in stock.”

Now, there is an increased focus on agility—not just for business operators, but for consumers, too, who are looking for flexibility, not just speed, from their retailers.

That agility is possible because of new software systems that allow retailers to track real-time inventory across dozens or hundreds of stores—information that may have previously been collected only once per week. Retailers can use that information to make more of what sells, and make less of what doesn’t to better suit consumer needs and follow trends.

“A new battleground is opening up over convenience and experience,” wrote Brian Birch, chief supply chain officer at Netrush, in a 2021 blog for Supply Chain Quarterly. “As consumers more finely slice their needs, they may want delivery on a particular day, at a particular hour, or to their cars at work.”

🔮 Predictions

Fashion is unlikely to slow down. But fast fashion’s negative impacts can fade away. Real-time inventory allows retailers to see what is selling and accurately order just enough to meet real consumer demand. Small batch production means that a store can replenish 50 shirts instead of ordering hundreds or thousands that may end up in landfills. Retailers want to avoid discounts, too, because they train customers to expect promotions, sometimes at a price that can’t cover the costs of properly-paid labor.

There’s a ways to go before the fashion industry gets there, though. “Up to 40% of garments are not sold at full price but at some degree of discount,” said Anna Granskog, a partner at McKinsey, in a video on the consultancy’s web site. “Cutting overproduction in half from where it is today would make a huge contribution toward a lower carbon footprint of the industry.”

Other shifts would need to happen at the same time to reduce the impact on workers and on the planet. Some companies are working on innovative fabrics that are biodegradable and so would be less harmful if they ended up in landfills. And culturally, a movement towards buying less could help, too.

Sound off

Would you rather buy:

Fewer, more expensive clothes

More second-hand clothes

Fewer clothes in general

In last week’s poll about work in the metaverse, 42% of respondents said it was all just hype. Guess we’ll still be seeing you on Zoom then.

Best wishes for a well-dressed week,

—Tiffany Ap, How We Spend reporter (definitely not working in sweatpants)

One 🕹️ thing

Wardrobe needs will evolve as people explore dressing for the metaverse. Some expect that buying outfits for our digital avatars could lead to a decrease in shopping for the offline world because people will split their spending between the physical and online world, and because consuming an item online can be a creative outlet. Online wardrobes have an advantage of providing the ultimate freedom of style that otherwise would be physically impractical or impossible to engineer.

That could be good news for the enviornment, too: According to DressX’s 2020 sustainability report, production of a digital garment emits 97% less carbon than a physical garment.

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