February 28, 2023
To meet the fashion needs of customers, fast fashion brands are increasing production speed and updating new trends. However, finding solutions for sustainable development in the fashion industry remains a difficult problem.
Fast Fashion Retail Industry Overview
Fashion is a passion. You may recall the fun dress-up scenes in 90s movies. We choose, buy, and arrange clothes to express our different emotions, while satisfying our human needs for comfort, individuality, and consumption.
Fashion is also a business. The global fashion industry is expected to reach $1.7 trillion by 2023. Hundreds of millions of people worldwide are involved in the industry’s supply chain. Between 2000 and 2014, the amount of clothing produced doubled and the amount of clothing consumed per person increased by nearly 60%. This is a result of the growth of fast fashion.
Fast Fashion
Fast fashion is a rapidly growing industry trend, surpassing its traditional competitors. By shortening production cycles and offering the latest designs, fast fashion allows consumers to not only have more options for their wardrobes, but also to update them in a cost-effective and efficient way.
This appeals to those who love innovation and style variety: according to The State of Fashion 2024 report published by Business of Fashion and McKinsey, 40% of US consumers and 26% of UK consumers have made a purchase at fast fashion giants Shein or Temu in the past year. This figure is likely to be higher if other fast fashion retailers are included.
Despite its economic contribution, the fast fashion industry also causes many environmental problems. Fast fashion consumers tend to throw away clothes after only a few wears: according to some studies, consumers wear cheap garments only about seven times before throwing them away. Of every five garments produced, three end up in landfills or incineration each year. The textile industry also emits 1.2 billion tons of greenhouse gases each year – more than all air and sea transport combined. There are also reports that some workers in clothing factories are subjected to low wages and poor working conditions.
Fast fashion is an industry with a huge environmental and social impact. This has attracted the attention of many people, especially Millennials and Gen Z. Not only are they conscious of sustainability in their product choices, but they also understand that the fashion industry contributes significantly to climate change. They are also changing their shopping habits: according to a recent study on sustainable consumption, half of Gen Z shoppers in China said they want to buy less fast fashion.
Ultrafast fashion
Ultrafast fashion is a new trend in the fashion industry, surpassing fast fashion in terms of speed and price. While Zara, one of the first fast fashion retailers, only added hundreds of new products per week in the 1990s, Shein, a Chinese fast fashion retailer, will launch up to 10,000 new styles per day by 2023. Not only that, Shein also sells at much lower prices than its competitors: Each Shein product costs an average of $14, while H&M costs $26 and Zara $34.
Shein has taken advantage of the Covid-19 pandemic to grow strongly. Thanks to the rise of e-commerce and digitalization, the company has nearly doubled its market share in the US market during that time; It is now the second-most popular place for young Americans to shop (behind only Amazon). The company was valued at $100 billion in its 2022 funding round (but in 2023, that value dropped to $66 billion, presumably due to concerns about government intervention).
How are fast fashion companies evolving their business models?
Ultra-low prices are as important to the success of the fast fashion business model as short turnaround times. Emerging fast fashion retailers like Shein and Temu are updating the model in the following ways:
- Flexible and scalable supply model from producer to consumer
Several next-generation fast fashion companies have developed large networks of suppliers, often producing exclusively for them.
- Data-driven product design and testing
For example, Shein uses a trend-to-demand model to design and curate its products. This includes a range of inputs from current trends to viral products to customer perceptions.
- Loyal and growing customer base
They are powered by influencer affiliate marketing programs and organic social community building, which reduces customer acquisition costs.
- High App Adoption Rates and Engagement Tactics
Companies have adapted their app experiences, allowing customers to earn loyalty points by setting up accounts, leaving reviews, watching livestreams, and more.
How are fast fahion brands’ top executives responding to sustainability concerns?
To meet growing sustainability demands, many fashion companies, both fast and slow, are changing their C-suite structures. McKinsey’s State of Fashion 2024 report found that most of Europe’s 25 largest fashion companies have at least one CEO with an ESG background. These CEOs are responsible for a variety of sustainability strategies , from reducing their company’s carbon footprint to reducing waste and improving working conditions .
The brands that have been most successful in implementing sustainability strategies have integrated sustainability elements into existing roles rather than creating new roles. For example, Primark, a UK-based fast-fashion retailer, has tasked Michelle McEttrick, the company’s first Chief Customer Officer, with leading sustainability strategy.
Additionally, being a CEO of sustainability can also be a stepping stone to higher positions, like Helena Helmersson, who was promoted to CEO of H&M in 2020 after previously serving as the company’s chief sustainability officer.
What solutions does the textile industry have to enhance the sustainability of its business model?
Many fast fashion companies are looking at ways to make their business models more circular, in response to climate pressures and a rapidly evolving regulatory landscape. In a circular value-creating model, resources are deployed iteratively.
In contrast, the traditional linear model starts with extraction and ends with disposal at the end of its life, with the expectation that consumers will discard the goods and buy more.
Here are some solutions fashion companies can take to comply with changing regulations:
Improve traceability
Achieving full visibility into the supply chain across all levels of production will be a critical enabler for regulatory compliance. Advances in blockchain and other technologies can help companies achieve more transparent and efficient monitoring. Brands such as Brooks Sports and Renfro Brands have deployed TrusTrace’s digital traceability platform to achieve traceability at scale.
Sourcing and Manufacturing
The activities that create raw material inputs in the supply chain account for the majority of carbon emissions in the apparel industry, so in the future there will likely be a greater focus on decarbonising the production of raw materials and garments. Brands may increasingly switch to new suppliers or enter into strategic alliances.
For example, luxury retail brand Hermès has partnered with startup MycoWorks to secure access to its engineered mycelium (a network of fungal filaments that can be used to produce a leather-like product).
Design
The new emphasis on longevity and durability may require new attention to design details such as stitching and seams. In the future, materials that cannot be separated when recycled may be avoided, meaning designers may have to think more creatively about their design choices.
End of Life Waste
New business models are emerging to reduce production and waste. Resale continues to grow through brand partnerships with secondhand marketplaces such as the RealReal and Vestiaire Collective. There is also an opportunity to accelerate closed-loop recycling, a process in which a product can be used and then turned into a new one over and over again. Stockholm-based Renewcell is building the world’s first large-scale fibre-to-fibre recycling plant and is working with global brands including H&M and Levi’s.
The apparel industry is facing many challenges and opportunities to enhance the sustainability of its business models. Fast fashion brands need to adapt to new demands for transparency, decarbonization, design and recycling. By adopting circular solutions, companies can create value for customers, the environment and society. As global business takes into account increasing climate pressures and changing regulatory environments, fashion companies that create new models for sustainable development are the ones most likely to excel in the future.
About InnoEx
InnoEx Company Limited (InnoEx) is a leading international event organizer and innovative community enterprise, fostering collaboration and driving technological advancement in Vietnam and Southeast Asia. Since 2011, we have created impactful events that connect businesses, governments, investors, and innovators, contributing to the region’s economic growth.
Each year, our dynamic platform attracts thousands of participants, including CEOs, entrepreneurs, investors, government officials, and industry experts from around the globe. More than just an event, InnoEx is a vibrant ecosystem where new ideas are nurtured, partnerships are forged, and the future of innovation is shaped.
Source: Press summary
