Australian fashion retail is going through a tough time right now: slowing sales, slimming margins and increasing global competition. In this month alone, four once-prominent brands, David Lawrence, Marcs, Herringbone and Rhodes & Becket entered administration. Many blame the global fast fashion leaders H&M, Zara, Uniqlo which took $600m out of the Australian fashion market in 2016, just 5 years after entering. A share that is only expected to grow further with all brands planning more stores.
It makes sense. Post-GFC consumers are more careful with discretionary spend, prioritising mortgage repayments and savings – the winners of the game will be those who can provide fresh runway fashion at the lowest prices, right? Wrong.
Which game are you trying to win?
Although cheap fast fashion has been going gang-busters lately, its a short-game and is not sustainable.
Driving prices down means dwindling margins, which as many retailers reported last year, it then only takes one unseasonably warm winter to feel the pain. Retailers racing to the bottom need to find cost savings somewhere, and the horrific collapse of Rana Plaza in Bangladesh (where 1,134 garment workers died) put the spotlight on where those savings might be coming from. The 2013 disaster was the first time many started asking questions about the true cost, the human cost, of those $4.99 t-shirts.
Fashion is now the second most polluting industry in the world after oil, and is the second largest consumer of water after agriculture. Add to this, most (c. 85% in the USA) of what is manufactured actually ends up in landfill. Yeah – that’s where all those adult-size polyester giraffe onesies went.
The question then is – is this a game worth winning?
Niche or future market?
In the shadow of rising fast/disposable fashion, its countermovement ‘slow/sustainable fashion’ has been quietly gaining traction and is playing the long-game. Whilst the current market size is niche, there is plenty of reason to believe it is where the market will shift.
The ‘awakening’ of consumers to what impact their consumption is having on the world around them has been well documented – evidenced by the growth of markets like Fair Trade (+50% CAGR) and Organics (+15% CAGR), all outpacing growth in their conventional equivalents over the last five years.
Then there’s the culture shift – owning lots of things isn’t the show of status that it used to be. The richest of the rich are buying less luxury goods and more luxury experiences. Simultaneously, the sharing economy is booming, led by the successes of Uber and Airbnb. In turning away from disposable culture, there is a return to demand for quality products made to last, fuelling the international expansion of businesses like buymeonce.com where everything on the site comes with a lifetime guarantee. As grandma always says, what’s old is new again!
Finally, now that consumers have more information and organising power than ever, and have the reason to be more discerning with what they buy, more and more are choosing brands that align with their personal values. Add to this the fact that younger generations were taught to recycle in kindergarten, are more accepting of climate change science, and are more likely to purchase items associated with a particular cause – the only way is up for sustainable fashion.
Reformation of fashion
There are many new-generation retailers taking on sustainability reform. Among them, Reformation, an eco-fashion brand born out of inspiration from Elon Musk and Tesla. The brand still considers itself ‘fast fashion’ but uses a mix of sustainable fabrics and recycled vintage garments for its creations. It also measures its environmental impact from sourcing to support office and ensures its emissions and waste savings are significant compared to industry standards and is not afraid to state the ‘true cost’ of fashion.
But make no mistake, it’s not just start ups and hippie stores taking action.
H&M is already one of the world’s biggest users of recycled polyester and organic cotton, with 20% of its product range incorporating sustainable materials (2015), a share that it aims to increase, and 100% of its cotton to come from sustainable sources by 2020. Whilst skeptics will put these initiatives down to token publicity gestures, what the world’s biggest fashion retailer is doing is supporting sustainability on the global fashion agenda.
Earlier this month, H&M made headlines when they launched their sixth Conscious Collection featuring an evening dress made from Bionic Yarn spun from reclaimed plastic (bottles and plastic bags) gathered from shorelines and waterways.
Levi’s is addressing sustainability by encouraging people to stop thinking about clothing as disposable, removing itself from the fashion cycle and refocusing on classic designs made to last a lifetime. In addition Levi’s “Water<Less” water-saving initiative has redesigned the finishing process for its jeans and saved 1 billion litres of water (more than 300 Olympic sized pools) since the program launched five years ago. Levis has now shared its innovations with other denim producers, with the goal of saving put to 50 billion litres of water by 2020.
Patagonia has long advocated responsible consumption, perhaps most famously through its “Don’t Buy This Jacket” campaign and refusal to participate in Black Friday sales.
Smart retailers will recognise that the shift has begun, and they can’t fight it. The only question is who will evolve in time, take a position and have more behind the label than just size information – and who is in denial, waiting for foot traffic to return, content with playing at the margins against H&M.