Is the grass greener on the other side of the ramp for the fashion industry

Is the grass greener on the other side of the ramp for the fashion industry

May 13, 2020

Published by Aakanksha Nair

The pandemic has drastically changed our consumption patterns for everything from food and beverage to ads and entertainment. This shift in consumption has in turn affected demand and triggered a domino effect on the supply side of several industries. One such industry is the fashion industry.

For the fashion industry, 2020 was going to be a mixed bag of wins and losses even before the pandemic had set in. While there were reasons to be optimistic, there were also several challenges facing the industry in the form of increased sustainability demands and an increased emphasis on technology adoption among other things. Before the pandemic itself, Mckinsey’s State of Fashion 2020 had predicted that this year the fashion industry’s growth rate would slow down to 3-4%. It’s no secret that this statistic now looks like the best-case scenario given the tangential effects of the pandemic on this industry. As is the case across most industries, even the fashion industry has felt the shock waves of this disruptive crisis through its supply and demand chain. Where consumers are struggling with their finances leading to cuts in discretionary purchases, fashion brands are struggling with moving inventory leading to an inability to sustain the existing workforce across the supply chain. The industry’s activities across the value chain have taken a hit and some predict that returning to normal will not be an option.

the demand

The United Nations labor organization predicts that approximately 25M jobs could be lost to the pandemic globally. This increase in unemployment has had a direct impact on the discretionary budgets of the world’s consumers. The fashion industry falls in the discretionary category and the fashion and luxury category as a whole stands to lose between $450 and $600 billion in sales globally. What’s concerning is that these statistics are not predicting the rock-bottom. As the lockdown extends so will the damage to this industry’s sales as is evident by the general pessimistic sentiment of over 75% of consumers who don’t expect their personal financial situation to improve over the next two months at least.

The demand has not only reduced but is also changing. The pandemic has raised a mirror to the industry’s ethics and sustainability claims. It’s become evident that brands have a huge impact on the ecological health of the planet. Consumers are now demanding brands that don’t use sustainability as a marketing tactic but instead have it woven into their core values as is evident by movements such as the #PayUp petition which called out some of the largest fashion brands to follow through on their commitments. The mirror also reflects the extent to which brands care about the people that make fashion possible. No, not just the ones that sit in high-rise offices but the ones that are working at the start line of the fashion process - the factory workers. Several brands have faced backlash for how they treated their employees during the pandemic highlighting the consumers’ demand for ethical practices and the need for brands to deliver on it.

A combination of these changes to the consumer’s thought process will mean that it is unlikely that the fashion industry will be able to return to business as usual without catering to the increasing demand for transparent, ethical, and sustainable practices.

the supply

A drop in demand combined with the lockdown means that the industry’s supply chain activities have been indefinitely paused. It has caused a widespread closure of retail stores leaving brands with an inventory surplus, depleting cash reserves, and a crashing valuation. This, however, is just the tip of the iceberg. The industry’s highly complex supply chain doesn’t end at its retail stores and financial stakeholders. In fact, it just starts.

This complex supply chain finds its roots in developing countries like India, China, Bangladesh, and more. This part of the supply chain usually gets paid over three-four months after delivery. The pandemic means that this payment is now getting delayed indefinitely. According to Bloomberg, over 1,100 garment factories in Bangladesh have had ~$3.17B worth of orders canceled leaving 2.17M workers affected. Similar events in other developing countries mean that workers are not getting paid for their work and even getting laid off without as much as severance.

This situation is likely to worsen as McKinsey estimates that ~80 percent of publicly listed European and North American fashion companies will be in financial distress if they have to keep their retail stores closed for two more months. While alarming, the pandemic has highlighted not only the need for an agile, lean supply chain but also the need to find ways to support the entire supply chain and not just parts of it. This combined with the anticipated changes in demand post-pandemic makes it crucial for the fashion industry to find ways to modify the supply chain in ways that enable it to support the consumer’s changing preferences while functioning profitably at all levels of production.

the green lining

While the situation is challenging, this crisis is a catalyst for change. This anticipated change forms the green lining surrounding this dark, heavy cloud. It stands for sustainability and through it, profitability. Kelly Saltzman, co-founder of Awoke N’ Aware says “This is an incredibly tough time for so many, but if we search for some silver linings, I think we can see that this is making us take a step back and focus on the important things. I think that this reset can push us to make better choices for our people, our supply chains, our businesses, and the planet overall.

I am excited to see how our communities pivot and develop in this new world.”

Research agrees and indicates an anticipated increase in the importance of sustainability and ethical practices for consumers which will encourage brands to find innovative ways to produce, sell, and market their products that meet the consumers’ criteria as well as the investors’ criteria.

Sustainability as a way of business and not marketing

While the term “sustainability” has been overused, it is in for a major makeover. The term has become synonymous with being environmentally-friendly. However, that is just one of the pillars of sustainability, the other two being the society and the economy. The positives and negatives of the pandemic have shown that the fashion industry like other industries has massive potential to be sustainable across all the three pillars of the term.

Using sustainability as a marketing practice will no longer work especially since consumers have now seen the impact that their favorite brands' production practices and their own consumption habits can have on the society, economy, and the environment. This is why even though most of the industry has put sustainability on the back-burner to deal with more pressing issues at the moment, they will have to re-prioritize to come out strong from this period. Forbes highlighted that 16% of consumers would now prioritise sustainable products and 45% would prefer companies that communicate with concern and purpose rather than prices and products.

Innovation throughout the value chain

The one thing that this pandemic highlighted is that a brand that can move at the speed of culture is one that stays relevant. And boy does culture have an erratic trajectory. The fashion industry is no exception to this rule. The pandemic has severely altered consumer behavior and consequently the consumer’s entire buyer journey. This leaves brands with no choice but to innovate to rediscover this new journey if they want to usher their consumers across the purchase funnel.

Innovation will have to occur throughout the value chain if brands want to reach the right consumers with the right message, at the right time, across the right medium. Fragmented and complex supply chains will have to be replaced by simple and lean ones to ensure resiliency. Marketing communication will change its focus from aesthetics and appeal to sustainability and value. Collections will have to change in style and frequency to move piled up inventory and to appeal to the growing “waste not, want not” attitude of the consumers.

All in all, a massive and inevitable revamp awaits the fashion industry at the end of this which can be fast-tracked by adopting innovative practices and technology-driven solutions. The proof is in the pudding. Nike was able to increase its digital sales by 36% in China during the pandemic by leveraging Taobao livestream bloggers. Asics held a VR launch for its latest sneaker models and instead of inviting media as is usual, they sent Oculus Quest headsets to journalists to watch the hologram.

the way forward

If there’s one thing that social distancing taught us, it’s that every single person’s action counts. This was true for climate change, stayed true during the pandemic, and will remain true for the new normal that awaits us. This crisis is a chance to metamorphose not only for the fashion industry but also for us as consumers of this industry. Through simple, consistent practices we can become the consumers that continue the change that this pandemic has set into motion.

As a consumer, decide to make sustainable choices. Start by deciding to not indulge in fast fashion, or by buying less and wearing more, or piling up your laundry so you end up consuming less water, or just reading up on how to be a sustainable consumer and trying to live up to it in as many ways as you can. It’s important to realize that demand fuels supply and through a collaborative effort, the fashion industry and its consumers can finally get to the greener side of the grass.

Expert Thoughts

Toronto-based marketer, Aakanksha, is a story-teller by profession and passion. When she's not working on marketing campaigns, you'll find her immersed in passion projects around animals, sustainable living and of course, story-telling.

- Aakanksha Nair -

Leave a comment

Comments will be approved before showing up.

women's size guide