After the bad blow suffered during the pandemic, the fashion industry is now looking at the numbers and timing of the global market recovery. COVID-19 has heavily impacted the entire sector which saw a 90% decline in economic profit in 2020. According to estimates by Statista, the growth rate between 2021 and 2025 will be higher than 7%, with a market volume of about $1200 billion at the end of 2025. By 2023, nearly a quarter of revenues will come from online sales.
Fashion, old and new words
Different trends between the various segments, obviously, for different product offering and different growth expectations, to be combined with the ultimate multiplicity given by the demand, which in recent times has taken new and, often, unpredictable paths requiring a continuous reconfiguration of the market for old and new fashion industry players.
Today, words like fast fashion, lifewear, preloved are essential to map out the choices of those who distribute and those who consume, all of which can be traced back to a common element: sustainability. There are also far worse ones. Lately, we hear more frequently the term ‘zombie brands’ to indicate brands that have missed the digital boat, are undercapitalized and lack resources to invest in the future and that exist only in name only to ultimately file for bankruptcy.
The nature of fast fashion is self-evident. The textile industry is the second worst polluter in the world, both in terms of production and waste. Many brands have built a unique business model based on the speed with which garments can be produced and shipped to stores. Large quantities of unsold goods originate from the quick fire rotation on the shelves, with obvious impacts on the environment.
Unfortunately, brands do not become sustainable on their own as they are pressured by demand, and combining it with the needs of an income statement that generates cash is not a cakewalk. The global fast fashion market is however expected to make up for 2020, reaching a value of around $40 billion in 2025, at an annual growth rate of 7% (ResearchAndMarkets.com).
Lifewear and awareness
In a recent interview with Pambianconews, Alessandro Dudech, COO of Uniqlo Europe, rejected the definition of fast fashion for his company. “Our proposal is innovation, quality, attention to detail and how far away there can be from a fashion that promotes replacement on the shelves and consumerism. Uniqlo focuses rather on the quality/price ratio and on longevity, which borders on the classicism of the garments.”
A sort of lifewear manifesto, with which the Japanese giant wants to promote its image on the market, exemplifying the more general trend of the entire global sector towards sustainable fashion. Moreover, no brand can escape the need to express its ethical commitment (whether authentic, formal or simply communicative) in this regard. Calls for sustainable fashion have indeed existed since the flower power of the ‘60s, but awareness of the problem has increased irreversibly since 2013, following the catastrophic collapse of the Rana Plaza factory.
Fast, faster and worse
In the fashion industry it is certainly very difficult to replicate cases like Patagonia, a virtuous business model that continues and consolidates over time, as there are wills and needs which are very difficult to combine and harmonize.
Garment production volumes are growing 2.7% annually. 12% of fibers are still discarded in the factory, 25% of garments remain unsold, and less than 1% of products are recycled into new clothes.
For some time now the stock problem has been affecting different brands. In 2018, the Burberry case caused a stir. In the same year, H&M CEO Karl-Johan Persson admitted that inventories were worth nearly a third of total assets. Sometime later, some Danish reporters claimed that H&M had burned fifteen tons of unsold clothes. The company replied that the destroyed garments had manufacturing defects.
Today, the fact that something important is happening is undeniable, and it inevitably passes from growing awareness to consumption. Preloved and thrifting are now the new words of fashion, which help to provide orientation and guidance, even with all the risks of misunderstanding that accompany every successful movement.
Second (hand) comes first
This was the title we chose less than a year ago to describe the second-hand market. There are more and more consumers who love to reduce, reuse and recycle and it will be wise not to be fooled by a short-sighted view of the phenomenon, imagining it as a simple contemporary reworking of the aspirations of the hippy era. Used clothes are now a serious business. Websites that sell preloved clothes, such as ThredUp (which processes hundreds of thousands of second-hand garments every day), Vestiaire Collective and Poshmark, are enjoying growing success.
A further demonstration comes from the leaders of fast fashion, who pay special attention and invest in circularity. H&M is the latest to enter the space, with a marketplace set to launch on 7 September in Canada, which the fast fashion giant see as an opportunity to bring in new customers and boost its sustainability credentials.
The new appeal
The thrifting trade is rising quickly, and find appeal among consumers who, although able to afford new clothes, do not consider price as a key determinant but prefer pre-owned purchases for environmental reasons. The recent study by Bain & Co. in collaboration with Depop, confirms the growing awareness in this respect by the younger generations.
In a collaborative report with Globaldata, ThredUp highlights the state of the resale market in the post-pandemic, which is set to double over the next five years, reaching a total $77 billion. As many as 188 million consumers made their first purchase in 2021, against 36 million in 2020.
The same report has highlighted that the resale fashion market is growing at a rate eleven times faster than traditional retail and it is assumed to be worth $84 billion by 2030, compared to $40 billion for fast fashion.
Brands will need to focus on two new key priorities: accelerate their shift towards a demand-driven model and reduce assortment complexity. The third decisive one will be determined by those who buy, thinking before spending.