Fast fashion represents 10-20% of the global fashion market according to Retail X. Yet in the summer of 2019, Forever21, a major fast fashion brand, went bankrupt. Has this low-cost model run its course? Are more sustainable options set to replace it?
Can you define the “fast fashion” economic model?
Fast fashion is characterized by the sale of clothing with manufacturing costs so low that they can be sold cheaply and encourage consumers to renew their wardrobes regularly. It relies on fleeting fashion trends that capture consumers’ attention with low prices. Fast fashion has also benefited from the development of social networks where it is fashionable to parade in new clothing.
As a result, the business model is based on high sales volumes that enable profits. Companies such as Zara, must manufacture their clothes in countries where labor costs are low and worker rights quite different (e.g., Spain, Turkey, North Africa…).
The strength of fast fashion models is to inspire or anticipate trends in official fashion shows. Zara for example, immediately collects data on trends via AI software on social networks. The business model is built around the agility to adapt quickly to current trends.
Fast fashion emerged because of new consumer expectations...
Fast fashion meets a real demand by consumers: budgets are not extensible and have to cover everything such as food, housing and clothing. New services and products like smartphones, electronic devices and associated services such as streaming, have redistributed how budgets are used. Fast fashion is a response to this new consumer budget balance.
What are the limitations of fast fashion? Why have brands like Forever 21 and Topshop gone bankrupt?
It’s important to note that Forever21 went bankrupt due to changes in US consumerism which are massively privileging e-commerce shopping. And the popularity of Topshop in the UK was greatly impacted by its CEO’s image.
Nonetheless, fast fashion is reaching its limit: customers are becoming aware of the negative side of this business model. Buying a t-shirt for 4 or 5 euros and then buying another, all of which will quickly end up in the trash bin, is a solution that is unsustainable in human and environmental costs. Global awareness about these issues will lead consumers to buy less and select products that last longer. Does this spell the end of the fast fashion model? That’s still quite uncertain, but in any case the model will have to evolve.
How can these models evolve?
H&M launched a sustainable development policy and refused to redeploy its manufacturing process in new low cost countries such as Myanmar, Kenya or Ethiopia. The first consequence of this change was an impact on its gross profit margin (54% in 2017 vs. 52.5% in 2018).
H&M is also investing in second hand and circular economy initiatives. The company offers clothing rental and recycling services. To continue to attract customers, fast fashion companies are also banking on short-term collections that catch the consumer’s eye. H&M negotiated collaborations with major luxury brands such as Karl Lagerfeld, Stella McCartney, Isabelle Marant, Balmain… Olivier Roustaing, the creative director at Balmain said: “We want to create affordable items that enable consumers to access emblematic brands.” Strategies are also being developed in terms of new implantations: Cos, the high-end brand of H&M will be implemented in China with evening gowns produced in Sweden. Overall, production processes are being geared towards smaller series in order to avoid overproduction.
In France, the anti-waste law for a circular economy is expected in 2021 or 2023. It aims to forbid the destruction of unsold new items. Many companies such as the major French luxury brand, Hermès, are thinking about this subject and its values, which are in opposition to the fast fashion vision.
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