The pandemic reality in the fashion industry - how to turn challenges into opportunities for sustainable fashion
The fashion industry before COVID-19
Before the outbreak of the coronavirus pandemic, the fashion industry was one of the most dynamically developing global businesses. According to the information presented in the preamble to the Fashion Pact concluded on August 24, 2019, at the G7 Summit, the value of the global fashion industry in 2019 was EUR 1.5 trillion per year.
The Polish clothing market is amongst the most attractive and largest in Central and Eastern Europe. PWC, in its March 2020 report "The Polish fashion sector on the edge", estimated the value of Polish fashion sector companies’ revenues at PLN 70.2 billion, of which, the revenue of the clothing and footwear industry was PLN 51.5 billion and the accessory and haberdashery industry was PLN 18.7 billion. PWC’s report highlighted that the Polish fashion sector consists mainly of domestic companies with a market share of approx. 73%, corresponding to PLN 51.8 billion. Moreover, domestic players are closely related to other sectors of the economy, creating an ecosystem of producers, designers and people in many related professions.
The rapid development of the fashion industry took place at the turn of the 21st century. Fashion became democratized. Today, consumers buy 400% more clothes than 20 years ago.
However, as a dynamically developing business sector, fashion has significantly contributed to environmental degradation both at the stage of production and the consumers’ use of clothes. The fashion industry contributes, along the entire supply chain, to soil, water and air pollution, greenhouse gas emissions and waste production. As a result, the fashion sector has become one of the most polluting industries.
According to National Geographic, about 2,700 liters of water is used to produce one T-shirt - as much as one person drinks in about 900 days. Also, a report published by the Ellen MacArthur Foundation shows that more than 1.2 billion tons of greenhouse gases are emitted annually in the production of clothes. This is more than air and water transport combined. The latest report by McKinsey and the Global Fashion Agenda "Fashion on Climate" from August 2020, states that the clothing sector emits 4% of total global annual emissions - as much as the economies of France, Germany and the United Kingdom together.
It is also worth noting that the average consumer throws away up to several dozen pounds of textiles per year.
However, environmental awareness of these phenomena, both among consumers and entrepreneurs in the fashion industry, has increased in recent years thanks to environmental activists as well as scientific studies and alerts about climate change.
Ecological rhetoric in fashion has become clearer and clearer, especially in the last 2 years, leading to ecology influencing forecasted trends in the fashion industry for the near future. According to the 2019 report "The State of Fashion" by The Business of Fashion and the consulting company McKinsey & Company, the main trend in the clothing industry for 2020 was sustainable development and transparency in the fashion industry.
The fashion industry, apart from the “green trend”, has taken real initiatives in favor of environmental protection, and above all, for the climate.
Already at the end of 2018, world leaders in the fashion industry adopted the Fashion Industry Charter for Climate Action (Charter). Although the Charter is a set of ethical obligations, in international relations, such declarations are often implemented on a par with international law. The parties to the Charter are the signatories (fashion companies) and supporting organizations (entities that share the principles of the document but are not able to implement them), which - referring to the provisions of the Paris Agreement - have committed to reducing greenhouse gas emissions by 30% by 2030, and by 2050, to be emission neutral. The Charter’s signatories also support the circular economy, which is in line with the Communication of the European Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 2015.
Six months after signing the Charter, the fashion industry signed another document during the G7 Summit - the Fashion Pact. The signatories of this document undertook not only to protect the climate and stop global warming, but also to protect biodiversity and the oceans. The parties to the Fashion Pact refer to the provisions of the Charter while committing themselves to supporting the achievement of its goals. The Fashion Pact, like the Charter, is a collection of ethical declarations and does not have the status of a binding legal act.
Despite not being formal sources of binding law, both documents have started the process of change in the fashion industry.
COVID has stopped the fashion world
The first indications of a slowdown in the fashion industry appeared in 2019. Experts in the 2019 report "The State of Fashion" predicted that, in 2020, the development of the fashion industry will slow down by about 3-4% compared to 2019 because of a generally less optimistic outlook for the world economy. However, no one could have foreseen such a deep, dramatic and wide-ranging crisis that followed the outbreak of the pandemic.
The outbreak of the pandemic dramatically affected all areas of the world economy. The fashion industry was an industry that was particularly hard-hit by its effects. By hitting the fashion sector, the pandemic also hit shopping malls, sales, logistics, transport, marketing and production.
The coronavirus disrupted liquidity in supply chains. As a result of the pandemic, delivering fabrics or fulfilling orders for new collections became impossible. This resulted in the stoppage of sales and, consequently, the inability to generate income.
The biggest problem for companies in the clothing industry during the pandemic was the fact that retail and service outlets were closed and that consumers were put into social quarantine.
The sudden nature of this dramatic slowdown revealed the inadequacy of adopted business plans for all companies in the clothing industry. The new reality surprised both company owners, employees and consumers. As a consequence, in April 2020, experts verified the estimates of players’ revenues across the global fashion industry in the McKinsey report "The State of Fashion 2020. Coronavirus Update", indicating that they will decrease by up to 30%. Further, that thousands of people may lose their jobs.
Pessimistic forecasts were also included in PWC’s report of March 30, 2020 "Polish Fashion Sector on the Edge - the Impact of COVID-19". Experts indicated that depending on the duration of the downtime related to the pandemic, the possible consequences for the fashion industry will be seen in the scope of:
- a decrease in income from the rental of commercial space,
- a drop in demand for goods and services in shopping malls, and
- changes in consumer behavior affecting their needs.
In response to this state of affairs, entrepreneurs from the Polish fashion industry quickly established the Association of Polish Trade and Service Employers. This organization’s main aims are to increase the "audibility" of the sector through more effective communication, present threats to its members, and engage with the government.
A new fashion reality
The coronavirus epidemic has significantly weakened the fashion industry by stifling sales, thereby causing a lack of financial liquidity, disrupting supply chains and finally - changing the values of consumers themselves.
Even if it may initially appear that the fashion industry will slow down efforts to combat global warming and reduce environmental degradation as a result of the pandemic tsunami, the reality was quite different. The coronavirus pandemic accelerated the process of changing consumers’ beliefs. The quarantine forced a period of reflection. The subject of broadly understood health, also in terms of a clean natural environment, has become a priority.
During the pandemic, global authorities in the fashion industry indicated that, paradoxically, COVID can lead to happiness and redefining priorities.
Li Edelkoort, one of the world’s most influential trendsetters, in an interview for Dezeen magazine said that the coronavirus epidemic will allow mankind to reset its values. Edelkoort emphasized that the pandemic has a beneficial effect on the environment due to the stoppage of factory work and transport. Anna Wintour, editor-in-chief of the American edition of Vogue, said in April 2020 that fashion after the pandemic would not be the same, and that excessive consumption would no longer be tolerated. The world-famous designer Giorgio Armani shared a similar opinion indicating that the overproduction of clothing and “fast fashion” is devastating to the environment.
As a result of the pandemic, most consumers changed their optics and wanted to change existing consumption patterns in favor of “sustainable consumption” that promotes the reuse of clothing, recycling, loan and replacement.
In McKinsey and the Global Fashion Agenda’s latest report "Fashion on Climate" dated August 2020, two-thirds of consumers believe that currently, in the face of pandemic threats, counteracting climate change is of key importance.
In the meantime, the work of the signatories of the Fashion Industry Action Charter for Climate continued in working groups resulting in the development of a pro-climate strategy framework, reporting and verifying emissions generated in the supply chain. This strategy applies to all participants in the supply chain. Each entity must take steps to decarbonize and implement real and lasting changes so that the fashion industry can achieve its goals of limiting climate change.
Fashion of the future
The future of fashion is primarily e-commerce shopping, the digitization of production processes and running a business in a sustainable and transparent manner – all of which puts the consumer first and foremost.
In this context, it can be said that we are dealing with the fashion of the future now. Online shopping is slowly replacing traditional shopping trips. Consumers have not reverted to their pre-pandemic purchasing habits according to a report by consultancy firm Deloitte's “Global State of the Consumer Tracker”. The survey shows that over a quarter of Poles still do not feel safe while shopping in brick-and-mortar stores, and as many as three-quarters of Poles are concerned about the safety of their relatives. However, according to the report "Omnicommerce. I buy conveniently” conducted by the Chamber of Electronic Economy, almost one-third of Internet users say that, due to the risk of infection, they are buying online more and more often.
Transferring sales to the virtual world should follow a second trend - sustainable development and environmental protection. The January 2020 report "Green Generation. Together for the Earth” confirms that Poles often shop online (60% of respondents). However, the survey data shows that three-quarters of internet users and 87% of buyers observe and are aware of the non-ecological behavior of e-shops and suppliers, and expect changes.
It should be remembered that consumers make their purchasing choices more and more consciously. They are beginning to thoroughly verify the supply chain of the goods they choose. This highlights why the transparency of fashion brands is so important today, and has led brands to clearly and reliably disclose information on product development, sources of material origin, country of production, sales, logistics and transport, as well as broadly understood pro-environmental activities undertaken in the company.
The report "Is ecology in fashion" prepared by Accenture, Fashion Biznes and the Responsible Business Forum, shows that 73% of consumers are willing to pay more for products made from green raw materials. This gives the fashion industry the green light to change.
Consequently, any entrepreneur who wants to develop their business in the clothing industry will have to include sustainable development in their DNA.
It seems that innovation and new technologies are the way to achieve this goal. Therefore, in the future, environmentally friendly fashion companies will focus on technological development both in the production of textiles and clothes as well as in the monitoring of supply chains. The digitization of systems tracking trends and indicating consumer needs to designers without the need to produce unnecessary products, will ensure sustainable business development for brands and the reduction of a negative environmental impact. New technologies will allow the streamlining of the replenishment and inventory process with high levels of accuracy.
Technological progress will not only mark the necessary path for the fashion sector, but will also allow the negative impact on the environment and climate to be reduced. Without a doubt, this both creates an opportunity and raises hope for the clothing industry.