By: Ilaria Pasquinelli, Twitter: @ilaria78, international marketing consultant for the textile and fashion industry.
Until the late 80s, fashion retailers and brands would typically have two main collections a year: spring/summer and autumn/winter. Then, in the 90s things changed dramatically. Increased competition saw retailers incentivising customers to visit their stores more frequently. To do this they expanded their product ranges. The latest fashions seen on runways and celebrities began to rapidly populate high-street retailers’ ranges. Designers and trend seekers would turn a garment around from drawing to shop floor in just two weeks. The era of “super cheap and super fast” took off.
Ever since, collections have become increasingly fragmented with three to five mid-season flashes in addition to the two main collections, and, in some extreme cases, there can be as many as eighteen collections a year. ‘Here today, gone tomorrow’ has become the norm.
Fashion retailers have changed how and where they buy
This new “fast fashion” model has considerably changed the role of fashion retailers in their supply-chains, specifically how and where they buy.
In the past, lead times typically used to be between 90 and 120 days. These have come down to between 45 and 30 days, or even less. As a management briefing from Just Style in 2006 pointed out, instead of 40,000 garments being manufactured across four styles for 20 weeks at a rate of 500 per styles per week, now only the first five weeks are contractually confirmed (usually at four styles at 500 per style per week). This is equivalent to a total commitment of 10,000 garments. What happens to the remaining estimated 30,000 that will be needed? Their fate remains undecided until the first batch is already on sale in store.
The end of the 1974 Multi Fibre Agreement (MFA) in 2005, triggered a shift in market shares of garments from developing countries. Today, almost three quarters of world clothing exports are produced in developing countries with the top three exporters being Asia (54%), South America (14%) and Africa (6%). More than a quarter of the world’s production of clothing and textiles now happens in China, nearly double its pre-2005 market share.
How has the role of fashion retailers changed?
Over the course of decades, large fashion retailers have acquired significant power as they are in direct contact with the end customer and can therefore influence preference. Retailers are also at the root of globalisation of consumers’ tastes. Wherever one goes, people dress very similarly. Global retailers only minimally adapt what they sell in Moscow and London, Tokyo or Buenos Aires.
The growing complexity of the supply chains and functions of large fashion retail chains has also meant that a company’s activity is not restricted to the core business of retail distribution. As a result supply chains have become largely opaque and nearly impossibly to track.
Higher pressure on suppliers to the fashion industry
Buyers today are substantially larger in size than the suppliers they source from, and hence clearly hold the bargaining as well as the market power. And with shorter lead and process times, the pressure on suppliers to cut costs, if not corners, has increased.
In Bangladesh, where 80% of the economy depends on the fashion industry, the minimum wage in 2006 was £7.16 a month. Taking into consideration inflation and subsequent real wage levels, that is two and a half times less than the £18 it was worth in 1994 when it was legislated. Meanwhile the price of essential commodities like rice, sugar, cooking oil and water have risen by 200%, making it virtually impossible for workers to support their families. Further, it is estimated that in cases where production is out sourced to a developing world country, workers’ wages only account for between 0.5- 4% of the final retail cost of a garment.
Higher quantities and lower retail prices
An office worker in the Victorian era, whether in London, Yorkshire or New York, would spend equal amounts on clothing and rent each year, and households would be able to survive on a single income. In contrast, labourer families would struggle to have sufficient food on the table with a single salary. Only by combining the wife’s and children’s salaries would there be enough food and perhaps some clothes, if not shoes, for the family.
These specifics of the past are very different to the present, where the average EU household spends only 5.7% of income on clothing and footwear. In the US, where in 2009 citizens bought $326bn of clothing, people spend as little as 2.98% of their income on clothes. This is down from 4.78% in 1988 and 9% in 1950, confirming a trend that has been apparent since before the second world war.
This goes hand in hand with a fall in price-per-item. In other words, we can buy the same, or even larger, amount of clothing, but spend substantially less. The EU-27 consumer statistical survey shows that since 1996 overall clothing prices have, on average, declined – despite an inflation of around 2.2% – which would normally result in a price increase. In the UK, garment prices fell by an average of 10% between 2003 and 2007, and in 2006 people bought a third more clothes than in 2002. While the 2007 recession left the total sales volume in the UK clothing retail market largely unaffected, the retail price of clothing deteriorated drastically.
As a direct consequence, textile production has doubled over the last thirty years. In 1977 the total demand amounted to thirty one million tonnes of fibre. In 2007, this figure had risen to nearly eight million tonnes.
Prices are lower and quality has decreased too
Cheap fashion uses cheap fibres, such as polyester and cotton. While polyester is an oil-based commodity, cotton on the other hand is not exactly the “good” crop it is usually perceived as. Unsurprisingly, quicker production lowers product quality, and bad quality garments are easier to discard. It is estimated that more than 1 million tonnes of textiles are thrown away every year in the UK alone.
In 2008, about 80% of all donated clothing was in good enough condition to either be reused as second-hand clothing, baled goods to developing countries, or sold to rag sorters. In 2011 this percentage had fallen to between 60 to 70%. In the same period, the total amount of clothing donated for recycling decreased by about 20%, while the total amount of clothing discarded remained stable or grew.
