What Has The Fashion Industry Learned From Disasters In The Past Ten Years?

With the fashion industry entering a new ten years, our industry is facing unprecedented pressure on climate change and human rights issues, forcing us to re-examine and purify our behavior. For brands, whether action is taken will determine whether they can survive in the next ten years.

London, UK - over the years, luxury goods giants Kering and LVMH have been competing for a long time in mergers, designers and retail. But in the September 2019 Paris fashion week, the most intense competition between the two French fashion giants is climate.

During the fashion week in Paris, at a rare top management meeting, LVMH elaborated on many initiatives taken by the group, and said that it was running Louis Vuitton and Celine brands in a more sustainable way, and made almost undisguised irony about its competitors. "We prefer action rather than commitment," said Antoine Arnault, LVMH's board member and chief executive officer of Bernard Arnault. Just a month ago, Kai Yun group, a brand owned by Gucci and Saint Laurent, launched a sustainable development agreement with the support of French President Emmanuel Mucklow (Emmanuel Macron). About 60 fashion and textile brands have signed the agreement.

It is hard to imagine that ten years ago these global luxury groups would fight for sustainable development, even though the two companies have already taken corresponding measures. Ten years ago, few consumers, or even fewer executives, were concerned enough about these issues and took corresponding measures at major business decisions. But over the past ten years, there has been a fundamental change in the discussion of human rights and climate issues in the fashion industry.

Now, the top priority is to let the brand prove that its business is not only economically sustainable, but also moral enough. Since 2010, a series of technical, social and political upheavals, public scandals and fatal disasters have attracted people's attention to the social and environmental misconduct in the fashion industry. On the other hand, a new generation of value oriented consumers is creating a positive incentive mechanism for brands, urging the brand to prove that they are adopting a more socially responsible way of operation.

Eva Kruse is chief executive officer of the Global Fashion Agenda, a Copenhagen based sustainable fashion forum and advocacy group. He said these problems have shifted from the small issues of corporate social responsibility team and sustainable development experts to "one of the biggest topics in our industry today". The topic now becomes, "this is the only way for our industry to survive."

With the fashion industry entering the new ten years, it has become a gamble to frankly talk about the environmental impact of fashion industry and the unreasonable treatment of workers. Big and small brands are under pressure, and these pressures may ultimately force fundamental changes in the way the fashion industry operates.

"The topic now becomes," this is the only way for our industry to survive. "

Consumers are becoming more and more autonomous, demanding and increasingly active, and the government is more concerned about this industry. Retailers are looking for new business models to reduce waste, and technological innovation is creating new threats and new opportunities.

Entering the 2020s, more and more analysts, executives, investors and consumers are looking at the many disadvantages of the fashion industry as a challenge for the entire industry to survive.

"Of course, the situation is becoming more and more complex," said Anna Gedda, director of sustainable development at H&M group. This is not only to ensure our survival in the next three years, but also to ensure the survival of the next 30 years. "

Under the surface, new designers, activists and some consumers have begun to think that the only way to solve many problems in the fashion industry is to completely end the consumption cycle.

"Some brands seem to think that the solution to the fast fashion problem is to store clothing recycling bins in shops or develop closed loop manufacturing mode," said Dominique Muller, policy director of Labour Behind the Label, a worker rights nonprofit organization. "But at the same time, they did not discuss consumption reduction in any way or encourage consumers to reduce purchases, so this mode is still a fast fashion."

Dirty Truth

Ten years ago, many companies regarded sustainability as a basic compliance issue, with limited attention to this issue. Clothing on the market with ethical standards is often unpopular. The process of solving social and environmental problems in this industry is slow, complex and expensive, and most enterprises have no motivation or interest in it.

In 2013, the Rana Plaza factory in Bangladesh's capital, Dhaka, collapsed, killing more than 1000 people. This is the most fatal garment manufacturing disaster in contemporary history, and it has hit the front page headlines of the world's major media. Overnight, the misconduct of the clothing industry has once again become the focus of public attention.

"Of course, the situation is becoming more and more complex."

"For the first time, fast fashion has to look at its own problems," said Mike Barry, former director and consultant of Marks & Spencer sustainable development, Martha. "The impact of this incident is not on the market, but on the board."

The tragedy of Rana square did not fundamentally change the industry, but it left an indelible mark. It forced the brand to take responsibility for the entire supply chain and promoted a campaign to disclose more information about clothing production. This incident is a touchstone for consumers who are worried about the social impact of products purchased by themselves. It does bring a real security improvement to Bangladesh in some sense, though this improvement is still fragile.

With the passage of time, participation in the topic of tackling climate crisis has gradually increased on the political and cultural level, and social concerns and worries about the living environment of workers have been obscure. In 2015, the UN Member States reached a landmark agreement to limit global warming, and governments committed themselves to take action against climate change. Although the progress of emission reduction has been lagging behind, the voices of Swedish activists Greta Thunberg and Extinction Rebellion have been exerting external pressure, and investors are more and more bold in querying the environmental protection measures of enterprises.

The confrontation between Kai Yun group and LVMH group in Paris fashion week is an example of the impact of this social transformation. Last year, Burberry decided to stop the practice of destroying the unsold products for a long time. Previously, the company burned nearly $40 million worth of goods and became a representative negative material for wasteful behavior in the industry.

"Everyone knows that the fashion industry is really, really bad," said Claire Farrell, member of the anti genocide group, at the BoF VOICES event in November. "What's so fascinating about living in a dying world? What's the impact of fashion on the planet? Is it really worth it?"

The rise of social media and a new generation of radical consumers has exacerbated the impact of these cultural and political changes on the industry. Ten years ago, or even five years ago, for most fashion companies, taking any form of political stance was unfavourable, and now this behavior has become a necessity.

Although cynics may be able to denounce the new commitment of big brands to social values as purely marketing means, the public statements of famous brands do help to transform the whole industry. In 2017, Gucci CEO Marco Bizzarri sharply criticized fur's "obsolescence", which contributed to the wave of a large number of brands announcing the abandoning of fur, and even the queen of England actively followed suit.

"Everyone knows that the fashion industry is really, really bad."

On the other hand, controversy over the poor advertising campaign in China at the end of Dolce & Gabbana in 2018 (and the controversy over Gucci's alleged "black faced" sweater products suspected of racial discrimination) have shown that if the brand does something wrong, it will pay the price. Therefore, brands are beginning to notice that they are being closely watched from all walks of life, and improper behavior will immediately affect brand profits.

An industry that is on the brink of collapse

But in the next ten years, the problem of restoring the fashion industry is a landmark task. Although consumers are beginning to realize that the industry is facing environmental and social challenges, this business model is becoming more destructive.

According to McKinsey data, global clothing output doubled from 2000 to 2014, and the average number of clothing purchased by the average consumer increased by about 60% per year. The global fashion agenda and Boston Consulting Group predict that clothing consumption will increase by about 60% between 2017 and 2030, reaching 1.02 million tons, equivalent to 500 billion T-shirts. "Consulting"

Commodity prices in luxury and commercial streets are falling fast, and businesses are catering to consumers' desire for novelty. The rise of e-commerce exacerbated competition, increased pressure on brands, and promoted brands to launch the latest fashions at a faster and lower cost.

As the profit margins narrowed further, brands continued to drive down the cost of manufacturers, even though they were still openly appealed for higher wages. News on the environment is not good. Although many brands have put forward many slogans and environmental protection initiatives and marketing copyrights, they promise to use environmentally friendly materials and ethical standards to enhance their sustainability, but the global fashion agenda has warned that the industry is delaying the process of environmental protection.

"In the next ten years, the problem of restoring the fashion industry is a landmark task."

In the new ten years, the fashion industry hopes to increase economic growth through more consumption, while turning to more sustainable business models, which have become two conflicting issues.

"If I can measure the heat of this topic, I think sustainability is more like a marketing topic," said Maxine B e DAT, executive director of sustainable fashion database New Standard Institute. I can foresee a real great recession.

For this problem, the fashion industry may not have another ten years to solve. In the next few years, the pressure of slow accumulation will reach its peak.

"Now is the time to take action. We must sober up, hurry up and work hard, otherwise everything will be over, "said radical designer Katharine Hamnett. She has spent years trying to win more sustainable initiatives in the fashion industry. "This change and adjustment is happening all over the world... Consumers are increasingly in need of sustainability, sustainability or sustainability, because they have the power to choose."

After years of economic growth, the outlook for the fashion industry in the next few years will be even more bleak. This will put more pressure on the overstretched industry model. This pattern has led to overproduction and forced many traditional retailers to take lower discounts. According to the BoF Fashion Business Review and the McKinsey Co's annual "State of Fashion" reality, executives across the industry are preparing for the slowdown in the coming year.

At the same time, concerns about climate change are intensifying. Last November, the United Nations Environment Programme issued a worrying report warning that the only way to avoid catastrophic climate change is to take more radical measures. In September this year, protests by the "anti extinction" group almost grabbed the London Fashion week. According to BoF Fashion Business Review and McKinsey Co's global fashion format report, nearly 2/3 of consumers claim to be "belief driven buyers". They will choose, transform, avoid or even boycott the brand based on a brand's position on social issues.

Marie-Claire Daveu, chief sustainability officer of Kai Yun group, said: "these problems come from all over the world." He stressed that this problem is spreading to the enterprise field, because employees also require enterprises to take more actions from all aspects of climate policy to corporate culture. "To attract the best new talents, it is very important for a company to really participate in sustainable development."

Regulators are also beginning to pay attention to this problem, which is a major change for an industry which is basically not strictly regulated. France has taken action to prohibit brands from destroying unsalable goods, and UK and Norway consumer watchdogs have warned businesses that they exaggerate their sustainability requirements.

"You may go bankrupt," said Lucy Shea, chief executive of Futerra, a sustainable development consultancy. "Great changes have taken place in the world. If you want to continue to maintain close ties with target consumers, you must start offering closed loop services, and you must ensure diversity and inclusiveness."

New business model

The brand is slowly starting to deal with this new reality. On the one hand, it is concerned about the serious damage that has spread to the whole industry. On the other hand, it is concerned about the changing demand of consumers for more responsible behavior of the brand.

More and more companies are starting to try new business models such as resale and leasing to extend the circulation time of garments. The RealReal, a luxury resale website, raised $300 million in its initial public offering earlier this year, putting its price on the target range, which is valued at about $1 billion 600 million.

"In the past more than 100 years, the fashion industry has been benefiting from the existing procurement, manufacturing and waste disposal methods, but this model will not work in the future."

If the material innovation and technological progress of recycling can be breakthroughs in scale and competitive in cost, it will be possible to provide a new solution to the serious problem of slow-moving waste in the fashion industry and change the rules of the industry.

"We now have solutions that did not exist ten years ago," said Sylvie B e nard, head of LVMH's environmental department.

The fashion industry is gradually embracing the transparent mode of operation, which may help some labor problems that continue to beset the supply chain of the fashion industry. The fuzzy and complex supply chain often brings a series of problems in the fashion industry. These problems exacerbate the abuse of resources and make the enterprises accountable more challenging. The key to solve these problems is to improve the traceability. A radical high transparency model advocated by new consumer oriented brands like Everlane helps to set a new benchmark for the industry.

However, despite good intentions, the fashion industry is still faced with a fundamental challenge in its efforts to innovate: the industry has yet to find a viable alternative to its current mode of resource squeeze and exploitation.

Kruse, the global fashion agenda, said: "there are some basic issues that we haven't really solved yet. This is a question of the whole business model in the future. Over the past more than 100 years, the fashion industry has been benefiting from the existing procurement, manufacturing and waste disposal methods, but this model will not work in the future, so what will the future of our industry be like?

Translation: Jingwen Chen