The fashion sector is in crisis. It’s hard to get through a month without hearing about another fashion company issuing profit warnings – even Swedish-owned H&M, for a long time seen as the industry’s success model, is hurting. In January, it lost 12% in market value and abruptly changed CEO. The firm has been struggling with weak sales and stockpiling for years, mostly as a result of inefficient supply chains.
Crisis talks and bankruptcy are also rocking other high-street favourites, from Victoria’s Secret, which has closed more than 100 stores over the past years, to Superdry, Gap, TopShop, Kookaï and Scotch & Soda.
Anything but green
Worse, the sector is unsustainable. Accounting for an estimated 10% of global greenhouse gas emissions, the global trade and production of textiles contributes more to climate change than all international flights (2%) and maritime shipping (also 2%) combined. The industry is notoriously wasteful, leaving 92 million tonnes of waste in its wake annually, according to a 2022 study. It is estimated that more than a half of fast fashion items are thrown away within a year of purchase.
Then there is the question of its working conditions. Eleven years after the Rana Plaza collapse, workers are still struggling to survive on extremely low pay, while working excessive hours in factories that often violate their human rights.
The big culprit for the sector’s woes? Many big fashion brands have effectively developed on what we call the principle of made-to-stock: the company produces large number of goods to send them across the distribution network, which spans warehouses, logistic centres and physical stores. In most cases, companies rely on outsourced and distant manufacturing plants. As a result, when demand falls, inventories balloon – and so does waste. In 2017, H&M was accused of having burned 12 tons of clothing a year since 2013. In 2018, Burberry’s annual report stated that it had destroyed products with a total value of €31 million in a single year.