If there were ever a time for fashion to reinvent itself, it is now. The industry has been hit hard by the COVID-19 pandemic. Billions of dollars of clothing orders placed with manufacturers around the world have been cancelled. Major physical retailers have shuttered. Online sales are down by as much as 30-40% in the US. A majority of fashion businesses are likely to suffer financial distress over the coming months. Many will not survive.
A so-called “black swan,” COVID-19 has exposed a fundamental weakness in the traditional fashion system: matching supply and demand. Industry leaders have long known that the old way of doing things – i.e. seasonally manufacturing items abroad without any advance customer feedback and then, months later, hoping that these items sell in retail stores around the world – doesn’t work. Industry overproduction runs at an incredible 30 – 40% each season. For a business with $2.5 trillion in global annual revenues, fashion is ripe for an overhaul of how it produces and in what quantities.
Not only is the traditional fashion system financially wasteful, it is also very damaging to the environment. According to the 2019 Global Wellness Trends Report, fashion is the world’s second worst offender in terms of water pollution. It is also responsible for roughly 10% of all carbon emissions. The price of beauty on the planet is high and real.
So as the world sits on pause during this COVID-19 crisis, there exists a rare opportunity for the fashion world to rethink how it does things, financially and environmentally. This is certainly true of the major incumbents, fashion houses that control a large portion of the industry value chain. But it also applies to new entrants: innovators and disruptors that might find it the perfect time to shake things up and improve upon the status quo.
A growing number of industry experts believe that fast, on-demand manufacturing is an important part of the next normal for fashion.
One of these people is Kirby Best, CEO of OnPoint Manufacturing, based in Florence, Alabama. Having built a career in the publishing industry perfecting the on-demand manufacturing of books, Best, a decade ago, decided to apply his learnings to the apparel industry. He designed a technology and manufacturing facility that allows fashion brands to bring on-demand products to market quickly and cost effectively.
“By using an on-demand model, our customers no longer need to order hundreds of something that they may never sell. With on-demand manufacturing there is no inventory, no fabric waste, and no warehousing,” says Best.
On-demand is both more economical and sustainable. Waste in the industry is rampant and expensive. On-demand production allows fashion brands to reduce their upfront cash need and minimize excess inventory.
It is also more logical. Whereas traditional clothing manufacturing is done weeks or months in advance of sales — sometimes halfway around the world, without any guarantee that the product will sell at retail — on-demand is speedy and surgical: product is only made once the sale has been booked and it can ship in a matter of days. For brands, this means no costly leftover inventory to send to landfill at the end of each season – a win for the bottom line and the environment.
But will fast, on-demand manufacturing be transformative for the industry? Is the necessary investment in equipment and “cut and sew” skills prohibitively expensive and complex?
According to Best, the challenge is a change of mindset more than the investment in hard technology and labor. He believes it is only a matter of time: “Change requires patience. When on-demand first came to the book publishing industry, the publishers initially resisted the model. Now they have adopted it broadly alongside (traditional) long-run offset printing. I believe the same thing will happen in the fashion industry. And I believe the pressures from COVID-19 will accelerate this shift.”
Local Vs. Global
On-demand manufacturing is most efficient if production is done close to the end consumer. This allows brands to sell online and deliver to customers within days without holding inventory. For example, with its Alabama location, OnPoint can receive an order and get it to a customer’s doorstep just about anywhere in the U.S in a day or two.
But while a large portion of clothing manufacturing is done abroad, COVID-19 has also highlighted the benefits of brands manufacturing locally even under a traditional (i.e. non on-demand) model.
Pierre Mallevays, Managing Partner at Savigny Partners, a mergers and acquisitions firm focused on the luxury sector, notes that “the existing global supply chain model left many high and dry during the time of COVID due to factory closures and delays in international shipping.”
Local production and warehousing of inventory would therefore solve the crippling bottleneck caused by a crisis like a pandemic. However, manufacturing locally and holding inventory is only a solution if there is demand for the product – reinforcing the need for the industry to better match supply and demand.
The rationale most commonly given by the industry for manufacturing abroad is the cost advantage. Best thinks this logic is flawed, citing Asia as an example of a manufacturing location where the industry has underestimated the overall cost base: “When you look solely at the manufacturing cost per unit you are only getting part of the picture. You also have to consider other factors, such as warehousing, shipping and the risks associated with the value of time. When all of this is taken into account, I am not sure the cost of manufacturing in Asia is really lower. COVID-19 has brought this all into focus.” Manufacturing, according to Best, will eventually return closer to the customer, to be performed in a market near where he or she lives
However, some industry experts fear that a move towards “local only” production will hurt the industry in other ways, including the loss of specialized skills and techniques from a global workforce that depends on providing them.
Bibhu Mohapatra, a New York based fashion designer, highlights the danger of abandoning manufacturing abroad : “If we don’t think globally, certain skills and crafts are going to die, such as embroidery that comes out of India.” He also points to the human impact of a dramatic shift from global manufacturing: “I believe in supporting local businesses but we need to maintain a balance. We can’t leave people behind. As a creative I have a responsibility to pay attention to the artisans that have been supporting my business from the beginning.”
So while a return to local production is a likely scenario for the industry, it would seem this shift needs to happen carefully and thoughtfully or it may invite more problems than it solves. A balanced mix of global and local manufacturing is perhaps the best way forward.
The End Of Fashion Seasons
Industry leaders increasingly agree that brands adhering to “fashion seasons” – i.e. introducing a fixed number of collections each year according to a set schedule – makes less and less sense. This tradition can lead to brands and retailers being stuck with large amounts of inventory that does not sell through. Since manufacturing against this schedule is done months in advance, any hiccup along the way can throw off the success of the entire model.
Case in point is the current COVID-19 situation: due to sharp sudden decline in consumer demand, many brands and retailers are sitting on a huge surplus of clothing from the Spring/Summer 2020 season. This inventory will lose most of its value over the next couple of months and be removed from full price retail stores by the late summer.
According to Mallevays, this antiquated approach to selling is poised to change: “It is likely that brands will seek to reduce seasonality in favor of a core, repeatable range whilst focusing on their territory and point of difference. Range widths may be cut down.”
Mohapatra concurs, noting that he and many of his designer friends are rethinking their approach to seasonal collections: “Consumers are frustrated. Women go into a department store in the summer to look for a bathing suit and find nothing. All that is there is Fall merchandise”. Consequently, Mohapatra is leaning towards producing smaller drops of product each month: “I don’t think it is going to matter much anymore to follow the traditional schedule.”
Environmentally, a “seasonless” shift is much better, since it tamps down on the notion that any collection has a short shelf life that must be replaced with next season’s offering – which leads to more clothing being produced and waste. What the impact this shift would have on fashion creativity and how designers design remains to be seen.
The Consumer First
A silver lining to the current outbreak is the overall growth of online fashion shopping. Consumers who previously only shopped for garments in physical stores are purchasing online for the first time. Brands that hadn’t developed their e-commerce capabilities are now doing so. Direct relationships between brands and customers are being fostered like never before.
“The trend to go more digital creates a better, more direct dialogue between fashion brands and their customers — and it offers designers tools to better understand the tastes and preferences of shoppers,” says Mallevays.
Mohapatra echoes the notion that COVID-19 has placed the shopper squarely in the spotlight: “We have all been forced to hit the reset button. The old system wasn’t sustainable. We can no longer mindlessly produce things and hope the consumption will keep up. The focus, now more than ever, needs to be on the consumer.”
How this shift affects the multi-brand retailers is yet to be seen. Those for whom a bulk of their business is already online will clearly be at an advantage. “For multi-brand retailers it will be more important than ever to justify their point of difference, be it by curation, location or price,” states Mallevays.
Ultimately, any increased attention by the industry on a movement towards sustainability bodes well for brands and shoppers alike. Consumer interest in sustainable fashion has been on the rise, with Internet searches for “sustainable fashion” tripling between 2016 to 2019. This is reflected in the growing interest consumers are showing in buying sustainable and vintage clothing, and using clothing rental services – each of which is more eco-friendly than shopping seasonally. It was also demonstrated in the protests against wastefulness during London Fashion Week last September which received significant interest from the press.
Undoubtedly the COVID-19 pandemic has meaningfully affected the fashion industry. How the business responds in the longer term is the opportunity at hand. Will brands implement changes such as shifting to on-demand manufacturing via local companies? Will consumers demand a closer direct relationship to brands that shun excess production and focus on sustainability? If ever there were a moment for the industry to bear the time and cost of improving itself, it is now when tolerance of waste-producing business models is diminished and expectations for purpose-driven sustainable action is heightened. 2020 has been a chaotic year to date for the business, but chaos breeds opportunity.
Fashion industry, it is time to step up.