Fast Fashion’s COVID Death & Virtual Revival?

By Dawn McGregor, Debra Tan 17 April, 2020

Fast fashion is dying - from broken supply chains and no demand thanks to WFH. CWR's McGregor & Tan reimagine fashion's future

No part of fashion’s business model has gone unscathed from COVID-19; $152 billion in market value wiped out from Jan 17 -Mar 11; the linear fast fashion model is on the brink of death
Supply chains are in tatters & manufacturing is pretty much non-existent; for many it will be fatal & already brands have filed for bankruptcy' & there are concerns about manufacturers surviving, even in China
'Home-chic' will be the new style due to WFH & will change materials & design; Fashions's future is increasingly virtual & digital with avatars & livestreamed runways, asking - will we even need clothes?

The fashion world, like the rest of the world, has been battered by COVID-19.The MSCI Europe Textiles, Apparel & Luxury Goods Index fell 23%, seeing $152 billion in market value wiped out from Jan 17 – Mar 11. No part of fashion’s business model has gone unscathed – raw material production, manufacturing, logistics, retail, sales, fashion shows, all completely battered. So, where do we see the industry going from here? Well, it looks like the death of fast fashion and we share why we think this below.

A quick death – broken supply chains, non-existent manufacturing & closed shops

Supply chains are in tatters and manufacturing is pretty much non-existent. The heavily relied on linear and just-in-time fast fashion model is if not on the brink of death, at least at a significant standstill and there are serious questions on whether it will even be there to be restarted post-COVID.

Supply chains are in tatters & manufacturing is pretty much non-existent….

…The fast fashion model is on the brink of death

Brands are being named and shamed over cancelling, postponing and in some cases not making payment for orders. Primark has cancelled the most orders (USD$273mn), followed by C&A (USD$166mn) and then Inditex (USD$109mn), according to a recent report. Though it should be noted that some brands are producing masks and other products to help fight COVID-19.

The impact from these order disruptions, mass unemployment for garment workers across Asia, particularly in Bangladesh where cancelled orders have passed USD$ 3billion and more than 1 million (around 25%) of garment works have lost their jobs or been furloughed.  China, the only bigger clothing exporter than Bangladesh is also reeling. Exports are down 20% and garment manufacturing fell 37% in January and February compared to the same period in 2019.

“The damage [from cancelled/ no orders] is fatal”

Liu Jianbo, General Manager of Yaqi Garments Co

The big question here then is, is this survivable or fatal? Word from the most impacted, is that it is fatal; “the damage is fatal”, says Liu Jianbo, General Manager of Yaqi Garments Co. located in China’s textile hub. The Chinese industry expected a business recovery in March and April but that has yet to come. With little or no orders, manufacturers face shuttering and soon, some as soon as two weeks. “Small companies with limited cash flow may stay afloat for less than half a month, and the largest ones can make it no longer than six months”, one shoe manufacturing executive said. So, it seems likely that the post-pandemic fashion industry in China and other countries with less a less established textile infrastructure, could look very different.

Then of course there are the closed stores but all that means is that consumers shop online instead, right? Yes, but there is plenty of issues there too. Brands are again facing criticism here for risking employees’ and those in the logistics sector health to fulfil orders. Amazon has had workers walkout due to the lack of protective gear. Is it really worth further risking lives in this time of a global pandemic? We say “further” as fashion already risks lives and the environment with its thirsty, dirty and wasteful ways (see just how so here and here).

These are incredibly tough and unprecedented times for everyone. There are no answers or easy solutions to the challenges fashion is facing now but the industry has for a long time now said that it wants to become green, sustainable and circular (we have written about this lots here, here and here). The biggest resistance to this change is its fundamental linear business model that is well-established and financially viable for shareholders.

But as we’ve shown above, this linear fast fashion model is in tatters now. And indeed, it does mean death for some. So far in April, two big fashion companies have filed for bankruptcy, True Religion Apparel Inc in the US and Debenhams in the UK. Both which had already been bailed out before but could not survive any longer in this pandemic period.

COVID-19 presents opportunity & is a catalyst for change

It may not be obvious, but this virus presents opportunity and is a catalyst for change for all sectors. And fashion, a ‘dinosaur’ compared to most sectors, must not fail to change.  The best time to reinvent yourself is when you are already in pieces. We just need to make sure fashion puts itself together in a new – sustainable, green & circular – way. So, what will fashion look like during- and post-pandemic?

Demand death – switch to home-chic

“…we see a new style emerging, ‘home chic’…

…big implications for future of raw materials & design.”

Well… we see a new style emerging, “home chic” – as we are calling it. With people spending more time at home (by choice or order), the clothes we need are and will change. Not really going to need those fancy work suits, dresses, high heels, or briefcases. Instead, more of a smart-casual attire that will look good for zoom meetings, be stylish for hangout parties and meet your at home workout needs but still be comfy, you are at home after all. And no, we are not talking about a no pants party. Changes like this will clearly have big implications for the future of raw materials and design.

There are already plenty of articles/ websites telling you how to best dress for working from home – “The 5 Best Work-From-Home Outfit Ideas”, “Best Work From Home Outfits to Boost Productivity”, “Best Work From Home Clothes For Women 2020” and it goes on and on…

But as we move more to home-chic, we need to make room in our wardrobes for our new pieces. And with spending more time in our apartments these days, it is a great time to do just that. So, go ahead and Marie Kondo your place. While your place should now “spark joy”, there will also be a pile of what you are discarding, waste. Ah yes, waste, an enormous issue; every second, the equivalent of one garbage truck of textiles is landfilled or burned. Plus, now there will also waste from face masks. Fashion is going to have to rethink waste even more now and the sharing/ renting economy models with likely consumer hesitance around cleanliness and safety.

Virtual future revival? & the knock-on effects

But actually, will we even really need (that many) clothes if we are using avatars? You may laugh but avatars are already widely used in gaming etc. and there is a fashion model avatar, Shudu, who has her own Instagram account with 130,000+ followers! Shudu has been called “the world’s first digital supermodel”. Meanwhile, Time magazine included “Lil Miquela”, a digital avatar who is a style icon with 1.3 million fans, in their list of The 25 Most Influential People on the Internet. Look out models! And not just models, but brands need to look out too if people like using avatars as the demand for clothes will plummet. Avatars will always look good, there’s little vanity – so dieting and the gym may go a bit by the way side and people can be their true selves.

Will we even need clothes in the future? Or will we be using avatars? And watching digital models walk down the runway?

Too farfetched? Well, we are already seeing signals. Fashionistas will have been gutted with the cancellation or indefinite postponements of notable Fashion Weeks and events, including the coveted Met Gala, due to the virus. A bright spot came from Shanghai Fashion Week that held it shows online, live streaming the full week. In other cases, Armani sent models down the runway to no live audience, instead livestreaming it. Louis Vuitton has since also livestreamed its Fall 2020 collection. It seems that fashion shows will also be part of this re-invention.

With this jumpstart for fashion tech, could we also see the proliferation of virtual shopping? Virtual fashion shows?

But if we go virtual it’s not just fashion that will be impacted, many other sectors will be too. What happens to shopping malls? To commercial property and the property sector? And what about cosmetics? If we are online, do we need as much make-up? And if using avatars or virtual models then we don’t need any cosmetics at all. Think of all the plastic waste that will be saved by not buying that lipstick or eyeliner. A virtual fashion future could be a greener one. And the impacts could be way beyond plastic. Fashion is one of the thirstiest, dirtiest and wasteful industries – just look at the stats the graphic below.

    

Imagine

We all need to think what we want our world to look like post-pandemic. Many are waiting for things to go back to normal but our normal, simply said, is bad for the environment, bad for the climate and ultimately bad for people. Why would we want to go back to that?

“This really is our chance to change the world’s trajectory. And yes, fashion needs to be part of that change.”

Moreover, the climate emergency we are in does not all us to return to normal. There could very easily be another pandemic with glaciers and permafrost melting, which scientists warn could release ancient viruses that are unknown to science. We need long-term plans from governments and companies to survive pandemics, to survive extreme weather while saving people and making money; we explore the balance between this as seen so far in COVID-19 here. This really is our chance to change the world’s trajectory. And yes, fashion needs to be part of that change.


Further Reading

  • Metamorphosis! Hard Truths & Unicorns – With blanket disruption globally, we are forced to rethink our future. The pandemic has presented us with a once-in-a-lifetime opportunity to morph toward business unusual, but can we take advantage? CWR’s Debra Tan ponders
  • COVID & Climate – Make Money Or Save Lives? – Governments are prioritising lives over money but with pressure to re-open the economy, can we use lessons learnt from COVID-19 to prepare for the climate crisis? CWR’s Ronald Leung explores the future of aviation and low oil prices
  • Medical Wastewater Treatment In COVID Times – Coronavirus can be found in faeces & urine so medical wastewater has to be handled with care. China is taking the lead with new standards & regulations. CWR’s Zhenzhen Xu expands on the hidden battle fought to keep the virus out of water & sewage systems
  • Sustainable Fashion Today: A Sweet But Short High – 2019 has been a busy year for sustainable fashion but with sweet but short highs as CWR’s Dawn McGregor highlights. Given fashion’s huge climate impact, McGregor laments the need for more strategic solutions
  • Fashion Has The Power To Shape A 2℃ World – If fashion were a country it would have the fourth highest carbon emissions behind the US, China, & India. China Water Risk’s Dawn McGregor & Debra Tan question why the industry is not under the spotlight like coal and call for faster disruptions

More on Latest

  • Forward Osmosis Tech For Wastewater Reuse – Desalination is power hungry. Dr Xiaodong Wang from Qingdao University of Technology shares with us a hybrid forward & reverse osmosis system that can increase water recovery by 45%, cut energy use and even reuse wastewater
  • Raindrops To Energy: The Droplet-Based Electricity Generator – Water contains huge amounts of energy yet harvesting it is not efficient. We sat down with Prof. Zuankai Wang from the City University of HK to learn more about how this groundbreaking tech powers 100 LED bulbs with one drop of rain

Dawn McGregor
Author: Dawn McGregor
Dawn leads CWR’s work to help corporates navigate increasingly disruptive & material risks from water & climate threats, as well as transitional risks in the supply chain arising from new regulations in China. Here, Dawn engages extensively with the global fashion industry delivering on-ground workshops in China to keynotes and strategic input at European HQs. She has written at length on the end of dirty and thirsty fast fashion and her report to overcome gaps between brands and manufacturers for a clean and circular future inspired the industry to create a new wastewater tool.Dawn also works closely with the property and tourism sectors where she not only conducts strategic assessments of their exposure but builds collective action toward resilience via closed door working groups and invite-only events. Having helped build CWR, Dawn is a frequent keynote, panellist & moderator at events, including being twice selected as the lead-rapporteur at World Water Week. Her articles are cited in various industry publications including the UN’s ‘World Without Water’. Dawn previously worked in a global investment bank assessing geo-political risk, crisis management and business resiliency. She was born and bred in Hong Kong and has lived in France, England, Singapore and Beijing.
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Debra Tan
Author: Debra Tan
Debra heads the CWR team and has steered the CWR brand from idea to a leader in the water risk conversation globally. Reports she has written for and with financial institutions analyzing the impact of water risks on the Power, Mining, Agricultural and Textiles industries have been considered groundbreaking and instrumental in understanding not just China’s but future global water challenges. One of these led the fashion industry to nominate CWR as a finalist for the Global Leadership Awards in Sustainable Apparel; another is helping to build consensus toward water risk valuation. Debra is a prolific speaker on water risk delivering keynotes, participating in panel discussions at water prize seminars, numerous investor & industry conferences as well as G2G and academic forums. Before venturing into “water”, she worked in finance, spending over a decade as a chartered accountant and investment banker specializing in M&A and strategic advisory. Debra left banking to pursue her interest in photography and also ran and organized philanthropic and luxury holidays for a small but global private members travel network She has lived and worked in Beijing, HK, KL, London, New York and Singapore and spends her spare time exploring glaciers in Asia.
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