Fashion Is Broken, Extreme Makeover Time

By Dawn McGregor 18 September, 2020

Fashion is going bankrupt with 20+ filings in 6 months. CWR's McGregor says it is time for a makeover, in order to survive

Fashion has been struggling for years - an old industry, dirty, thirsty & wasteful - but the final breaking point has been COVID-19, which exposed deep vulnerabilities throughout
There have been 20+ bankruptcy filings between brands & retailers in last 6 months, including big names like J.C. Penney, J. Crew; some wonder if it is a tactic to survive 2020
There is also big uncertainty around 20% of the world’s cotton that comes from Xinjiang; being broken is devastating but is a real opportunity for an extreme makeover, one that changes fashion

Fashion is broken. The industry has been struggling for years, from an old industry with little innovation, its dirty & thirsty ways,  the mountains of waste & microplastics it creates and its oil & plastic addiction, but the final breaking point, COVID-19, which exposed its deep vulnerabilities.

Fashion has been struggling for years but COVID-19 was the final breaking point

This is true for the luxury sector with new consumer priorities and less discretional spending. The highbrow Tiffany acquisition by LVMH worth more than USD16 billion is in tatters, in part to the damage caused to the luxury industry by the pandemic.

It is especially true for the fast fashion sector (we wrote about its death here), which operates on a low margin-linear model that is heavily reliant on quick and cheap but highly disparate global supply chains. It’s not surprising then that it has been battered by the pandemic but the number and speed at which the dominoes fell, was. It’s been a retail apocalypse. Since early April, I have counted 23 bankruptcy filings between fashion brands and retailers. And there are some very well-known and big names in those, like, J.C. Penney, J. Crew, Aldo, Brooks Brothers, Neiman Marcus and it goes on; and there are others on bankruptcy watch. Some wonder if they all really needed to file for Chapter 11 or if they are using bankruptcy as a way to ride out 2020.

20+ bankruptcy filings in last 6 months…

…then 20% of cotton is potentially not viable anymore

And if that wasn’t enough, there is now also big uncertainty around 20% of the world’s cotton – a key fashion staple -, which comes from Xinjiang in China. The factors behind this are a bit more of a mixed bag with geopolitics, changing markets and some pressures from the pandemic all playing a part. There has been mounting pressure on the treatment of the Uighur population in China and forced labour allegations. In March 2020, the Better Cotton Initiative (BCI) – leading global NGO on cotton -, suspended activities in Xinjiang, following these forced labour allegations.

The matter has continued to escalate. BCI’s investigation into the allegations in cotton has been delayed due to the pandemic. Then, the US government announced on 14 Sep 2020 new restrictions on the import of products from Xinjiang, especially cotton and apparel. The industry is struggling to replace this huge chunk of cotton. A potential option is to turn to India, already a major global producer but the country already suffers from severe water scarcity, so it is not a viable option. As Amy Lehr from CSIS says, “Similar vertical capacity in a single country or region at such a scale does not currently exist”.

Being broken is devastating but is a real opportunity for an extreme makeover, one that changes fashion for better forever

As devastating as it is to be broken, for the industry, markets, people and economies it does present a real and unique opportunity for an extreme industry makeover – one that charts a better climate future (yes, fashion matters to the climate, see here), operate within planetary resource boundaries, more modern and more innovative. This should be an opportunity everyone takes.

Yes, we can build back better, and it is good that 50+ leading organisations signed the Ellen MacArthur pledge to do just that, but can we do even more? With the broken pieces, we can find new ways forward.

What if factories were more than just places things are made, like Esquel’s award winning factory in Guilin that even to be built, used sustainable products (bamboo etc.) and has a garden to help feed its 1,500 workforce? What if the agriculture used in fashion could all be regenerative? Patagonia has started doing this. What is everyone had a corporate biodiversity strategy – the next frontier in fashion sustainability? Kering with the University of Cambridge Institute for Sustainability Leadership has published their strategy. What if fast fashion finally ditched the perpetual lowest price saga – a crux permeating many of fashions’ problems? What if the ‘what ifs’ you just read and other came true… that would be a good looking makeover. Let’s make it happen.

Further Reading

  • 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
  • Fast Fashion’s COVID Death & Virtual Revival? – Fast fashion is dying – from broken supply chains and no demand thanks to WFH. CWR’s Dawn McGregor and Debra Tan reimagine fashion’s future – a virtual realm where our avatars attend Zoom drinks and digital supermodels walk the runway
  • The Status Of Fashion’s Redesign – Fashion, an industry not often associated with climate change & technological innovation has been redesigning itself to change just that. With growing global focus on the environment China Water Risk’s Dawn McGregor takes a look at the status of this redesign

More on Latest

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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