The current financial climate of high inflation highlights the significance of sustainable fashion. Here are some of the primary factors set to shape the fashion industries retail strategies in the coming years.
High inflation places consumers and fashion companies under pressure
Fluctuating inflation has elevated the cost of living globally, and economic instability has left consumers worldwide feeling uncertain about what lies ahead. In light of these challenges, a growing number of individuals are inclined to save more, cut back on non-essential expenses, and brace themselves for unforeseen financial burdens.
Many are opting for more economical brands and discount outlets to curtail their spending. Moreover, a significant portion of consumers are adopting alternative approaches to obtaining goods, actively seeking budget-friendly alternatives and exploring avenues such as repair, resale, recycling, and rental.
Additionally, fashion enterprises have experienced the strain of escalating production expenses encompassing raw materials, shipping, storage, and rent, alongside other operational outlays. These businesses have encountered difficulties in fully transferring these increased costs to the customer, primarily because of apprehensions that it might deter purchases. Consequently, numerous market players in the market have endured diminishing profit margins over the past year or even more.
Cost-of-living crisis forces consumers into sustainable behaviour
In today’s world, where inflation continues to affect our wallets, it’s interesting to note that sustainable consumer choices, which were previously hindered by the higher prices associated with eco-friendly products, are now gaining popularity. Activities like repairing, reselling, recycling, and renting are receiving a natural boost from consumers.
Interestingly, the cost-effective approach of cutting back on consumption is inadvertently promoting sustainability, a trend referred to as “Eco Economic” in Euromonitor International’s Global Consumer Trends 2023 report.
Nearly 40% of global respondents stated they repair items instead of replacing them
Source: Euromonitor International Voice of the Consumer: Lifestyles Survey 2023
Given the circumstances, fashion industry participants must find ways to maintain brand engagement while accommodating consumers’ desire to save money. This shift is prompting significant changes within fashion businesses as they strive to convey their worth and relevance to cost-conscious consumers, particularly when it comes to non-essential purchases. In this environment, the adoption of sustainability and the provision of a sense of purpose beyond mere profits are increasingly striking a chord with consumers.
Shift in business models comes alongside growing pressure from regulators
The movement toward a more sustainable fashion industry is not solely driven by consumer preferences; it’s also responding to increasing pressure from regulators, particularly within the European Union. The European Green Deal and the Sustainable Textile Strategy, for instance, are considering legally mandated measures to enhance the durability, repairability, reusability, and recyclability of textiles. Furthermore, sustainable regulations are emerging in various parts of the world.
For instance, in the UK, a wide range of qualifying companies are now required to disclose their Environmental, Social, and Governance (ESG) practices. In the United States, regulations like California’s Garment Worker Protection Act, New York’s Fashion Sustainability and Social Accountability Act, and the Federal Fabric Act signify a notable shift in regulatory focus.
In this evolving regulatory landscape, companies must demonstrate their commitment to sustainability, as failure to do so could hinder their ability to comply with potential labor and environmental regulations in a timely manner.
Integrating sustainability in retail to communicate value to consumers
Fashion companies are under increasing pressure to demonstrate their commitment to sustainability, both due to changing consumer attitudes and emerging regulations. To meet these demands, many are leveraging their retail channels, both physical stores and e-commerce, to engage consumers while addressing cost-saving concerns. This includes offering repair services, resale, and rental options.
As a result, an increasing number of companies have begun to offer clothing and footwear repair services, alongside introducing options for resale and rental. Recent examples include Inditex, which now charges customers for returning unwanted online orders unless they do so in-store, aiming to reduce costs, carbon emissions, and excessive consumption. Inditex has also introduced a scheme allowing customers to deposit unwanted clothing from any brand into recycling bins at Zara stores, following the lead of H&M, Marks & Spencer, Mango, and Uniqlo, all of which have launched their recycling initiatives in recent years.
Recycling, repair, and resale services are popular among consumers
In the current context, sustainability is becoming a priority for fashion retailers, and recycling, repair, resale services are flourishing in retail as they are top of consumers’ minds in 2023.
55% of global respondents stated they had bought second-hand or used items
Euromonitor International Voice of the Consumer: Lifestyles Survey 2023
These sustainable initiatives are set to expand and could become the norm. They offer businesses the dual benefits of enhancing their circular economy efforts and tapping into the revenue potential of the secondary market. Moreover, as technology advances, there is the possibility of “reverse sourcing” with recycled fibers, which could provide a future source of raw materials.
Source: Euromonitor
