The global fashion industry produces between 80 billion and 150 billion garments annually. However, up to 40 percent remain unsold and frequently end up in landfill or incineration. Despite the environmental and financial toll, only one percent of fashion brands is actively working to reduce production volumes.
UK trade show Source Fashion and retail consultancy Insider Trends paint a bleak picture in their recently published report, “Do We Really Need to Produce So Much?” The report explores the scale, causes and consequences of overproduction and solutions for brands looking to remain competitive while reducing waste and environmental impact.
While legislation like the EU Extended Producer Responsibility (EPR) for textiles, which makes producers responsible for the entire lifecycle of their products and bans on the destruction of unsold clothing and footwear, may force shift in business practices, brands need to adopt a new mindset.
Part of the issue, according to the report, is an outdated metric of success and correlation between business and year-over-year growth. Degrowth—or a planned reduction in production volumes—is the most impactful step the apparel industry can take toward reducing waste. However, the term has negative business connotations even though it does not mean a sales downturn.
For years the retail industry has equated success with increased profits driven through sales growth. “Volume is incentivized because the economy of scale means the cost per unit goes down the more you order, which means your profit margins go up,” the report states.
A good starting point is to separate the idea that producing more and increasing profits always go together. The report describes how Uniqlo has seen business grow 70 percent over the past seven years while increasing production volume 20 percent. While it’s not quite degrowth, the retailer’s overall growth has increased significantly more than production, proving that brands can grow while resisting pressure to constantly introduce new products.
Additionally, the 40 percent of unsold goods should be measured as a waste of resources. By employing strategies that cut waste, the report says brands can start down the road to degrowth and improve their balance sheet.
Solutions to mitigate waste include on-demand production, circular design, modular design and retail-as-a-service models like resale, rental and subscription.
The report also urges brands to co-design garments and collections with consumers to ensure relevancy.
“This shifts the power of influence from brands—who use social media and advertising campaigns to drum up desire for products—to consumers by letting them tell the retail industry what they want from the things they buy. This can be everything from color to material choice to size,” the report stated.
The report notes how brands like Unfolded, which enlisted over 8,000 women to provide feedback on their designs, saw repeat order rate is two-times the industry standard.
“This report highlights the uncomfortable truth behind retails success—that excess production is built into the model with volume is the only way to increase profits,” Suzanne Ellingham, sourcing director at Source, said, adding that opportunities await for those willing to “embrace a leaner, smarter, more circular future.”
