Fast fashion: the price we pay for our designs on low costs
The Loadstar is running a series of reports on the ecommerce sector, which has been ...
© Nunthana Setila
By Ian Putzger
Covid-19 has dealt a heavy blow to the fashion industry.
“We saw fashion screech to a halt around 20 March,” said Lisa Morales-Hellebo, partner and co-founder of early-stage supply chain venture fund Refashiond Ventures.
The shutdown of retail venues and the disruption to supply chains illustrated the risk of globalised structures to many players in the industry, she added.
Airfreight, which used to be a strategic plank for fast-fashion brands like Zara has turned into a major headache, owing to scarcity of lift and stratospheric pricing.
The fashion industry cannot compete with the electronics giants that buy up most of the available lift for a product launch, Ms Morales-Hellebo said. And the looming distribution of Covid-19 vaccines spells more bottlenecks ahead.
As with other industries, the pandemic has reinforced some incipient shifts in fashion, such as a growing interest in production closer to markets. Earlier supply chain disruption from extreme weather and tension in global trade had prompted fashion brands to consider such a move – the latest shock has added a sense of urgency.
Another argument has been the lower cost of producing in low-wage countries, but this is actually flawed, according to Ms Morales-Hellebo, as it does not take some factors into account. Efficiency and reduction of mark-down are the biggest factors for margin increases, she said.
Moreover, the traditional operating model of the industry is not sustainable, she argues, pointing to the vast amounts of waste it generates. In the US, this amounts to $50bn-worth of dead stock a year.
She added that a realisation is growing that sustainability is no longer a ‘nice-to-have’, but vital for the long-term viability of the fashion business.
This demands far-reaching changes, beyond the modifications the pandemic has entailed. A central plank of a forward-looking strategy is a shift to a circular economy, said Ms Morales-Hellebo. Increasingly, large fashion brands like H&M are embracing such an approach.
At the same time, the model has to be transformed into a demand chain, and the technology for this exists.
Refashiond has been collaborating with Gerber Technology, which provides systems to automate and manage product design and manufacturing, with software for pattern design, automated material spreading systems and computer-controlled cutting.
For the fashion industry, the move to a circular set-up built around demand chains requires a monumental effort, says Ms Morales-Hellebo.
“Our only real chance to meet the sustainability goals the industry has set for itself is to focus all resources on building the new system. Trying to refashion the existing supply chain would be too costly and time-consuming, given the complexity and vast number of nodes that would have to be changed.”
The way forward is through collaboration, she noted, adding that this notion is gaining traction in the industry.
The nascent collaborative approach extends to the use of production infrastructure and supply chains. Manufacturing is not a ‘secret sauce’ for a fashion brand to gain an advantage over competitors, but a commodity that can be shared, she said. Likewise, supply chain infrastructure and services can be shared, rather than everybody use their own delivery system.
One promising move in this direction came this year from H&M Group when it unveiled Treadler, a B2B initiative that allows other players access to H&M’s global supply chain. It even offers assistance with product development.
In this, as well as in the move to demand chains, digitisation plays a pivotal role. Ms Morales-Hellebo views the digitisation of the fashion supply chain as the “opportunity of a lifetime”. She sees promise in concepts like an intuitive platform developed by Grydd, which integrates all the elements of a supply chain network and uses artificial intelligence to analyse the data and predict different outcomes.
While there are plenty of creative ideas on the scene, one vital ingredient is in rather short supply: what is sorely needed is capital to fund early stage innovations that can open new doors for this industry – “the single biggest constraint”, Ms Morales-Hellebo said.
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