How Retailers Can Exploit Fast Fashion’s Effects on Consumer Behavior to Create Change in the Garment Manufacturing Industry

In developing countries with t-shirt economies, strikes, suicides, deaths, and tragedies like the Rana Plaza collapse are par for the course in the race to the bottom. The losers: laborers, mostly women, many children, who make pennies on the dollar, sewing for hours on end in un-airconditioned firetraps. The winners: first-world consumers who get trendy clothes quickly and cheaply.

Since Rana Plaza, a Bangladeshi garment factory, collapsed, killing 1,227 people and injuring over twice as many, the outcry against the ramifications of fast fashion has gotten louder than ever. Eco-activist and writer Amy Dufault even went so far as to call “our addiction to fast fashion” a form of terrorism. But is the struggle between consumers and laborers really a winner-takes-all race for stylish clothes or living wages, or are both parties pawns of a larger game that retailers play?

“Fast fashion,” really a manufacturing process that is the combination of short lead times (quick response) and up-to-the-minute design, is an umbrella term describing the change in the last decade or two in garment production and retailing from two to four seasons, to no seasons at all. Instead of retailers showcasing relatively static collections for Spring/Summer, Fall/Winter, and a few mini-seasons in between, clothing is continuously rotated in and out of stores throughout the year.

Zara leads the pack in the march towards fast fashion, taking only two to three weeks from design to in-store availability. “Zara are the inventors of the concept of fast-fashion,” says Melbourne Business School professor of marketing Mark Ritson in LeadingCompany.

Store managers pick from a catalogue what they would like to stock in their stores, and it’s made and dispatched from Spain as quickly as possible. ‘This means they don’t have any seasons… They literally just react to demand.’

Indeed, if you visit a Zara store on a Saturday and then pop in again next weekend, you’ll see an entirely different set of merchandise.

The supposed impetus behind this change in the industry is that consumers want the latest trends as quickly as possible, and retailers and manufacturers have to amp up production to meet this want. In 2012, MJ Deschamps wrote in “Fast Fashion Shifts Supply Chain Focus“:

As companies increasingly transition from a traditional, production-driven supply chain to a more market-driven one, much re-thinking and re-working has happened on the manufacturing side of things, in order to meet new, speed to market demands.

Armed with this information, it’s easy to make the assumption that the consumer’s buying habits are to blame for Rana Plaza—that retailers are simply doing their job of supplying what we want.

But if we compare a fast fashion system with a traditional system, we can see how the fast method benefits the retailer as well as the fashionista looking to replenish her wardrobe week to week. In a traditional system, from the moment a designer puts her pen to paper to design a new look, it may take 6 months to a year for it to manifest on the racks. By the time it hits the floor, the style might be faux pas. Meanwhile, the retailer ordered thousands of pieces to be made—but no one wants them. What is a retailer to do with a warehouse full of clothes? Sell them at deep discounts, which means losses. Slow lead times, then, don’t encourage retailers to buy from expensive, fair-labor factories when they face the threat of significant losses at the end of the year.

Fast fashion’s real-time supply and demand forecasting and production mean low inventory—and thus high consumer incentive to buy. Researchers Robert Swinney at Stanford and Gerard P. Cachon at Wharton explain:

. . . quick response decreases the expected future utility of waiting for a price reduction, enhanced design [designing trendy and current products] increases the immediate utility of buying the product at the full price.

That is, if buyers simply expect that retailers will supply trends quickly and offer limited, changing inventory, they will swoop up items before they disappear. There’s no waiting for a sale anymore—those racks are stocked only with the least-desirable straggler pieces of the last month or so. Coveted items must be purchased quickly. With prices already low, why wait for a sale to save a few dollars when the item might soon be gone—or worse, out of style?

Additionally, while the free hand of the market would tell you that industry will find the intersection of the of the lowest price and the best quality, fast fashion comes with an added caveat: trendy is synonymous with throw-away, and thus, retailers have incentive to build in obsolesce to promote high closet turnover. People tend to invest in time-tested staples, not neon pink tie-die platform Mary Jane wedges.

. . . . . .

Consumer behavior may never significantly change. People will always want to be stylish, and the profits of major fashion chains don’t go down along with the buildings their clothes are made in. But retailers can change the way they sell, and in fact, they may get consumers to purchase more by selling less.

While it may not shorten lead time for individual designs, limiting inventory and eliminating sales will encourage consumers to buy items at a higher full price. Double the exclusivity (a rarer piece that will soon be unavailable to buy) is double the incentive for purchase. H&M, for example, has trendy pieces as well as basics, and stores are overflowing with merchandise. Zara stocks few basics, and no more than one run of any other design is made. In 2012, Zara’s parent company Inditex captured 9.5 billion euros in gross sales, whereas H&M saw a full billion less. With small runs, laborers would then not be encouraged to pump out hundreds and hundreds of garments, times however many stores they will end up in. They can instead focus on making small, exclusive runs to effectively reduce working hours and earn more per.

Retailers could even run exclusive collections created by artisans who keep traditional crafts alive. With careful style forecasting and working designs to meet western tastes, they could position truly fair-trade clothing and accessories to be viable purchase options. Already a number of organizations who do this, such as Indego Africa, Nest, the Andean Collection, and Global Goods Partners, have linked major bands like Club Monaco and J. Crew with artisans around the world, giving them access to the global market they need to make a living.

Retailers owe it to themselves, consumers, and laborers to limit collections. Having a well-stocked closet can be possible without the clothes’ being made off the backs of the exploited. With the right forecasting, marketing, and planning, retailers can offer or better merchandise while capturing the revenue they want. There is no need to force those who would sooner die under a pile of Joe Fresh jeans than wear a pair themselves to make an absurd number of garments—garments that will only end up in the back rooms and sale racks of the developed world’s stores. If retailers would only sell clothes that were truly worth wearing, if for style, trendiness, originality (and maybe one day, quality), Rana Plaza may be last stop on the race to the bottom.

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