Por\u00a0Neo Chai Chin<\/a>Jan. 21, 2021 – Eco-Business<\/p>\n\n\n\n The fashion industry, founded on billions of consumers getting dressed up with places to go, has been a major casualty of the Covid-19 pandemic.<\/p>\n\n\n\n Its profits are expected to dive by 93 per cent<\/a> in 2020, and global revenues are projected to shrink by 27 to 30 per cent compared to the previous year, according to consulting firm McKinsey and industry intelligence provider The Business of Fashion.<\/p>\n\n\n\n As the pandemic led to retail stores being shut and people across the world being confined to their homes, industry observers called for a departure from a business model that relies on selling ever more unnecessary products to customers, at prices that leave millions of farmers and factory workers without viable livelihoods.<\/p>\n\n\n\n \u201cCovid-19 has exposed the fallacies of the current \u2018pile-high-sell-low\u2019 and \u2018take-make-dispose\u2019 business models, and the fashion industry now has a unique window of opportunity to make fundamental changes as the world emerges from the pandemic,\u201d said Ariel Muller, managing director, Asia, of international sustainability non-profit Forum for the Future.<\/p>\n\n\n\n Brands and retailers cannot do it alone, the non-profit argues in a recent report. They must bring on board and invest in their supply chain partners, if the industry is to achieve the \u201cdeep transformation\u201d that is rapidly needed.<\/p>\n\n\n\n \u201cManufacturers hold the key to practical execution of industry transformation,\u201d said the report, Making the Leap to Circular Fashion<\/a><\/em>.<\/p>\n\n\n\n Covid-19 has exposed the fallacies of the current \u2018pile-high-sell-low\u2019 and \u2018take-make-dispose\u2019 business models, and the fashion industry now has a unique window of opportunity to make fundamental changes as the world emerges from the pandemic.<\/p> Ariel Muller, managing director, Asia, Forum for the Future<\/p><\/blockquote>\n\n\n\n A deep transformation in fashion will entail an equitable shift towards the circular economy, said industry observers.<\/p>\n\n\n\n Circular fashion refers to an industry model in which waste and pollution are designed out from the life cycle of the product, and products and materials are kept at their highest value during use. At the same time, the industry must respect human rights and constantly innovate as it serves consumer needs, the experts said.<\/p>\n\n\n\n New technologies and business models must be tested and scaled, and their impact on the future workforce must be considered, stated the report.<\/p>\n\n\n\n \u201cThis can only happen if brands, designers and industry bodies step up efforts to include supply chain voices in reimagining how fashion items are designed, made, sold and used,\u201d said Forum for the Future, which produced the report at the end of a two-year innovation programme called Circular Leap Asia<\/a> last year.<\/p>\n\n\n\n The programme, which aims to help apparel manufacturers, brands and retailers in Asia develop and scale circular solutions, saw the participation of three companies\u2014Singapore-headquartered apparel manufacturer Ramatex, Taiwanese footwear fabrics maker Yee Chain International, and supply chain giant Fung Group\u2019s knitwear supplier Cobalt Fashion.<\/p>\n\n\n\n Linear business models are so last season.<\/p> Gerrard Fisher, partner, circular business, QSA Partners<\/p><\/blockquote>\n\n\n\n \u201cThe crisis provides an opportunity to take much bolder steps towards the transformation of the industry for a low-carbon economy. There are opportunities at every aspect of the value chain\u2014from connecting with consumers with a new narrative around sustainable consumption, to rethinking business models that underpin the sector,\u201d said Muller.<\/p>\n\n\n\n The fashion industry has been on an \u201cenormously unsustainable trajectory\u201d in recent decades, and is responsible for up to 10 per cent<\/a> of annual global man-made carbon emissions\u2014a percentage greater that aviation and shipping combined, Muller noted.<\/p>\n\n\n\n Forum for the Future identified five areas in which manufacturers can help to scope and support circular opportunities across the value chain. They should prepare themselves to:<\/p>\n\n\n\n The industry is presently not extracting the maximum value from materials and garments, which is \u201creally just throwing money away\u201d, said Gerrard Fisher, a partner at circular economy consultancy QSA Partners.<\/p>\n\n\n\n Known for its innovation and passion in the design of garments, Fisher said the industry\u2019s strengths should be harnessed for better business models that meet customer needs. \u201cLinear business models are so last season,\u201d he said. \u201cI\u2019d like to see the fashion industry get a better understanding of their customers\u2019 real needs after the pandemic.\u201d<\/p>\n\n\n\n The way many customers work, socialise and relax has changed, and will continue to change, along with their wardrobe needs. \u201cThe fashion industry usually focuses on new product design but hasn\u2019t innovated much about how customers use and access apparel,\u201d he said.<\/p>\n\n\n\n Manufacturers and product designers, as well as brands\u2019 marketing departments, should have conversations about how long their products will be used by customers, and what would happen to a garment after its first user does not want it anymore, Fisher said.<\/p>\n\n\n\n Such a discussion would set clearer goals for the product\u2019s design and manufacture. For instance, if a garment is going to be low-priced and thrown away after a short period of use, biodegradability may be important, he said.<\/p>\n\n\n\n According to Forum for the Future\u2019s report, the pandemic could result in other changes to the fashion landscape that the industry must respond to.<\/p>\n\n\n\n As more customers shop online, fashion products may come to be differentiated by their origin\u2014who made or designed them, and under what conditions. \u201cAs supply chain information becomes more valuable, will the industry move beyond price, speed and quality as the primary measures of success for manufacturers?\u201d the non-profit questioned.<\/p>\n\n\n\n Post-pandemic, the industry could also see a wave of acquisition and consolidation. Stronger brands and retailers may seek to regain partial control of the supply chain to drive technological innovation and changes in business models, it stated.<\/p>\n\n\n\n As supply chain information becomes more valuable, will the industry move beyond price, speed and quality as the primary measures of success for manufacturers?<\/p> Making the Leap to Circular Fashion report<\/p><\/blockquote>\n\n\n\n Post-Covid-19, Fisher said it is the smaller, nimbler and more sustainable businesses that may connect better with their customers, instead of larger and more conventional companies whose focus is to return to business as usual. \u201cI do suspect that we will see a change of mood in the customer market, perhaps with a slight shift towards more considerate purchasing. I\u2019m optimistic that some of the larger players will pick up on this and offer new business models to meet those needs,\u201d he said.<\/p>\n\n\n\n QSA Partners, like the Circular Leap Asia programme, is part of the Laudes Foundation\u2019s Bridging the Gap<\/a> initiative, which aims to bridge the gap between knowledge and willingness to adopt circular models, and concrete action.<\/p>\n\n\n\n Asked about the pandemic\u2019s toll on many garment workers in the Asia Pacific<\/a>, who have been laid off or temporarily without work, both Muller and Fisher said this is due to the industry\u2019s inequitable sharing of value across the supply chain.<\/p>\n\n\n\n Calling it a \u201ctragic direct consequence\u201d of the growth in fast fashion, Fisher said many people have become reliant on the industry\u2019s size and consumption.<\/p>\n\n\n\n Any changes that reduce the demand for new products will likely hurt employment in fibre production and garment manufacturing, he said. Circular models, on the other hand, are likely to create jobs in repair and re-commerce, which should be higher-paying but fewer in number. \u201cUltimately, a well-designed supply chain based on a circular business model will align the supply chain\u2019s incentives with customer needs and share value more equitably across the supply chain,\u201d Fisher said.<\/p>\n\n\n\n Muller said government leadership is vital, as is companies\u2019 responsibility to respect human rights. Besides protecting the health, safety and livelihoods of their employees, companies should also support the most vulnerable of their customers, workers and small-business partners, she said.<\/p>\n\n\n\n Business and human rights-related legislation has gathered pace in the last five years in places such as the European Union<\/a>, Muller noted. Investor scrutiny has also risen, driven by increasing evidence that human rights performance has statistically significant effects on investor valuations and margins, she said.<\/p>\n\n\n\n The fashion industry should plan for longer-term recovery and resilience by adopting a \u201chuman-centred approach\u201d that is better equipped to distributing wealth equitably\u2014according to where value is created, said Muller.<\/p>\n\n\n\n To do so, suppliers must have a seat at the table alongside fashion brands and retailers.<\/p>\n\n\n\nEquitable and circular: All hands needed on deck<\/h4>\n\n\n\n
Maximising the value of resources, serving customers\u2019 needs<\/h4>\n\n\n\n
Human rights matter: The era of considerate purchasing?<\/h4>\n\n\n\n