How online retailing is allowing fast fashion to thrive
In the first of a two-part feature, edie's senior reporter Sarah George explores how booming profits for online retailers are driving a fast fashion mindset in the UK that could undermine efforts to champion sustainability in the fashion sector, unless business and consumers find their voice.
With business rates rising and more consumers choosing to shop online, it’s a tough time for bricks-and-mortar fashion retail. And that’s before you add climate protests, including XR’s call for a total fashion boycott, to the mix.
Between October 2018 and 2019, some 85,000 jobs were axed at UK retailers, with department stores House of Fraser and John Lewis and fashion retailers like New Look, Coast and Karen Millen among the worst hit. Just two months later, KMPG declared 2019 the “worst year for UK retail on record”.
Trends of falling fashion turnovers and profits were attributed, in part, to retailers’ failures to keep up with consumer demands for action on the many environmental issues the fast fashion industry is tangled with: it is estimated to account for 10% of annual global emissions; landfills or burns a bin lorry full of textiles every second; logs 2.4 billion trees every year and accounts for one-fifth of the world’s water pollution by industry.
Knowledge of these statistics – alongside equally damning findings around modern slavery and other human rights abuses of fashion supply chains – are growing as broadcasters dedicate more news coverage and documentary time to environmental issues and fashion magazines shift their narratives. Just last week, ITV’s investigation into clothing waste pollution in Ghana was one of its most-shared stories.
‘This is our rubbish, building up in someone else’s country’
— ITV News (@itvnews) February 18, 2020
And it seems that this knowledge is changing not only survey results but buying habits, forcing incumbent fashion brands to innovate or lose out. The global secondhand fashion market reached a record $24bn in 2019 and is set to surpass $64bn by 2028. In contrast, the fast-fashion market, currently worth $35bn, will reach just $44bn in the same timeframe.
It may seem perverse, then, that Boohoo Group – owner of not only its namesake fast-fashion brand but also MissPap, Nasty Gal and Pretty Little Thing – recorded 37% year-on-year turnover growth in the UK last financial year. That’s despite the group facing bad press over sustainability issues ranging from carbon, water and waste to wage exploitation. Similarly, InTheStyle, which began with just £1,000 investment in founder Adam Frisby’s bedroom, reached a record £40m turnover last year. During 2019, it stocked at least 20,000 lines at any given moment.
So, why are physical stores seemingly feeling the sustainability pinch so much more than their online counterparts?
Money, money, money
According to the long-standing retail lawyer and fashion writer Nicola Broadhurst, the reason is clear: physical stores face costs which website hosts and warehouse renters simply do not. Water, electricity and heating bills are increasing incrementally. Add that to business rates changes and fashion retailers have seen an average 11% increase in operating costs since 2015.
And for Broadhurst, these costs don’t only bite bottom lines, but present reputational risks too. “Where bricks and mortar businesses fall down is that they have so much more to deal with in terms of costs, and so much more which, to look at, seems like unsustainable business – signs lit up, shops heated or cooled, car parking bays,” She says.
Online shopping has, on average, a 60% lower carbon impact than purchasing in-store, largely because of physical shops’ reliance on travel by individual petrol and diesel cars.
But what goes unseen for online retailers is the mountain of waste. Or, given that the Landfill Tax applies to e-tailers the same as retailers, the huge volume of products which will inevitably end up as waste, given that there are no recycling systems at scale for them and even charity shops are turning them away.
Most national or multinational retailers with physical stores simply cannot get 600+ new garment lines to all locations on a weekly basis, as US-based e-fashion giant Fashion Nova does. Nor can they, in most cases, afford to produce £5 dresses or £1 bikinis as standard. This trend towards pricing low, piling high and turning around fast has repeatedly been linked to textile waste at all tiers of the supply chain – particularly at post-consumer level.
Broadhurst tells edie that the scaling up of UK e-fashion sales – and, therefore, the sub-sector’s waste mountain – can be traced back to the 2015 Consumer Rights Act. The Act mandated a 14-day returns period for all non-sale goods sold online, after consumer rights groups complained that online shoppers were “at a disadvantage”.
Now, “newly empowered” to shop online and return at will, consumers can make a far quicker choice to add 20 items to cart and send 19 back– a choice in which the fact that many returns end up as waste is not considered, Broadhurst notes.
Of course, dealing with returns will result in operational costs – be that in the form of logistics systems to get them back on shelves or online, or, in the worst-case scenario, a Landfill Tax bill.
In a bid to cut these costs and preserve progress towards its sustainability targets, Asos last year moved to penalise “serial returners”. But such initiatives are suffering from sparse, non-uniform uptake because they are voluntary, Broadhurst explains.
“There are so many conflicting standards and they are all, in the first instance, voluntary. I think if we don’t see some fairly radical shifts in [business] behaviour, I’d be surprised if there aren’t new tax initiatives introduced… through the back door,” she tells edie.
“Tax is such a great lever to change behaviours and it has, I know, been discussed,” Broadhurst adds in an allusion to the Environmental Audit Committee’s (EAC) drive to add a 1p levy to each garment sold in the UK.
The motion was ultimately rejected by Ministers, which Broadhurst puts down to Brexit. With the transition period to negotiate and the mammoth task of hosting COP26, she does not expect taxation on fashion to change in 2020, but that “mounting social pressure” in 2021 will likely force Ministers to re-assess policy in this area.
“The climate conversation is only going to get bigger and louder, not smaller and quieter – and it will evolve into specific demands to look at industries which are the worst offenders,” she summarises.
Corporates – particularly those which are older and larger – are often accused of failing to support legislation which would prevent a market-led “race-to-the-bottom”. But the majority ultimately responded to the EAC’s calls for evidence, while the likes of Missguided did not, despite a six-month window to do so.
And, as the British Retail Consortium’s sustainability policy advisor Leah Riley-Brown explains, many big fashion incumbents were “hugely disappointed” that the EAC’s recommendations were all thrown out.
While some dubbed a tax on manufacturers unfair and unlikely to raise consumer awareness, Riley-Brown argues that there has been a broad drive for some policy formats to create a “level playing field” in which the business cases for both incremental environmental improvements (carbon, waste and water reductions) and full-on transformations in the name of sustainability (to, for example, rental or resale models) are bolstered.
“With the policy framework that we have here in the UK, the business case for some of these models at scale isn’t completely formed in all cases. In other words, doing the right thing can often be the more expensive thing,” she explains.
Indeed, the VAT on repair and rental sits at the standard 20%, pushing prices beyond what many are willing to pay, or in line with the cost of a new item from Primark. Couple that with rising operational costs, Riley-Brown notes, and you see some of the high street’s biggest names only daring to dip their toe in servitisation models outside of the UK (see H&M, Urban Outfitters, H&M again and Uniqlo).
“Servitisation is something that is very much top-of-mind for many retailers at the moment, in fashion and beyond. But without strong policy support, it’s very much still in the pilot stage for most,” Riley-Brown summarises, adding that the policy field is also “uneven” between online and in-store retailing.
While this paints a bleak picture, Riley-Brown concludes that weak policy support cannot and should not be a standalone excuse for inaction, noting that business has a history of shaping green policy.
The beginnings of these new business models are beginning to make inroads on the highstreet, from Selfridges, with its second-hand department co-hosted with Depop, to Allbirds and Raeburn using stores as event spaces to discourage overconsumption at peak times.
The question now is how to scale up their example and bring digital-only fashion retailers – beyond independent boutiques with sustainability built-in – to the conversation. Doing so will be crucial not only to tackling the climate crisis and meeting the Sustainable Development Goals but safeguarding a future for UK retail.
This is the first part of a two-part feature. The second part focuses on innovative business solutions to fashion’s growing waste problem, spotlighting the businesses and organisations working to create a truly circular economy for what is considered one of the world’s most linear sectors. Read part two here.
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