The success of fast fashion is predicated on growth, and lots of it, a constant churn of products in the stores. It's also a business model that presupposes sustained economic growth supported by ever-growing consumer demand for stuff. Indeed, suppose consumers pull back on their spending. In that case, economies won't do well -- lessening the churn necessary for fast fashion suppliers to thrive.
Having said that, it's a no-brainer that if economic growth suffers, so too will sales of non-essential consumer goods, like clothing -- fast-fashion or not. Yet, it is fast fashion that requires an extra degree of churn to remain successful. Eliminate the churn in the stores, and fast fashion suffocates.
So how has global growth been doing? Although aggregate global economic growth has improved since 2020, the recovery has been uneven, with some countries doing better than others. Don't take my word for it. Here's the latest from the International Monetary Fund (IMF) in their latest World Economic Outlook Report: "Global recovery continues, but the momentum has weakened and uncertainty has increased."
Not jolly. The IMF elaborates further: "The global economic recovery is continuing, even as the pandemic resurges. The fault lines opened up by COVID-19 are looking more persistent—near-term divergences are expected to leave lasting imprints on medium-term performance."
And there's more. "The global economy is projected to grow 5.9 percent in 2021 and 4.9 percent in 2022. The rapid spread of Delta and the threat of new variants have increased uncertainty about how quickly the pandemic can be overcome. Policy choices have become more difficult, with limited room to maneuver," the IMF concludes.
In short, this is economics-speak for "buckle up everyone and get ready for air turbulence."
And then there's the most recent news from the United States, the largest fast-fashion consumer. "Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the third quarter of 2021, following an increase of 6.7 percent in the second quarter. The deceleration in real GDP in the third quarter was led by a slowdown in consumer spending," reported the Bureau of Economic Analysis.
Implications of slowing economic growth
For companies with business models based upon consumer churn at the stores while supporting long and elaborate supply chains worldwide, slowing economic growth is not a welcome development. Moreover, governments worldwide have already spent inordinate resources to prop up economies during the pandemic -- meaning they printed a lot of money.
It's also worth pointing out that whatever top-line growth the world has witnessed in 2021, that's compared to the lockdown-induced declines of 2020. So, in a sense, to compare 2021 to just 2020 doesn't tell us much. An economic rebound isn't really all that surprising. What's more meaningful is how 2021 growth stacked against longer-term trends.
Curiously, the economic growth rate in many countries had slowed in recent years, regardless of the pandemic, which simply knocked the stool from under the chair. So governments stepped in to repair the economic chair. And to do so, they stimulated their economies, particularly in developed countries, by printing money, and lots of it.
But here's the rub. Printing so much money may also mean that what appeared to be temporary inflation may become longer-lasting than economists previously thought.
Based on the IMF's assessment, the global economy is stalled with medium-term implications for slower growth. And suppose governments feel compelled to gear up those printing presses yet again to stimulate their economies? In that case, we may find ourselves entering an unavoidable period of higher inflation -- along with uncertain economic growth. Because, after all, higher inflation typically results in lower consumer consumption. And a self-induced period of economic malaise descends on the planet. OMG.
I know all of this is a little wonky, but here's the point: if growth slows globally, how does fast fashion survive? After all, isn't fast fashion predicated on accelerated growth? Interesting questions.
But here's another one: does sustainability self-correct if fast fashion fails due to lack of growth? After all, perhaps there's a silver lining to all this doom and gloom lurking beneath the surface. It's funny how markets can, at times, self-correct imbalances.
For years companies -- especially fast-fashion companies -- have lathered up sustainability initiative after sustainability initiative as part of their marketing stories in a poorly veiled attempt to hide what exists in plain sight. Is a 20,000-mile supply chain sustainable? Not really. Will joining the new NGO flavor of the month fix that? No. The goals of meeting such and such an objective by 2030 sure sound good in press releases and marketing presentations but don't amount to any real progress.
It's no wonder that so many people are frustrated by the same old sustainability claims and far-off goals: it's all a pile of excrement, plain and simple. After all, investments made around the world decades ago must be protected. And if all it takes is some loose marketing to protect those investments, then many companies will.
The real tragedy is with the NGOs. It may sound harsh, but NGOs working in our industry are being used. So many people are embarking on missions so deeply felt and believed all in the name of fixing a broken world, while in reality reduced to acting as shills for corporate interests. And they may know that they need the financial lifelines provided by the very corporate interests they may disdain to survive. Catch-22.
So, we're back from where we began: slowing economic growth. But, as we've established, growth is the lifeline for fast fashion. Pull that out from under so many brands, and we're left with a desiccated carcass. But that's the force of the markets at work. It's impossible to avoid.
Here's an example of the market at work: higher cotton prices. To speak with a brand, one would think that the world's cotton farmers just declared war on them. But the reality is anything but that. The truth is that cotton prices provide the excuse for many brands to raise their prices and protect their holy margins. Damn the farmers.
The only problem is that higher costs arising from inflation for apparel brands emanate from their troubles with shipping lines and port delays. And also, an overabundance of money in the economic system. Many people are flush and don't feel as financially constrained as they were before the pandemic. So they're willing to spend.
Flash! In an ironic turn of events, many companies can't import their goods into developed countries in time to cash in on that newfound wealth. I'm stunned, shocked. Well, what do you know? Maybe the old model of global sourcing is broken. Customers may decide after all that they don't need so many clothes. And that's the real threat to any fast-fashion brand. They're not needed anymore.
Guess what? Maybe the planet will be better for it.
Originally published on just-style.com on November 1, 2021.