The report titled ‘Do we really need to produce so much? Making a profit in a degrowth world‘ points out billions of fashion items are produced each year that aren’t sold.

It states: “These items and the resources that went into creating them literally go to waste. They aren’t making brand’s money. They’re costing them it.”

The report, which was published by the UK’s responsible fashion sourcing show Source Fashion continues: “If that’s not a starting point in the business case for producing less, then we don’t know what is. And by employing strategies that cut waste, brands can start down the road to degrowth and improve their balance sheet.”

How to maintain a profit when producing less fashion

1 Drop the micro-trend model

The report explains fashion has become dominated by micro-trends with new designs dropping daily from some brands. It points out the speed with which these trends come and go has created the perfect environment for excess inventory as consumers move onto the next thing before a retailer can sell the last.

By shifting away from this model to focus more on seasonless, core ranges, Source Fashion says brands can reduce production volume and associated waste product. They also get to benefit from the economy of scale if they are producing the same product consistently rather than constantly laying out to set up production for yet another new design.

2 Invest in made-to-order

Made-to-order existed before mass production, but this report notes: “We’re seeing brands returning to the made-to-order model to reduce overproduction and waste product.”

For some businesses it might be that consumers can place an order at any time and have the items created and sent to them. While others might invite customers to pre-order a new collection so the clothing is produced solely on what is ordered (nothing more or less).

This gives brands the benefit of economies of scale and meeting any minimum orders from suppliers. And some brands may decide to incorporate a mix of the two.

Another key benefit of the made-to-order model is that it has the potential to reduce the number of returns because consumers are only buying products that they really want rather than on a whim. Designs are also more timeless by nature – when there’s a month between an order being placed and the product arriving, it’s hard to keep up with micro trends, which gives the item more longevity.

3 Collaborate with customers on designs

Another way brands can make sure that there is a market for their products is to involve the end customer in the design process.

This shifts the power of influence from brands, who use social media and advertising campaigns to drum up desire for products, to consumers by letting them tell the retail industry what they want from the things they buy. This can be everything from colour to material choice to size.

4 Embrace circular initiatives and services

The report explains brands need to be investing in creating high quality products that can support circular initiatives like repair, rental, resale and redesign.

Plus, the Ellen MacArthur Foundation (EMF) believes circular business models have the potential to grow from 3.5% of the global fashion market (2021) to 23% by 2030.

By generating multiple income streams from a single item over the course of its lifetime – either by reselling or renting it or by charging for repairs and customisation – brands may be able to make the case for producing and selling fewer new products.

5 Keep track of inventory

Report author Source Fashion argues the simplest way for brands to solve overproduction is to “get on top of their inventory”.

A lack of accurate, real-time information about what they have and where it’s located means brands place orders that they don’t need, feeding the overproduction cycle.

Poor stock management can also mean brands overproduce novelty items, such as products that tie into a specific sporting event or have a particular year as part of the design, which then can’t be sold in the future as there is no consumer demand.

One answer to the inventory challenge is to invest in new technology, such as RFID, that makes it easier to monitor and track inventory levels. Data-driven planning tools can also help brands more accurately forecast demand so that they produce the right amount of each product for the market.

6 Trial modular fashion

Modular fashion has a lot of promise to reduce clothing overproduction, according to the report.

It says: “Clothing that can be sized up and/or adapted to fit different needs, such as changes in weather or season, means that consumers need to buy fewer items. They can do more with less.”

The challenge of modular fashion is the time, cost and expertise required to produce lots of individual, often fairly small, parts. And if those parts end up not being sold it’s hard for them to be turned into something else or sold on the wider market (as they need the rest of the modular system to work).

While cost per wear is often very good because consumers are getting more wear out of the items, modular fashion can have a higher upfront investment cost that is out of reach for many shoppers. Modular fashion brands also run the risk of driving unnecessary consumption through limited edition patterned and coloured add-ons or accessories. Brands may find it hard to balance the longevity of their products with the desire to make sales.

7 Experiment with membership models

Membership models in fashion tend to be loyalty schemes rather than paid for benefits. Where a brand does have a paid membership, it’s seen as complementary to its core business rather than a way to generate revenue that could replace the production and sale of new ranges.

Companies that have already scaled and ingrained customer relationships and confidence could explore a membership model that drives profit through monthly or annual payments rather than just sales. But, this is only environmentally valuable if they reduce production volumes at the same time.

What does the future look like?

The report insists that if the entire fashion industry committed to a post-growth strategy there would be “greater efficiency and less waste across the sector”.

It adds: “New supply chains and sourcing would be developed to support made to order and small batch production. Wages for workers could be higher as brands focus on producing better quality items that consumers will pay more for.”

Product development would also change with items designed to be repaired, resold, rented, and remade. Closer collaboration and discussion with customers about designs would be the norm. Brands would realise that not everyone needs to aim to be a huge global name with masses of profits to be successful. For many, a committed, core customer base would be enough to more than keep them in business.

The crucial question is whether or not the fashion sector would still make a profit, and the report says: “Brands can absolutely produce less, pay more for what they do make, and still make money – it just might not be as much as before.

“But it’s better than the alternative if the industry carries on the way it has been. Because you can’t make any profit if you can’t stay in business.”

By Just Style