We live in an age of uncertainty and with this uncertainty comes a shaky economy and a challenging business environment for the apparel industry, but what does it mean for sustainability, asks Robert Antoshak, partner at Gherzi Textil Organisation.

The pandemic, supply chain disruption, a war, tensions over Taiwan, and accelerating inflation. All of this adds up to uncertainty and that’s just the economic situation. How about other aspects of our business besides economics, like sustainability? What happens to sustainability initiatives during times like these? 

For sure, the work of NGOs hasn’t slowed. If anything, the industry’s supply chain issues over the past couple of years underscore the importance of sustainability. Yet, there’s a possibility those initiatives may become marginalised as brands and retailers struggle in an increasingly unpredictable market.

10 questions, 14 answers

Sustainability remains elusive for many in our industry. Profits come first. After all, companies are in the money-making business, not the planet-saving business, regardless of what company marketing may claim.

Moreover, some firms refuse to use the term “sustainability” in favour of other terminology. Why? Because sustainability can be hard to define, and it can mean different things to different people.

You may know the old joke: ask 10 people for a definition of “sustainability,” and you’ll get 14 answers. Green is great. Consumers know what they want but struggle at times to accurately describe what they really want.

Even so, definitions notwithstanding, consumer attitudes – and how the industry responds to consumers – will always influence the apparel business. But how can we ignore sustainability and climate change when droughts and floods ravage cotton crops, disrupting raw material supplies for so many textile mills worldwide?

Which brings us back to ponder our original question: how does sustainability survive in an age of economic uncertainty?

The economy and uncertainty

Indeed, we have inflation and uncertainty, which contributes to economic distress. And pain. The recent Jackson Hole speech by Federal Reserve Chairman Jerome Powell revealed that the Central Bank would raise interest rates to tame inflation. But, as Powell said, the Federal Reserve “must keep at it until the job is done” to roll back inflation.

The European Central Bank echoed Powell’s remarks. “A larger ‘sacrifice’ will be needed to tame inflation than in previous bouts of monetary policy tightening, according to European Central Bank officials who warned that price growth risks spinning out of control if forceful action is not taken,” reported the Financial Times.

The NY Stock Exchange tanked in response – too much hopeful thinking that inflation had peaked led to a recent run-up in stock prices. Sure, the rebound was welcome, only to collapse in the face of reality. Interest rates are going up. But sadly, sometimes hope has to take a backseat to reality.

So, we’re back to sustainability and the hopeful mission of so many people to expand sustainable practices throughout the industry. Such well-meaning folks. But will these efforts be in vain if the clothing market deteriorates?

The cost of sustainability in inflationary times

Common wisdom says that sustainably made products cost more. For sure, sustainability comes with added costs. But from a business perspective, higher costs are tolerable so long as consumers continue to purchase sustainable products despite higher prices. And that’s the tricky part.

As we live in inflationary times, everything costs more. Duh. Therefore, higher costs can be passed on to consumers. Good for sustainability, right? Maybe not. For many consumers, here’s the rub: higher prices will affect purchasing decisions.

Look, it’s simple economics. Higher prices will eventually result in weaker demand. Things will get to a point where affordability overshadows everything from quality and variety to sustainability and environmental conviction.

We see that already in retail sales. There’s a distinct correlation between higher prices and consumer demand. What’s more, consumers prioritise their purchases. Apparel is discretionary, while things like food are not. Consequently, purchasing has moved away from clothing in favour of essentials as inflation has increased.

Are consumers willing to pay for sustainability? Generation Z and Millennial consumers say they are. Still, waning retail sales suggests that economic concerns weigh heavily on a generation passionate about sustainability, transparency, and quality.

Consumer decisions and implications for retail

Many consumers struggle with the reality of deciding between essential and discretionary purchases. But unfortunately, a buck doesn’t go as far as it once did – as consumers know all too well these days.

A solution for some has been to shop cheap. That’s helped bolster apparel sales at some big-box and discount stores over the past few months. However, big-box or bargain shopping often doesn’t equate to shopping for sustainably made clothing. But retailers are facing various problems, from waning consumer demand to rising inventories.

The Wall Street Journal reported recently: “Retailers have a glut of inventory and are discounting items to clear out space for holiday goods. As a result, many have already lowered profit expectations for the year. They are working on cutting costs as consumers are pulling back spending in categories such as apparel and home goods ahead of the key year-end shopping season.”

Yikes.

Is sustainability sustainable?

It’s a tough market. So, this begs the question: is sustainability sustainable when considering the realities of today’s economy? For example, suppose people cut back on their purchases of clothing. In that case, the market weakens (which it already has), and retailers’ woes only increase.

Consequently, many retailers will only do what they can: slash prices to entice more shopping. But this will reduce revenue for the retailer and will only increase the costs of piles of inventory carried on their books. In turn, retailers may never be able to sell off this inventory.

So, what happens to that inventory if it doesn’t sell? “Deadstock” is a relevant term; much of it will end up in landfills. It’s a write-off for brands and retailers, adding to the industry’s already sketchy history of skirting environmental considerations in pursuit of profits.

It’s a kick in the head for environmentalists. They argue that the planet’s health should be the highest priority. Indeed, consumerism, fast fashion, hyper fashion, and the ills of the global apparel industry must be reformed, rethought, and adapted to the realities of the economy and the planet’s health.

Costs and benefits

But in the final analysis, the price of clothing paid by consumers will drive the fortunes of “sustainability.” If items cost too much, consumers will avoid buying more. Instead, they’ll undoubtedly look for ways to pay less.

In this sense, the sustainability movement risks pricing itself out of the market. It’s a sad commentary when we consider the state of the global environment, climate change, and the severe weather events ravaging parts of the world these days.

However, in this economy, consumer economics outweighs consumer interest in doing the right thing. It’s the age of uncertainty.

By Just Style