Fashion businesses are no longer a worthwhile investment
The death knell for the fashion industry—heralded for years by analysts, pundits, and consumers alike—has finally arrived. Neiman Marcus, J. Crew, Centric Brands, and Brooks Brothers are only the beginning. PVH and Gap have both lost over $1 billion this year. LVMH and Kering recently reported revenue drops of 38% and 44%, respectively, last quarter. We are witnessing the final crumbling of a tightly knit industry built on exploiting creative labor, wholesale cronyism, producing vast amounts of undesirable goods and dumping said goods into landfills.
For those familiar with the razor-thin margins and glacial pace of change found in many fashion organizations, the monstrous deficits making headlines are no surprise. For those in prominent industry networks hotly debating a revised fashion calendar, Instagram runway shows, and vaguely more controlled markdowns, you are missing the point.
Nearly every flaw in the fashion system can be traced back to a single issue: inventory.
The reliance on upfront, bulk production requires time and valuable resources to be allocated before consumers are able to indicate a preference for a style. When I produced collections on the traditional fashion calendar, I was asked to mass-produce a style 180 days before I could expect payment. I was also told a 75% sell-through rate was considered “great performance.” This casual assumption—that at least 25% of the inventory I bought months beforehand would go unsold—was a rude awakening. Wasted resources are built into the system. Imagine if upwards of 25% more revenue could be allocated to nurturing talent, sustainable sourcing, or operational development—all of which the fashion industry has become notorious for neglecting in recent years. This wastage of investment has enforced a downward spiral across the industry, where under-compensated teams in flawed supply chains unknowingly commit to producing underperforming styles without any way to recover.
When a style does not sell, there are few options to get rid of the inventory. Markdowns and off-price channels are the first ports of call. The ubiquity of these strategies has trained a generation of consumers to underestimate the value of the clothes they buy and resulted in a race to rock-bottom pricing that is unreflective of the actual cost of goods. When markdowns and off-price channels fail to sell the unwanted product, it is thrown into landfills or burned (see Burberry and H&M). Billions of dollars in clothing is discarded in this way annually, contributing levels of pollution that make the fashion industry one of the least sustainable in the world. New York City alone landfills around 100,000 tons, or 200 million pounds, of clothing every year.
The wastefulness of inventory does not stop here. As we know, the fashion cycle continues in the after-sale market. Undesirable product that is sold at a markdown is far less likely to have a productive life, is less likely to be worn frequently, to be successfully resold, or to be wanted even as a donation. These are products that serve no one well, and the existing system requires that they be made by the thousands.
A handful of businesses, including my own, have pioneered an inventory-less fashion model. It is down to this that we are weathering the current crisis without the inventory strains our competitors face. This concept is not new. Many industrial businesses, such as Toyota, have produced just-in-time for decades, though it has generally eluded apparel and accessories. There is not one right way to do this. We have partner factories that produce every item on demand within 10 business days. Betabrand vets each style by crowdsourcing. The Wylde is one of many brands producing women’s wear by preorder. What we have in common is a commitment to allocate our resources wisely, both financially and environmentally. It took nothing short of a pandemic and subsequent economic crisis for the retail giants to even take a closer look at these archaic models stifling the industry. Meanwhile, small businesses have been challenging the norm head-on for years, with profitable, impressive results not brought on by resource gluttony and dehumanizing practices.
I urge the industry to reconsider its perspective on which changes should be made in order to give fashion a fighting chance. I am among a growing number of entrepreneurs who have already tackled the digital runway show, perfected the “product drop,” and streamlined seasonal markdowns. The arguments for fewer collections, adjusted seasonality, and better websites will not result in healthier businesses if bulk inventory production still ties up resources, hamstrings design, and pollutes our planet.
The future is creative, resilient, and liberated of inventory. Anything less is no longer worth the investment.
Misha Nonoo is a fashion designer based in New York City, best known for her eponymous line of women’s ready-to-wear clothing. Nonoo is also a member of the Council of Fashion Designers of America (CFDA).