The fashion sector is in crisis. It is difficult to get through a month without hearing about another fashion company issuing profit warnings – even Swedish-owned H&M, for a long time seen as the industry’s success model, is hurting. In January, it lost 12 percent in market value and abruptly changed CEOs. The firm has been struggling with weak sales and stockpiling for years, mostly as a result of inefficient supply chains. Crisis talks and bankruptcy are also rocking other high-street favorites – from Victoria’s Secret, which has closed more than 100 stores over the past several years, to Superdry, Gap, Topshop, and Scotch & Soda.
To make matters worse, the high-volume model observed by many companies in the fashion segment is inherently unsustainable. Accounting for an estimated 10 percent of global greenhouse gas emissions, the global trade and production of textiles is estimated to contribute more to climate change than all international flights (2 percent) and maritime shipping (also 2 percent) combined. Still yet, the industry is notoriously wasteful, leaving 92 million tons of waste in its wake annually, according to a 2022 study, and it is estimated that more than a half of fast fashion items are thrown away within a year of purchase.
Still yet, there is the issue of working conditions. Eleven years after the Rana Plaza collapse, laborers are still struggling to survive on extremely low pay, while working excessive hours in factories that often rife with human rights violations.
One of the big culprits for the sector’s woes? Many big fashion brands have effectively thrived on what we call the principle of made-to-stock: A fashion company produces large number of goods that it allocates across its distribution network, which spans warehouses, logistic centers, and physical stores. In most cases, companies rely on outsourced and distant manufacturing plants. As a result, when demand falls, inventories balloon – and so does waste. In 2017, H&M was accused of having burned 12 tons of clothing a year since 2013. In 2018, Burberry’s annual report stated that it had destroyed products with a total value of almost $38 million in a single year.
The promises of on-demand fashion
So, is the fashion world doomed to waste and overproduction? During the recent Plug and Play conference, I argued that this was not a fatality, and highlighted on-demand manufacturing as a promising new path for the fashion sector. In contrast to the traditional mass-production model utilized by fashion entities, where goods are manufactured on the basis of forecasted demand, on-demand manufacturing only makes goods when there is actual demand for them. This means that the t-shirt you spotted online will only be made when order it. Proponents believe supply chains ought to be redesigned to be tighter and more agile, with an eye toward factories that are physically closer and production runs that make smaller batches.
A number of brands have dabbled with the idea. Following in the steps of electronics and automotive industries, Nike and adidas have taken a run at on-demand production. In 2000, for instance, adidas launched its online customizable platform, miAdidas, which allowed customers to personalize the color, outsoles and laces of its best-selling sneakers. But in 2021, the service was quietly brought to a halt, with adidas framing the move as a “strategic decision” and stating that it believed the “future of customization lies in co-creation.”
In August 2019, Nike also selected creatives and activists in New York City to design the “NYC by You” project. This made-to-order footwear collection was available until September, with the brand announcing its intention to offer sneakers “only made available for a limited time, rather than limited quantities.” Other brands, such as Shoes of Prey, NA or Tekyn, have based their whole business model on on-demand production. But by and large, these early experiments, including Shoes of Prey, which filed for bankruptcy in 2019, showed that customers were not ready to pay more and wait longer to have their unique own design.
Something other than textbook success
That said, some brands have defied the odds to prove on-demand models can be profitable. Among them are Barcelona-based sustainable producer Alohas, or French fashion brand Asphalte, whose success relies on small batches manufactured closer to the final consumer (for example, in Portugal for European customers) at the right price. Alohas is adjusting price to reduce inventory and provide an advantage to its early buyers, turning the concept of traditional end-of-season discounts on its head. Meanwhile, Asphalte is collecting early feedback from its customers to help shape future designs.
So, why are these innovators succeeding when giants like adidas and others have discontinued their customizable outlets? The fact is that Alohas and Asphalte are not implementing customization or truly starting manufacturing only when consumers finally place an order. Like the computer manufacturer Dell a few decades ago or the automotive industry, they have approached on-demand through the angle of small batches, rather than single-unit production. This makes sense: after all, supply chains and manufacturing processes are designed for batches and cannot handle single-unit production profitably at scale. Existing infrastructure mostly relies on emerging economies, which hinders the opportunity for massive transformation. Also, consumers are not ready for the long waiting times and higher prices associated with a radical shift toward customization.
Making on-demand fashion work
To make on-demand production more widespread, the industry will need to support initiatives impacting both the supply side and the demand side. On the supply side, several start-ups are in the process of reshuffling the fundamentals of fashion production with disruptive models. Some of them presented interesting innovations during Plug and Play’s webinar: (1) Unspun, which enables micro-batch production with 3D weaving machine; (2) Austrian start-up Silana, which developed robotics to automate the garment sewing process that currently relies on human labor; and (3) UK start-up Pattern Project has developed a software based on artificial intelligence technology to manufacture micro batches, making production much more agile and responsive.
These firms rely on technology, itself driven by data and an increasingly intelligent integration of the different links in the value chain. Additive manufacturing, or industrial-scale 3D printing, offers the opportunity to produce garments with the minimum required fabric. Take your average t-shirt: to produce it, traditional manufacturing first requires the cotton fabric, and then cuts its components according to set patterns. This process leads to higher waste, and long lead times due to its complexity. In contrast, additive manufacturing can produce a t-shirt as a single piece, which greatly reduces waste.
Such technology is paving the way for the development of more complex forms of manufacture-on-demand, without compromising economic profitability or customer satisfaction. Thanks to their flexibility, these tools can also be positioned closer to customers, reducing transport and storage costs as well as the associated environmental and social footprint.
Shifting fashion culture
On the demand side, it is necessary to educate the final consumer about fashion’s true cost in order to reconnect with the original meaning of fashion, where value is based more on the way the product is made and its quality than on the rapid renewal of trends that lead to pre-conceived obsolescence.
Recent regulations – such as France’s Anti-Waste Circular Economy Act, Germany’s Supply Chain Act or Sweden’s Extended Producer Responsibility – are triggering these evolutions, but there is a long way to go before we can achieve the deep cultural change and infrastructure we need. Overall, implementing on-demand production at a large scale in the short term is not realistic. But as our examples show, purposeful fashion is certainly within reach.
Valérie Moatti is a Professor and the Lectra Fashion and Technology Chair at ESCP Business School.
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