Fast Fashion and Sustainability: A Contradiction?

Photo by REUTERS, Francis Kokoroko, 2022

In the fast fashion industry, the allure of rapid production and affordability has expanded consumer options significantly, yet the question remains: is fast fashion truly a sustainable practice?

Fast fashion involves rapidly transferring trends and styles from designers directly to retail stores. These garments are sold in large quantities at affordable prices making an increasing amount of people consume fast fashion clothes. It’s worth pondering what economic rationale is behind our continuous mass consumption. As consumers eagerly snap up the newest products, one wonders how often these garments are worn before ending up in the trash. The fast-paced growth of this industry tends to cause environmental damage and reveal exploitative labor conditions. There's also the issue of asymmetric information, where the true costs and quality of production remain cloaked from public scrutiny. This obscured reality is sparking a crucial re-evaluation of the industry’s sustainability and ethics, urging a closer look at whether fast fashion can ever align with responsible consumption.

Why do we keep shopping?

Ever wondered why your favorite retail stores are always discounted? From the perspective of behavioral economics, this is a result of anchoring. Consumers will take the original price as their point of reference making the discounted price appear cheaperin perception (Caldwell, 2017). Additionally, fast fashion companies often capitalize on consumers' loss aversion tendencies. Limited-time offers, flash sales, and promotions create a sense of urgency, prompting consumers to make quick purchasing decisions to avoid the perceived loss of a good deal.

Where do our clothes end up?

After extensive shopping, our clothes end up in the dump and this severely impacts the environment. Fast fashion significantly impacts pollution, waste, and resource depletion throughout its production and distribution channels, with a notable contribution to water pollution. The industry is heavily reliant on cotton, a crop that demands extensive water usage; it requires approximately 10,000 litres of water to produce just one kilogram of cotton, equating to about 2,700 litres for a single cotton T-shirt (The World Counts, 2022). Additionally, the processes of fabric dyeing and treatment are particularly water-intensive. These processes involve chemicals that can be detrimental to aquatic ecosystems. In Bangladesh, a South Asian country with a heavy focus on garment production, the repercussions are starkly visible. The Buriganga River, vital for drinking and fishing, often turns black due to the extensive pollution from dyes. Those frequent pollutants include heavy metals from dyes, formaldehyde, and nonylphenol ethoxylates (NPEs), all known for their toxicity to marine life and potential to disrupt natural habitats. The situation is exacerbated by improper waste disposal by local factories, leading to significant accumulations of plastic in landfills, waterways, and urban areas. Reports from the Bangladesh Department of Environment indicate that factories release 21,600 cubic meters of toxic waste and trash into the Buriganga River every day, severely affecting the health and livelihoods of local communities (TEDI, 2023). This also compromises the well-being of local communities posing significant risks to human health.

Can the industry be saved?

Only low-quality goods are produced in the fast-fashion market. Two of the other economic concepts associated with the fast fashion market are quality uncertainty and for 8% of global carbon emissions and 20% of worldwide wastewater. asymmetric information. Let’s assume that only two types of products are available in the fast-fashion market: high-quality (𝐻) clothes that take an initial market share 𝑞 with a relatively expensive price (𝑃 , and low-quality that occupies the market share 𝑒) (𝐿) 𝑝 = 1 − 𝑞 with a cheaper price (𝑃 . Consumers cannot distinguish between the 𝑐) products, yet the seller has discernment. Since consumers are indeterminate about the quality, their expected price (𝑃 will take the form of 𝐸𝑥𝑝 𝑃 , which is below the acceptable price of a certain 𝐸𝑥𝑝 = (𝑞 * 𝑃𝑒 + (1 − 𝑞) * 𝑃𝑐) proportion of high-quality sellers. In this scenario, 𝐿 will ultimately expel 𝐻 from the market. The 𝐻 producers are unwilling to sell at a despicable price.

The marginal cost of producing 𝐻 is greater than 𝐿, as in the fast fashion industry producing sustainable, healthy, and original designs costs more than fabricating unsustainable pieces that mimic high-end designs. Even if the ultimate expected price is higher than the production cost, the 𝐻 producers will realize that shifting to production 𝐿 will bring them higher benefits, as the consumers fail to determine the quality. Consequently, the consumer starts to believe that there is only 𝐿 existing in the market as its market share proportion grows. The expected price falls continuously until the high-quality producers leave, and the poor-quality goods dominate the market.

As a solution, the 𝐻 producers could use signalling to inform the consumers that they have quality goods available. By leveraging pricing, branding, sustainability initiatives, and other signalling strategies, quality producers could create competitive advantages and capture market share in a dynamic and competitive industry. Lamentably the firms will consider signalling only if the consumer is willing to pay for the higher quality. In the fast-fashion market, the target customers are the young generation from 18 to 25 years old seeking affordable clothes, and the products’ quality is not the main concern. As a result, these firms are competing for customers with decreasing prices: “...Shein’s average SKU price is $14, compared with $26 at fast fashion retailer H&M and $34 at Zara.” (McKensy, 2023). To combat these negative externalities produced by the industry the government could impose schemes to reinforce sustainability education among the younger generation, leading to more sustainable practices in the future.

The concepts of behavioral economics, externalities, asymmetric information, and signalling support the analysis of the problematic success of the fast fashion industry. The production quality and process should go through more strict scrutiny. It is also important to note the market has deterred high-quality production, thus there is pressure from demand side consumption. Education on sustainable apparel is the most popular remedy to combat the demand side pressure and correct economic rationale. However, education is only likely to change the situation in the long run in the short run, the fast fashion industry could rampantly continue polluting our environment.

Bibliography:

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