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1 Fast Fashion’s Unfashionable Side Alyssa McAndrew MGMT302 December 17,2014
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Fast Fashion’s Unfashionable Side
Alyssa McAndrew MGMT302
December 17,2014
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Table of Contents:
1. Executive Summary………………………………………………………………………………......3
2. Introduction……………………………………………………………………………………………...4
3. Issues…………………………………………......................................................................................7
4. Wages……………………………………………………………………………………………………….8
5. Working Conditions…………………………………………………………………………………..9
6. Solutions…………………………………………………………………………………………………15
7. Conclusion………………………………………………………………………………………………17
8. Tables……………………………………………………………………………………………………..19
9. Works Cited…………………………………………………………………………………………….21
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Executive Summary The fast fashion segment of the garment industry is very unique. It has taken
an industry that used to revolve around seasonal runway shows, and transformed it
to a fast paced industry that churns out disposable fashion. The incredible pace that
fast fashion operates at puts tremendous pressure on the supply chain. Consumers
want fashionable products faster and at the lowest possible price. As a result,
production is outsourced to countries where pricing is lower. But the problem lies
with the big fast fashion retailers who are exploiting the suppliers in these
countries. The competitive environment of fast fashion has created unethical
conditions, including inadequate wages and unsafe workplace environments
throughout the supply chain, especially in production in these garment factories.
These problems will go unchanged until we can find a way to hold these fast fashion
retailers accountable, and create an environment for customers to purchase
ethically.
How do we effect change with this crisis? I am proposing to create the Global
Workplace Pact. This would be an agreement supported by governments across the
world, promoted with the help of the United Nations and fast fashion global giants.
This agreement would establish:
• Appropriate minimum wages across the world in proportion to the culture
and standard of living in each country.
• Uniform standards for workplace safety, including fire protection and
building structure integrity.
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Not only would this establish more fair and safe environments across the world, but
also this would help to elevate countries out of poverty.
Introduction
For many years, the apparel business was driven by two opposing
ends of the market, the haute couture and ready-‐to-‐wear end and the mass
produced end. Haute couture, by its nature is exclusive and expensive, and it relies
on distinctive designs and high quality of the garments to distinguish itself. The
designs require significant investments and risk and they are generally rolled out to
the market in a controlled and deliberate fashion through large media events like
Fashion Week. The large investment in design and marketing costs, as well as
higher quality production, require high prices to provide a suitable profit
margins. Accordingly, haute couture and ready-‐to-‐wear clothing have a longer shelf
life, so the need for speed in bringing goods to market is limited. In addition, the
quality requirements generally mean that the haute couture companies rely on local
craftsman and artisans to produce their merchandise. For a company like Chanel,
that means producing its goods in European countries where the wages and
working conditions are generally satisfactory.
Mass produced clothing is generally inexpensive and undistinguished,
providing retailers with low profit margins. Accordingly, retailers at this end of the
market generally need high sales volumes to achieve satisfactory profit levels. In
addition, they rely on the lowest production costs available. Historically, the
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suppliers that can meet this requirement have been located in countries like
Bangladesh, India, and China with low standards of living. The suppliers in these
countries compete against each other and because the competition is so great, the
suppliers have not been able command much strength in the negotiating with the
large retailers. Accordingly, the suppliers in these countries have not been able to
pay their workers adequate wages, and have had to cut corners in the workplace
facilities and policies which has resulted in sweatshop conditions.
Beginning around 2004, the “fast fashion” segment of the industry began to
develop. “Unlike the retailers of haute couture and ready-‐to-‐wear, fast fashion
retailers do not directly invest in design but instead are inspired by the most
attractive and promising trends spotted at fashion shows and cues taken from
mainstream consumers.” (Tokatli 2) Fast fashion brands have streamlined and
efficient supply chains that enable them to beat haute couture and ready to wear
designers to market. Fashion is revolving less around the high-‐end designers’
seasonal collections, as fast fashion brands turn over designs at low prices at
incredibly rapid paces. Fast fashion is meant to be disposable and consumers want
the latest styles and they want them faster than ever. With increasing numbers of
brick and mortar stores worldwide and e-‐commerce, fast fashion is able to access a
much wider and more diverse market.
The culture of fast fashion is extremely competitive, which results in a race to
see who can build more stores, produce and distribute faster, and this all relies on
the maximization of every aspect of the supply chain. Originally, fast fashion
retailers sourced the production of their merchandise very close to the market in
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order to maximize the speed to market and minimize inventory levels. But as fast
fashion has grown, and as transportation costs have decreased, fast fashion retailers
have been able to look for efficiencies in the low cost manufacturers used by the
mass market segment of the industry.
“Maximizing the speed, synchronicity and responsiveness of the supply
chain involves maintaining a rhythm of flexibility whereby budget interpretations of
catwalk styles are ‘whisked into…stores with breathtaking speed’. The idea is to
beat the high-‐fashion houses and ready-‐to-‐wear designers to market.” (Tokatli, 3)
Fast fashion as a segment of the fashion industry is very unique. It has made fashion
more affordable with its offerings of pieces that are on trend and are below designer
prices. Companies in fast fashion are not the risk takers, but they mimic what is
shown by haute couture and ready-‐to-‐wear designers. As a result, fast fashion
survives on its ability to produce and globally distribute merchandise at the fastest
pace possible.
“A designer dress photographed on a model during fashion week does not
arrive in department stores for months – but something very like it can be spotted
hanging in Zara in a couple of weeks.” (Tokatli, 9) Based on the pace of this industry,
businesses are bound to cut as many corners as they are legally allowed to in order
to maximize profits. But the fact of the matter is that increasing wages or providing
safer work environments would not impact their profits very heavily.
In order to understand the changes we need to make to the fast fashion
segment of the fashion industry, we first must define the goal. The goal is to create
fashion that is ethical.
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“Ethical fashion is not only hard to define, as there is no industry standard.
Moreover, it often has common characteristics with other movements such
as fair trade and ecology or green fashion. The term ethical fashion is a new
approach of “fashion with a conscience” in the market and refers to a
growing number of ethical clothing companies such as American Apparel,
Edun, or Gossypium that strive to attract young mainstream consumers by
producing fashionable clothes. The principle is to source garments ethically
while providing good working standards and conditions to workers and to
provide a sustainable business model in the clothes’ country of
origin…Consequently, ethical fashion can be defined as fashionable clothes
that incorporate fair trade principles with sweatshop-‐free labour
conditions...” (Joergens 361)
Issues
There are few naturally ethical fashion brands, as the competitive nature of the
industry forces companies to make questionable decisions in their supply chains in
order to meet profit expectations. Fast fashion retailers must have a clear
understanding of what their consumer wants and how to get it there through their
supply chain. There is a constant tension between the pure cost of each element in
the supply chain and what is fair. The fast fashion business model originally relied
on supplier sourcing close to the market to minimize production and inventory
fulfillment, over the years this has changed. Transportation and logistics have
improved greatly, and allowed for supplier sourcing to be more remote. In addition,
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the public shareholders of the largest companies have certain profit
expectations. As a result, fast fashion retailers have moved their production to
countries with lower minimum wages as well as lower living standards. This trend
has only increased the historical issue the apparel industry has had with suppliers of
mass market clothing in developing countries providing inadequate wages and
sweatshop working conditions.
Wages
The garment industry has been full of controversy for years due to the
environment induced by outsourcing production. It has always been advantageous
for clothing retailers to outsource production because the price points are lower,
but fast fashion has taken this to another level. Their business is driven by speed
and low prices, so retailers put pressure on suppliers to be the most efficient
possible to deliver goods in very tight timeframes. But the amount of pressure these
global retailers are placing on suppliers is leading to suppliers cutting corners when
it comes to safety in order to maintain their reliable and profitable relationships.
The truth of the matter is that the fast fashion retailers hold all the power and the
suppliers are at their mercy..
It can be argued that the employment relationship at these factories are
almost a form of slavery. There aren’t many other options for workers in these
countries. While workers are choosing to take these jobs, big corporations are
taking advantage of them and exploiting their lack of options. Although, one could
argue that these jobs are better than what is being offered elsewhere in their
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countries, the large retailers have all the negotiating power with the supplier
companies. If there is no accountability for this relationship, the supplier is forced
to pay inadequate wages.
For years, clothing suppliers in these developing countries have not paid a
living wage. In addition, after adjusting for inflation, the real wages in many of these
countries has actually gone down. For instance, according to a study by the Center
for American Progress, real wages in Bangladesh, from 2001 to 2011, decreased
2.4% providing the workers with less buying power, not more (See Table 1 below).
In addition, in both 2001 and 2011, the prevailing wages in Bangladesh were only
14% of the living wage (See Table 2 below), or the wage required for an individual
to provide himself and his family with the basic elements of an adequate standard of
living. In fact, of the 15 largest exporters of clothing to the US, which made up 80%
of exports to the US, real wages declined over this 10 year period. In addition, on
average the prevailing wages in these same countries were only 36.8% of the living
wage in those countries. So, not only are the wages not sufficient enough to support
a reasonable standard of living, they are actually losing buying power as well.(Global
Wage Trends in the Apparel Industry) So although the current wages may be better
than what is currently available in other businesses in their countries, these wages
are still not enough to help end the cycle of poverty in those countries.
Working Conditions
Zara is owned by the larger Spanish fashion company Inditex. “Famously it was
Inditex-‐owned Zara that really broke the mould, bringing in a super-‐responsive
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timetable in the form of some 12,000 new styles each year. It is now every brand's
goal to be as quick – and cheap – as Zara.” (theguardian.com) This rapidly paced fast
fashion made great profits for companies such as Zara, but it is challenging to
maintain a quality and safe work environment in such a fast paced environment. It
became very difficult for Zara to keep track of its suppliers’ behavior. Given the
extreme pressures to fulfill orders, it was only a matter of time before careless
mistakes were made. As a result, there were a series of deadly factory fires and
collapses in Pakistan and Bangladesh between September, 2012 and April, 2013.
Figure 1: Rana Plaza collapse (http://upload.wikimedia.org)
Of these garment factory tragedies, one of the deadliest was the collapse of Rana
Plaza in Bangladesh in 2013, where one of Zara’s suppliers was located. Because of
this constant pressure to produce efficiently and stay ahead of consumer demand,
safety protocols were overlooked, and Rana Plaza collapsed killing 1,127 people.
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“The day before the factory collapsed, cracks appeared on the walls of the
eight-‐story building. But managers were focused on the bottom line, and the
employees, toiling for the world’s lowest wages, couldn’t afford to stop
working. So production continued until the building collapsed, killing 1,127
people inside – the deadliest accident in the garment industry’s history.”
(csmonitor.com)
Every human has fundamental rights, one of these being the right to physical
security. The management at Rana Plaza was under such pressure from fast fashion
companies, that they chose to completely disregard this right. If a building’s walls
are cracking, it is impossible for it to be a safe environment. The collapse of Rana
Plaza was inevitable. It was just a matter of time with its cracked walls. There is no
doubt that the choice to keep working in Rana Plaza to maintain a deadline was
unethical because profits were held with more importance than this right to
physical security.
James Nickels explained that there is an “affordability-‐fairness” condition. He said
that no person or entity can be held responsible for doing something if it is not in
their power to do it. Furthermore, the obligation to respect a right is determined
from a perspective of an entity’s resources and the distribution of burdens. As the
largest clothing retailer in the world, it is undeniable that it was within Zara’s power
to prevent this tragedy. Instead of holding these garment manufacturers to
acceptable safety standards with appropriate delivery deadlines and compensation,
Zara and other companies chose to look the other way because the price was right.
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Figure 2: Bangladeshi rescuers retrieve garment workers from Rana Plaza (http://blogs.r.ftdata.co.uk
In many cases, it can take a tragedy to effect real change, but Rana Plaza was
not the first tragedy to occur. In the five months before this collapse, 1,254 people
were killed in collapses, fires and stampedes according to the director of the
Institute for Global Labour and Human Rights. It seems that the only reason that
Rana Plaza got so much media attention was because it was the deadliest collapse in
history. Until now, this continuous pattern of tragedy has not brought about any
changes because the governments in places such as Bangladesh have not been as
strict as they are in the United States and Europe. It is desirable for garment
factories to work with such global giants as Zara because it is better than the
alternatives in their country, however these garment manufacturers are at the
mercy of big corporations such as Zara, because they do not have a voice. So how do
you give these people a voice?
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In the aftermath of this tragedy at Rana Plaza, the Clean Clothes Campaign
emerged. It called on fashion companies that sold clothes that were made in Rana
Plaza to help those victims of the collapse. As a result, the owner of Zara, Inditex,
chose to stop sourcing from within Rana Plaza after the supplier failed to take steps
to improve standards. In addition, Zara agreed to put some money toward the
compensation fund to help Rana Plaza victims and other victims of garment factory
disasters in Bangladesh. While this seems like an ethical response to this crisis, it
appears that this decision was only made because there was pressure on these
companies to make this disaster right in some way. This tragedy at Rana Plaza
would have been swept under the rug like all the others if it weren’t for all of the
media coverage that was hurting their image in the public eye. Throughout this
entire process, Zara prioritized its profits over fair conditions. While they had the
power and capital to effect change, they chose to ignore the unfair conditions so
they are in fact an unethical company.However, while Zara and some of its
competitors are making efforts to effect change, they cannot do it alone, and a
concerted global answer is required. So, who has the power and resources to effect
change? Based on Nickel’s “affordability-‐fairness” condition, the government has the
necessary power to implement laws and regulations that would hold companies
more accountable. If this does not happen, this pattern will continue and we will see
more tragedies in our future. A business needs to make profits in order to exist, and
they need to stay competitive with other companies in their industry. So it makes
sense that companies would be tempted to cut corners and pay such minimal wages
to garment factory workers if their competition is doing it.
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Because these companies are not naturally ethical, they must be held
accountable. The Bangladeshi government began to improve factory safety in the
garment industry with the Accord on Fire and Building Safety. In addition, the
International Labour Organization is also backing this effort that will “provide
technical expertise for building and fire safety assessments, strengthen and support
labour, fire and building inspections and build occupational safety and health
awareness and systems.” (Butler & Hammadi) This is a great start, but this is
another response to a tragedy that cannot be ignored. It is unethical to repeatedly
act in unsafe and unfair ways until a fatal tragedy occurs like Rana Plaza’s collapse.
As a result, there are many factors within the fast fashion industry that cause
companies like Zara to be unethical. It seems that the culture in fast fashion
perpetuates this type of behavior for businesses, but each company is responsible
for influencing positive change. Based on the theory of deontology, every human has
fundamental human rights such as the right to physical security and if we have the
power to affect change we have the obligation to do so. Zara had that power but was
so focused on the bottom line that they completely disregarded this obligation, and
relied on third party suppliers to take direct responsibility. Because nobody was
holding Zara accountable for its actions, these unethical practices continued and
were swept under the rug. Although Zara has since responded to this issue in some
positive ways, as noted in its annual report each year, it remains to be seen how
effective these measures will be. In any event although they seem to be making the
effort to act ethically, and although they are the largest player in the fast fashion
industry, they are only one company. Zara needs support from others to force the
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change that is required. In the mean time, Zara will continue to enjoy the benefits of
the lower costs in these countries, even if they increase in the future.
Solutions
The current situation has arisen because of the unequal distribution of wealth and
the standards of living in the various countries. This has lead to suppliers in these
countries competing with each other without negotiating power, which has lead
them to be paid unfairly. There needs to be a uniform global pact that guarantees
that all workers will be paid a living wage, and will be guaranteed a safe workplace.
The pact would call for accountability by suppliers and retailers alike with the
support of the local governments to enforce the provisions of the pact. By making
the pact global, some of the negotiating power would be shifted to the suppliers and,
therefor, indirectly to the workers. The pact would provide for each country signing
the pact to require a minimum wage rate that would at least be equal to the living
wage in that country. Workers would be able to support their families in a decent
standard of living, and not just at a subsistence level. The countries with the lowest
cost of living or standard of living would still be able to compete the most
aggressively to get market share of the clothing production business. Over time, this
would raise the standard of living in those countries.
The other element of the pact would be a requirement that countries signing
the pact would have to put in place a safety accord modeled on the Bangladesh
Accord on Fire and Building Safety. This accord provides guidelines to be followed
for building inspections, fire safety procedures and training, remediation of issues
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noted on inspections, and reporting. The money needed to put this in place would
come from the local government as well as the retailers in the contract negotiations.
This pact ideally would also be promoted not only by government agencies, but the
International Labor Organization, the World Trade Organization, and the fast
fashion retailers.
The biggest challenge to change lies with the consumers because they drive
the industry. Fast fashion caters to its consumers, so the only way fast fashion can
truly become ethical is if consumers change their purchasing patterns to be more
ethical. However, this is not as easy as it seems. In a study of consumers and ethical
fashion, conducted by Catrin Joergens, in the Journal of Fashion Marketing and
Management, UK and German focus groups indicated that there was little evidence
that ethical issues had any impact on consumers’ fashion purchasing behavior. “We
buy the image of the product and not because it was produced under ethical and fair
conditions. I want to look good and make an impression on people.” (Joergens 364)
It is debatable at best that consumers will ever make purchases ethically. The only
way that it seems possible is if more fashion becomes ethical or if it becomes
fashionable to care. Can we make fast fashion retailers create ethical and sustainable
supply chains? Humans like to think that they care about ethical practices in
business, but the truth of the matter is that when it comes down to it, price most
often wins. This applies to both businesses as well as consumers. Not every
consumer can afford to be choosy, so price will typically prevail over ethics. People
are idealistic but will often look the other way. In today’s consumer driven society,
we have more purchasing power than ever before. With a flooded market with
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endless options at various prices, consumers are no longer just fooled by marketing
ploys. While marketing is still a successful tool for businesses, consumers are more
intelligent in their choices. They can make affordable fashion choices while still
staying on trend if they shop with retailers such as Zara. As a result, consumers tend
to look the other way and pretend to not understand the reality of exploitation in
this industry.
The best way to change this behavior is through a concerted global
advertising campaign that highlights the issue and how responsible companies are
making the effort to improve the situation, but they need consumers’ support. The
ads would include sufficiently dramatic footage of the impact of inadequate wages
and workplace security. The key to success would be to make it fashionable to care.
It would also encourage consumers to look for the label indicating an item was made
under fair trade pricincipals. The funding for this campaign would ideally come from
a combination of government agencies and apparel industry trade groups and
unions. The result would be better informed consumers willing to pay a little more
for their clothing knowing it was for a good cause.
Conclusion
Because shopping for clothing is such a complicated process, convincing consumers
to purchase ethically made clothing becomes a great challenge. It is highly unlikely
that every consumer could be convinced to disregard their personal desires of
buying the least expensive clothing in order to be ethical. So how do we fix this
problem? We provide an environment that respects basic human rights to ensure all
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workers are paid a living wage and are guaranteed a safe workplace. Generally
speaking, governments are best suited to guaranteeing human rights, but the impact
of profits is a strong influence on how companies behave, so their influence would
push for the most cost effective way of achieving that. So a combination of
government and businesses is the best solution to resolving these inequalities. A
global standard put in place would create a fairer environment for all stakeholders,
from workers up through shareholders and all points in between. Since the standard
of living and minimum wage is different across the world, this global standard
would be implemented in each country based off of the economic status of that
country. In the end, there would be a significant decrease in poverty in each of these
countries as the contribution to their economies is boosted. Finally, the basic human
rights of all participants in the supply chain would be improved and companies
could publish their truly effective and ethical measures in their annual reports.
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Tables
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Works Cited: • Donaldson, Thomas J. "Rights in the Global Market." Multinational Corporate
Responsibility. 139-‐162. Print. • Siegle, Lucy. "Rana Plaza a Year On: Did Fast-‐fashion Brands Learn Any
Lessons at All?" The Guardian. 4 Apr. 2014. Web. 19 Nov. 2014. <http://www.theguardian.com/world/2014/apr/20/rana-‐plaza-‐bangladesh-‐disaster-‐anniversary>.
• Miller Llana, Sara. "In Bangladesh Factory Aftermath, US and European Firms Take Different Paths." The Christian Science Monitor. The Christian Science Monitor, 29 May 3013. Web. 16 Nov. 2014. <http://www.csmonitor.com/World/Europe/2013/0529/In-‐Bangladesh-‐factory-‐aftermath-‐US-‐and-‐European-‐firms-‐take-‐different-‐paths>.
• "Bangladesh Factory Collapse Toll Passes 1,000." BBC News. 10 May 2013. Web. 17 Nov. 2014. <http://www.bbc.com/news/world-‐asia-‐22476774>.
• Butler, Sarah, and Saad Hammadi. "Rana Plaza Factory Disaster: Victims Still Waiting for Compensation." The Guardian. 23 Oct. 2013. Web. 20 Nov. 2014.
• <http://www.theguardian.com/world/2013/oct/23/rana-‐plaza-‐factory-‐disaster-‐compensation-‐bangladesh>.
• Rana Plaza Collapse. Wikimedia image. Nd http://upload.wikimedia.org/wikipedia/commons/0/0c/Dhaka_Savar_Building_Collapse.jpg
• Bangladeshi Rescuers Retrieve Garment Workers. Blogs.r.ftdata.co.uk. http://blogs.r.ftdata.co.uk/photo-‐diary/files/2013/05/bangladesh1.jpg
• Joergens, Catrin. "Ethical Fashion: Myth Or Future Trend?" Journal of Fashion Marketing and Management 10.3, 2006: 360-‐71. Print.
• "Global Wage Trends for Apparel Workers, 2001-‐2011." (2013). Print. • Tokatli, N. "Global Sourcing: Insights From The Global Clothing Industry The
Case Of Zara, A Fast Fashion Retailer." Journal of Economic Geography (2007): 21-‐38. Print.
