Lupine Publishers (2024)

R B Chavan*

• Institute of Appropriate and Sustainable Technology, Maharashtra, India

Received: August 01, 2018; Published: August 09, 2018

*Corresponding author:R B Chavan, Institute of Appropriate and Sustainable Technology, Aurangabad Maharashtra, India

DOI: 10.32474/LTTFD.2018.02.000144

Abstract PDF

The notion of global fashion industry is a product of the modern age as clothing is often designed in one country, manufacturedin another, and sold worldwide. The global fashion industry is dependent on ever-changing trends that keep consumers, driven bythe need to wear the latest. The paper highlights the fast fashion and slow fashion models prevailing in the fashion industry. Amongthe two models the fast fashion model is well established, however the slow fashion model is gaining importance as it discouragesundesirable excessive use of clothing resulting in the waste recycling problems and threat to environment. The paper also peepsthrough the internal, micro and macro factors influencing the business environment of fashion industry and ways and means toovercome these factors to meet the ultimate goal to establish successful relationship with customers with reasonable profit. Themacro factors are often referred as PESTEL (political, economic, technology, environment and legal) factors. It has been pointedout that among these PESTEL factors, presently the environmental factors and social factors of business ethics are posing a seriousthreat to the sustainability of fast fashion model of the fashion industry.

Keywords: Fashion industry; Business environment; Internal, micro and macro; PESTEL; Fast fashion; Slow fashion

Prior to the mid-19th century, most clothing was custom-made.It was handmade for individuals, either as home production oron order from dressmakers and tailors. By the beginning of the20th century-with the rise of new technologies such as the sewingmachine, the rise of global capitalism and the development ofthe factory system of production, and the proliferation of retailoutlets such as department stores-clothing had increasingly cometo be mass-produced in standard sizes ready for sale. Althoughthe fashion industry developed first in Europe and America,presently it is an international and highly globalized industry, withclothing often designed in one country, manufactured in another,and sold worldwide. For example, an American fashion companymight source fabric in China and have the clothes manufactured inVietnam, finished in Italy, and shipped to a warehouse in the UnitedStates for distribution to retail outlets internationally. The fashionindustry has long been one of the largest employers. However, dueto increase in labor costs it has moved from developed countriesto developing particularly China and African countries [1]. Fashionindustry employs people across occupation from skilled labour tofashion designers, computer programmers, lawyers, accountants,copywriters, social media directors, and project managers.Manufacturing is only a fraction of the modern fashion industry asit is a highly sophisticated industry involving fashion and marketresearch, brand licensing/intellectual property rights, design,materials engineering, product manufacturing, marketing andfinally, distribution [2].

Components of fashion industry

The fashion industry consists of four components/levels:

a) The production of raw materials, principally fibers, textiles,leather and fur.

b) The production of fashion goods by designers, manufacturers,contractors, and others.

c) Marketing in the form of advertising and promotion.

d) Wholesale/Retail sales and e- commerce.

These levels consist of many separate but interdependentsectors. These sectors are Textile Design and Production,Fashion Design and Manufacturing, Fashion Retailing, Marketing and Merchandising, Fashion Shows, and Media and Marketing. Eachsector is devoted to the goal of satisfying consumer demand thatenable designers, manufacturers, retailers and marketing firms tooperate for a profit [1].

Global fashion industry

The global fashion industry is dependent on ever-changingtrends that keep consumers, driven by the need to wear the latest.However, this means that goods have a short shelf life, requiringmanufacturers, designers and retailers to meet tight productionschedules and distribution deadlines. This also gives trendsetters,such as celebrities, key roles in successful marketing andpromotions. In a global marketplace, the fashion industry is highlycompetitive. Though manufacturing is carried out in developingcountries of Asia and Africa due to cheap labor, China is claiminga majority stake by offering quality goods at cheaper prices. Thefashion industry is no longer solely dependent on retail storesfor sales due increase in opportunities for retail sales throughe-commerce, which allows buyers to shop and purchase online.Marketing and promotion also are expanding with the growth ofsuch media trends as social networking and use of technologiessuch as mobile devices and smart phone applications, which allowfor shopping anywhere. Product branding is an important partof gaining recognition and customer loyalty. This segment of themarket, promoted by designers and fashion models, is among themost visible. It also presents greater challenges for lesser knownproduct lines [3].

Business models of fashion industry

The fashion industry is a dynamic in the sense that fashiontrends and styles change continuously. Each fashion companyresponds differently to the changes in fashion trends, distributionand selling of clothes to its customers. The majority of companieschoose to follow the latest fashion trends while new entrants try toemphasize quality over quantity by striving for a more sustainableand long- lasting approach. These differences are generallyillustrated by two business models, which have emerged over thepast few years within the fashion industry, namely the fast fashionand slow fashion model. According to Fletcher fast fashion is timebased whereas slow fashion is rather quality-based [4].

Fast Fashion model

Companies following the fast fashion business model arecharacterized by a quick response to the latest fashion trends aswell as short production and lead times resulting in quick supplyto market and customers [5]. New designs and collections areintroduced within weeks, which keep customers continuouslydropping by the stores in order to review the latest fashion styles[6]. Adopters of the fast fashion model are concerned with bringingnew products very quickly to the market in order to capture anddirectly respond to the latest trends in the market [7]. Fast fashionmodel is characterized by low prices, a short time-to-marketand reduced lead times resulting in a delivery of new clothes tocustomers several times within a season. In comparison to slowfashion concept, the fast fashion concept is well-established inapparel market and numerous renowned fashion companies likeZara, H&M, Top Fashion, GAP have successfully implemented theapproach in their business strategies [8,9].

Slow fashion model

Compared to the fast fashion model, slow fashion is more novel.It is concerned with creating a more sustainable and ethical supplychain highlighting the use of local resources and longer productlives [10]. In contrast to fast fashion, slow fashion promotes amore conscious buying behavior and motivates customers to bemore aware of the materials used to create their looks. It triesto incorporate green thinking into the fashion world and pullscustomers away from the throw-away culture that has been createdwith the emergence of the fast fashion concept. Slow fashion ratherstands for attributes like sustainability and quality and an effortto decrease over-consumption and encourage a more consciousapproach to purchasing clothes [11-14]. Slow fashion modelgoes beyond sustainability where companies also engage in atransparent supply chain management and incorporate ethical andsocially responsible initiatives while not losing sight of creativityand fashionability of their products. The prominence of the slowfashion business model is recently increasing, and more and moreentrepreneurs establish new and prospering businesses under thisconcept [10]. Due to this upheaval, the slow fashion concept willbe considered as new entrant since it is only in the early stages ofmarket establishment.

Table 1 provides a more detailed overview of the two business models.

Table 1: Overview of fast fashion and slow fashion models [13].

Business environment

Business environment is a marketing term and refers tofactors and forces that affect a firm’s ability to build and maintainsuccessful relationships with current and prospective customers.The business environment is also known as marketing environment[14]. The marketing environment factors can be internal (within theorganization) or external (outside the organization). The externalfactors can further be divided into micro and macro environmentfactors. Thus, the marketing environment can be broadly classifiedinto three components as shown in Figure 1.

Figure 1: Business environment factors [15].

Business environment factors

Some of the marketing environment factors are controllablewhile some are uncontrollable and require business operationsto change accordingly. Firms must be well aware of its marketingenvironment in which it is operating to overcome the negativeimpact the environment factors that are affecting on firm’smarketing activities for successful business.

Internal environment factors

The internal environment is made up of factors within thefirm itself. These factors include staff relationship, resources andcorporate culture and ability to deal with external environments.This is depicted in Figure 2.

Figure 2: Internal environment of an organization [16].

Internal environment of an organization [15,16]

Thus the internal environment is the staff relationship and thefunctioning of internal departments such as management, finance,research and development, purchasing, Business operations andaccounting. Each of these departments influences marketingdecisions. For example, research and development may provideinputs of the features a product that can perform and accountingapproves the financial side of marketing plans and budget toincorporate such inputs. Marketing managers must ensure thatproduct will be delivered to customers in the time frame requiredin order to maintain a strong customer relationship. Controlling theinternal environment depends on the corporate culture. Unless thecompany has ability to control internal environment factors, it willnot be able to compete in the market.

Micro environment

The Micro Marketing Environment includes all those factorsthat are closely associated with the operations of the businessand influences its functioning on day to day basis. Therefore,before deciding corporate strategy companies should carry out afull analysis of their micro environment. The micro environmentfactors shown in Figure 3 include customers, employees, suppliers,retailers & distributors, shareholders, Competitors, Governmentand General Public. Businesses cannot always control microenvironment factors but they should endeavor to manage themalong with Internal Environment and Macro Environment factorsFigure 3.

Figure 3: Micro environment factors [15].

Micro environment factors [15]

Customers: Every business revolves around fulfilling thecustomer’s needs and wants. Thus, each marketing strategy iscustomer oriented that focuses on understanding the need of thecustomers and offering the best product that fulfills their needs andcustomer service.

Employees: Employees are the main component of a businesswho contributes significantly to its success. The quality ofemployees depends on the training and motivation sessions andpromotion opportunities given to them. Training and developmentplay a critical role in achieving a competitive edge; especially inMarketing.

Suppliers: Suppliers are the persons from whom the materialis purchased to make a finished good and hence are very importantfor the organization. A supplier’s behavior will directly impact thebusiness. For example if a supplier provides a poor service thiscould increase time scales or product quality. An increase in rawmaterial prices will affect an organization’s marketing strategyand may even force price increases. It is crucial to identify andchoose best suppliers existing in the market and maintain closerelationships with them to remain competitive and provide qualityproducts to customers.

Retailers & Distributors: They play a vital role in determiningthe success of marketing operations. Being in direct touch withcustomers they can give suggestions about customer’s choiceregarding a product and its services.

Competitors: Keeping a close watch on competitors enablesa company to decide its marketing strategy according to the trendprevailing in the market. Competitor analysis and monitoring iscrucial if an organization is to maintain or improve its positionwithin the market.

Shareholders: Apart from financial institutions, the publiccompany can raise funds through shareholders. Therefore, everypublic company has an objective of maximizing its shareholder’swealth. Thus, marketing activities should be undertaken keepingin mind the returns to shareholders and to strengthen company’sfinancial position.

Media: Positive media attention can “make” an organization(or its products) and negative media attention can “break” anorganization. Organizations need to manage the media so that the media help promote the positive things about the organization andreduce the impact of a negative event on their reputation. Someorganizations will even employ public relations (PR) consultantsto help them manage a particular event or incident. Consumertelevision programs with a wide and more direct audience can alsohave a very powerful impact on the success of an organization.

Government: The Government departments make severalpolicies viz. pricing policy, credit policy, education policy, housingpolicy, etc. that do have an influence on the marketing strategies.A company has to keep track on these policies and make themarketing programs accordingly.

General public (Society): The business has some socialresponsibility towards the society in which it is operating. Thus, allthe marketing activities should be designed that result in increasedwelfare of the society as a whole.

Macro environment PESTEL Factors

The macro environment refers to all forces that are part of thelarger society and affect the micro environment. Factors affectingorganization in macro environment are known as PESTEL, thatis: Political, Economical, Social, Technological, Environmental andLegal shown in Figure 4.’

Figure 4: Macro environment (PESTEL) factors [17].

Macro environment (PESTEL) factors [17]

Political and legal Factors: These are all about how and to whatdegree a government intervenes in the economy. This can include- government policy, political stability or instability, foreign tradepolicy, tax policy, labor law, environmental law, trade restrictionsand so on. It is clear from the list above that political factors oftenhave an impact on ease of doing business. Organizations need tobe able to respond to the current and anticipated future legislationand adjust their marketing policy accordingly. Legal factors include- health and safety, equal opportunities, advertising standards,consumer rights and laws, product labeling and product safety. Itis clear that companies need to know what is and what is not legalin order to trade successfully. If an organization trades globally thisbecomes a very tricky area to get right as each country has its ownset of rules and regulations [17-20].

Economic Factors: Economic factors have a significant impacton how an organization does business and also how profitablethey are. Economic factors include - economic growth, interestrates, exchange rates, inflation, disposable income of consumers,employment etc. These factors can be further broken down intomacro-economical and micro- economical factors. M a c r o -economical factors deal with the management of demandin any given economy. Micro-economic factors are all about theway people spend their income. The effect of some of the economicfactors on fashion industry is summarized below.

Disposable income and employment: Increasing disposableincome of households, has been witnessed in most of the EconomicCooperation and Development (OECD) countries over the lastcouple of years This implies that there is more money available forconsumers to purchase clothes, which may increase the total salesof fashion companies. On the other hand the employment rate inmost OECD countries has continuously decreased over the last fewyears [18, 19]. In the course of this trend, there might be less peopleable to buy fashion clothes due to the unemployment, but those whoare employed can spend more money on the products due to higherdisposable income. Consequently, as an option for higher profits,fashion firms may increase price by enhancing product quality.

Growth in global economy: According to the OECD, the globaleconomy is expected to strengthen and grow in the next few years.The European Commission [20] declares that the fashion industryitself has constantly growing at around 10%. Remy, Schmidt,Werner and Lu [21] claim that the global women’s apparel marketgrowth rate is expected to increase by 50% till 2025. As a result,there are greater opportunities for internationalization of apparelbrands.

Raw material and labor costs: Raw materials like oil andwater are becoming scarce; resulting in rise in manufacturingcost of apparel [22,23]. The European Commission [20] alerts thatdue to the decline of the manufacturing industry, skilled labor hasdecreased and became more expensive, which may pose a threatto the competitiveness in the apparel industry [20]. As a responseto these two trends, fashion industry tends to outsource the textileproduction to low-cost manufacturing countries like Bangladeshor Cambodia in order to cut production and labor costs [7,9,24].However, experts alert that even in these countries, the resourceprices already have and will be rising significantly in the future [25].

Social factors: These factors include-population growth, agedistribution, health consciousness, career attitudes and so on.These factors are of particular interest as they have a direct effecton how fashion industry understands customers. The fashionindustry is one of those industries that may be most affected bythe impact of socio-cultural trends [26]. For instance, it has beenwitnessed for decades that the world population is aging [18]. Sucha demographic change may result in a threat for solely teenageorientedapparel firms because the competition for their shrinkingsegment becomes more intense. However, an opportunity can openup for new or more flexible incumbent fashion retailers. They mayfocus on more mature customers and offer appropriate sizes andsimpler designs with quality durable materials. Another social trendis that customers are more and more concerned about their health,which can be confirmed by a steady increase in individual healthexpenditure [27]. This may lead to a greater customer interestin the materials used, their origin and their processing methods,demanding more transparency and accountability on behalf of thefashion firms. In this respect, more and more customers have gone‘green’ and support sustainable and ethical activities of companies[7,10]. Besides this, fashion tastes and trends of teenagers andyoung adults are very diverse and volatile nowadays and areinfluenced by celebrities and the media [23]. The ‘hipster’ trendis a recent example and companies may have to decide if theyfollow such temporary fads or if their business is stable enough tosustain within their usual channels. The media, however, does notonly spread trends to customers but also makes aware of scandalsand negative publicity about bad Corporate Social Responsibility(CSR) practices like child labor, sweat shops or inhumane workingconditions. One example was the incident at the Rana Plaza inBangladesh in 2013, a factory which makes garments for chainslike Primark, where more than 1,100 workers died when thedilapidated building collapsed above their heads [28]. As a result,changes in customer behaviour and attitudes towards fashioncompanies are increasing the demand to more reporting activitiesand auditing processes on labour conditions and wages to ensure afairer treatment of workers.

Technology factors

The fashion industry has always been subject to technologicalchanges and has influenced the way in which apparel products areproduced, supplied and delivered to customers. The emergence ofthe Internet and improvements in communication technologies havefacilitated and accelerated the information flow of new trends andbrands from the customer to the retailer, which enables companiesto respond more quickly to the latest market impulses [29]. In turntheses advancements have increased customer demands since themedia continuously updates them about the newest fashion styles[23]. A similar improvement in knowledge transfer and interactioncan be witnessed between retailers, wholesalers and manufacturers,which are able to benefit from more efficient distribution andcommunication channels [30]. Besides, low-cost advertisem*ntand marketing options for retailers through social media platformsor a corporate website are on rise to attract consumers for buyingfashion products [23]. Innovations like matrix coding, the cocreationof products and online shopping have made the decisionand purchase of fashion easier and more convenient for customers[31,32]. Despite the technological enhancements, the apparelindustry remains rather labor-intensive with limited automationbecause of frequent design, textile and demand changes [33].

Environmental Factors

These factors have come to the forefront by the turn of thecentury. They have become important due to the increasing scarcityof raw materials, pollution, health hazards, carbon footprint targetsset by governments to mitigate climate change, doing business inan ethical and socially responsible way etc. These are just someof the issues marketers are facing within this factor. More andmore consumers are demanding that the products they buy aresourced ethically and if possible from a sustainable source. In theenvironmental dimension of the PESTEL framework several trendscan be observed which are likely to have an impact on fashionindustry. First of all, climate change and global warming might poseserious challenges to fashion companies in the future, especiallywithin developing countries [34]. Events like droughts, tsunamisor floods are often unforeseeable and can harm the growth ofcotton and the maintenance of manufacturing facilities. Sincemany retailers have shifted the production to so- called developingcountries in Asia [7,9,24].

Fashion industry need to be particularly aware of suchenvironmental risks and create awareness in production units andamong workers for such events. Besides, in order to counteract andreduce the consequences of the changing climate, stakeholdersare putting pressure on fashion companies to reduce their carbonfootprint and incorporate environmental friendly practicesalongside their whole supply chain [7,10]. A related critical debatethat has been pursued recently and may continue to be the issue inthe future is about the environmental pollution that is attributedto the supply chain activities of companies in the apparel industry.Fashion leaves a great environmental footprint along its supplychain and life cycle. For instance, growing non-organic cottonrequires a big amount of chemicals, water and pesticides, whichharm human health and have a significant, long-lasting impact on the environment. Besides, overconsumption in the fast-fashionworld leads to greater amounts of waste creating disposabilityproblems.

Textile production facilities use a lot of energy, water andchemicals generating contaminated water and toxic volatileemissions [7,10,35]. No one wants to eat a meal laced with plastic,but if something doesn’t change in our current textile economy,that could soon be a reality. Plastic microfibers, which are like tinypieces of plastic lint that come off synthetic clothing in the washingmachine, are now entering the oceans at a rate of about half a milliontons every year - that’s equivalent to more than 50 billion plasticbottles. Once in the water, these microfibers are ingested by aquaticwildlife and travel up the food chain where they end up beingconsumed by humans. This problem is just one of many, highlightedin a report from the Ellen MacArthur Foundation. Entitled “A NewTextiles Economy: Redesigning Fashion’s Future.” The report hasgarnered support from brands like Stella McCartney, Nikeand H&M in addition to the United Nations and organizations likethe Sustainable Apparel Coalition and the C&A Foundation [36].

The House of Commons environmental audit committee in UK has launched an inquiry to explore the carbon impact, resourceuse and water footprint of clothing throughout its lifecycle andsupply chain. The committee has observed that the globalisedmarket for fashion manufacturing has facilitated a “fast fashion”phenomenon; a proliferation of cheap and cheerful clothing, withquick turnover that encourages consumers to keep buying. Thekey to the inquiry is how consumers could be encouraged to buyfewer clothes, reuse clothes and think about how best to disposeof clothes when they are no longer wanted. An estimated 300,000tonnes of fashion waste goes straight into landfill each year in UK, despite growing efforts to encourage consumers to recycle theirworn and unwanted clothing [37]. It is for these reasons more andmore consumers, governments and other stakeholders demandmore sustainable and ethical practices in daily business operations.If fashion companies want to maintain loyal customers, they needto reduce their impact on the environment and invest in sustainableand eco-friendly practices in order to reduce waste and minimizethe pollution of water and air.

Though fast fashion model is well established, however, dueto environmental issues and social values related to businessethics, the slow fashion model is gaining an edge over. Businessenvironment is an alternative term to business marketing. Amongthe three factors, macro factors known as PESTEL are purely ofexternal nature need to be carefully understood and researchedby the fashion industry for carrying out the business in ethical andenvironmentally friendly way for its sustainability. Technology isplaying a great role in the marketing of fashion products but is alsoposing a threat of competition. Therefore, creating a brand imagebased on ethics and providing environmentally friendly productshas become essential for the survival in the global fashion industry.

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