Brondwyn Douglas, ESG Officer, Spear Capital
Earlier this month, Sports Direct owner Fraser Group announced its £20-million acquisition of fast-fashion group Missguided. The acquisition ensures the survival of what was once one of the UK’s biggest online fashion retailers after it went into business rescue in late 2021, although there will be job losses.
In the wake of the acquisition, people are once again asking a lot of questions about the viability of fast fashion, especially as consumers look to embrace sustainability. That’s understandable, as according to one study, “The fashion industry is currently responsible for more annual carbon emissions than all international flights and maritime shipping combined.” It’s also true that millions of tonnes of clothing end up in landfills every year. So, while those questions are important, Missguided’s difficulties shouldn’t be seen as a nail in fast fashion’s coffin. There is a way to marry fast fashion and sustainability, and it starts with looking to other markets, including Africa.
The fall of a fast-fashion giant
As the largest UK fast-fashion retailer to have fallen on hard times in recent years, it’s unsurprising that many have sought to suggest that Missguided’s downfall is a harbinger of what’s to come for the industry as a whole. Much of that commentary is tied to the fact that the retailer made its name with a lucrative sponsorship of hit reality TV show Love Island. Under mounting pressure, the latest season of the show has seen the stars clothed in second-hand pieces from eBay. It’s also true that other fast-fashion retailers, such as Boohoo, have faced hard times in recent years.
But a deeper look at Missguided’s rise and fall shows that it had much deeper set issues than any perceived shift away from fast fashion.
Founded in 2009, the Manchester-based company rapidly grew to become one of the UK’s biggest online fashion players. While it reported small profits until 2016, it started reporting losses in 2017, with the £45-million loss it reported in 2018, representing its nadir. Without knowing the ins and outs of Missguided’s business strategy, those kinds of losses suggest that it was trying to spend its way to aggressive growth and market dominance. It’s a strategy which worked for Amazon, but it also put paid to a number of Amazon competitors over the years.
Unless you have investors with very deep pockets, there’s always a chance that someone will be able to outspend you. That’s especially true when the business in question operates in a niche. One only need look at the rise of a company like the Chinese-founded Shein in the UK and internationally to see the kind of competition that fast-fashion companies now face.
The latest looks, delivered sustainably
Even if sustainability were the primary issue though, that doesn’t mean it’s impossible to get the latest looks at a reasonable price while doing what’s best for the planet and society.
African fashion player in the ecommerce sector, MyRunway, is an example of this. It sells ‘developed world’ stock at the end of a season to the South African market, thereby extending its lifespan and ensuring that more stock is used up. Additionally, this approach allows European retailers to easily, and sustainably, enter new markets. MyRunway has also done a lot of work to ensure that it’s as sustainable as possible as a company and is continuing to investigate and adopt practices which improve its sustainability proposition. That means, for example, shifting its entire distribution warehouse to be closer to where there is market demand, consciously cutting back on CO2 emissions associated with delivery.
It’s also worth noting that it operates in a growth market. While COVID-19 accelerated ecommerce in South Africa and across the continent, it still only accounts for around four percent of retail sales. That means there’s a lot of room left for growth.
Building better businesses
Some are calling fast fashion’s presence in the sustainability conversation ‘a step towards accountability’. Others believe that ‘taking action, any action, is a positive step forward’. Because of the sheer size of fast fashion brands, even small changes can have tremendous positive impacts that ripple across the sector. It is essential, however, that greenwashing is avoided and only authentic steps are taken.
So what is the role of fast fashion giants in the sustainability conversation? While many fast and conventional brands have joined the sustainability conversation, few have shown signs of implementing strategies to lessen their impact on people and planet. Overly aggressive growth strategies and a failure to get the basics right – like paying suppliers on time and delivering to customers on time – have the potential to be damaging.The companies that understand that adopting sustainable business practices are investing in the longer term are better placed to compete in an aggressive sector.