The 2018 Apparel Industry Overproduction Report and Infographic

In this report, you’ll find all you need know about the scale, causes and consequences of overproduction. Created by ShareCloth.

Olena Rudenko · Dec 10, 2018

Intro


You know this problem exists: mounting piles of deadstock and incinerations of unsold clothes. Landfills overpacked with textiles and calls for sustainable fashion are all over the news.

However, having decided to investigate the issue, you might be overwhelmed with tons of fragmented data spread over the internet. To save you time and effort, we decided to put together the most important and up-to-date information about the problem. In this report, you’ll find all you need know about the scale, causes and consequences of overproduction.

Facts and Numbers


The problem of unsold clothes is vividly illustrated by recent H&M news. At the beginning of the year, the fashion giant reported sitting on a huge pile of unsold clothes — $4.3 billion worth of inventory. The company produces so many clothes that a power plant in a Swedish town Vasteras partly relies on burning its defective products to create energy. It incinerated 15 tons in 2017, though H&M claims those were clothes not safe to use. Meanwhile, luxury brand Burberry admitted burning products worth $37 million instead of selling it at a lower cost. This caused a scandal and the company had to change their policy.

The fashion industry is enormous. If each one of the 7.5 billion people on Earth owned only one pair of pants and one shirt, that would make 15 billion items of clothing.


But we, of course, have more.


Here are the key facts about production and use:


1.7 trillion dollars

is the value of the apparel and footwear market. That’s roughly the same as the GDP of Canada.

Source: Pulse of the Fashion Industry.

150 billion garments per year

are produced in the global fashion industry, which means about 20 items per person.

Source: Takeaways from Future of Fashion Sustainability Panel

30% of clothes is never sold.

Another third only leaves the shops with a discount.

Source: Overproduction: Taboo in Fashion

210 billion dollars

makes up an inventory distortion in the global fashion industry. This is the disconnect between what consumers want and what retailers have in stores.

Source: eMarketer

460 billion dollars

is how much the global economy misses out on each year because people are throwing away clothes they could continue to wear.

Source: A new of textile economy by the Ellen MacArthur Foundation


Not only are brands producing more, customers are using large amounts of clothing for a shorter time:An average American buys 70 apparel items a year.

That is a new piece of clothing every four to five days.

Source: Americans have stopped trying to stuff more clothes into their closets

The average closet of a UK citizen contains 152 items.

More than half gather dust. There are $45 billion of unworn clothes in the United Kingdom alone.

Source: Oxfam

Less than three years

is the lifetime of an apparel item in developed countries.

Source: A new of textile economy

More than 50% of fast fashion produced is disposed in under one year.

Source: A new of textile economy


The consequences


Fashion is said to be the second dirtiest industry in the world. It is henpecked by energy-intensive processes, high water consumption and use of non-renewable resources. Thus, overproduction has a huge impact on the environment. Moreover, the more we produce, the more waste is accumulated. Here are some important facts:

12.8 million tons of clothing

is sent to landfills annually

Source: Environmental Protection Agency

92 million tons of solid waste each year

is produced by the fashion industry using 98 million tons of natural resources.

Source: Greenpeace

1.2 billion tons annually

is the total greenhouse gas emissions from textile production. This is more than those of all international flights and maritime shipping combined.

Source: Anew of textile economy

7,000 litres of water

is needed to produce one pair of jeans. An average person drinks that much in about six years. The industry produces 2 billion pairs of jeans every year.

Source: Greenpeace

102 million tons

will reach the global apparel production in 2030 if the population and economy rise as expected. It has doubled in the past 15 years and now makes up 62 million tons.

Source: A new of textile economy

Not only does excess output of apparel harm our planet, it is also dangerous for the economy. Overproduction was one of the reasons for the Great Depression and the lean manufacturing approach considers overproduction to be the worst of the seven wastes in business as it obscures all the other problems with processes. Many businesses have failed because they cannot buy raw materials to service a customer because they have already put their money in producing goods that are not required.

The Pulse of the Fashion Industry report projects that, by 2030, fashion brands will see a profit reduction of $52 billion across the industry, if they continue to operate like now. With resources becoming even scarcer, the industry will face rising costs from labor to materials and energy. But if the fashion industry successfully addresses those issues, the world economy will gain $182 billion annually, according to the same report.

Why companies overproduce clothes?


First of all, there is a growing demand for clothing. Not only has the Earth’s population increased, but the shopping urge has taken on a quasi-addictive quality. In the era of fashion bloggers and Instagram celebrities, being seen in the same outfit twice is enough to be banned by the fashion police.

Second, fast fashion system distorts our sense of value. Low-price and low-quality clothes have also low value to customers and are considered disposable. Why bother to invest in apparel emotionally and monetarily if there is a continuous supply of fresh and cute clothes?

But even with such a big demand for new clothes, there is still a forecasting error, a risk every business seems to accept. If a company underestimates the demand, it may lose profit. Given how cheap production is, especially in Asia, a lot of apparel brands prefer to overestimate future sales.

Even with a reliable forecasting system, customers’ tastes are changing unpredictably and at a space speed. That accelerated fashion cycles is as well. Traditional fashion is officially broken up into seasons: spring/summer lines debut on runways in early fall, and autumn/winter collections debut in February. There is plenty of time between the introduction of new styles on catwalks and their arrival on store shelves. Brands must assess the demand so they can manufacture the right number of garments. With fast fashion, it’s all different now. Once a brand spots a new trend, it can deploy hyper-rapid design and supply chain systems to bring the trend to market as quickly as possible. Fast fashion labels may issue as many as 52 weekly “micro-seasons” per year. Topshop, for example, introduces ~400 styles per week on its website.

And last but not least, unit cost is also a reason to produce large batches. The bigger the order, the smaller the price per item. For fast fashion, it is often crucial. The industry typically places high-volume orders well in advance, but supply too often exceeds actual demand. The consequence: large quantities of clothing are heavily discounted. Many shoppers now anticipate those markdowns, which in turn effectively invites them to over-consume. This is a vicious cycle: an increase in the number of clothes being produced, sold and by extension, the amount of clothing being dumped.


What brands do with the deadstock?

  • They sell through discounts and outlets.
    Three-thirds of apparel purchases are now made at discounted prices. Some traditional retailers now have more discount outlets than full-priced stores. But even the the thrill of discounted shopping can never ensure all products are sold.
  • Sell in bulk into non-competing markets.
    For example, European brands often re-label their deadstock and sell to Australia.
  • Donate to charities.
    This may sound good on paper, but in reality, donating and dumping unsold clothes to lower-income countries can have a negative impact on their local economies and communities. Besides, demand for such charities is falling, partly because the low quality of donated products from fast-fashion retailers.
  • Destroy (though almost never admit).
    Clothes are either shredded and recycled or incinerated. The public can only rely on rumours about how unsold or damaged clothes goods are destroyed.

The battle for brands to cope with unsold inventory isn't as straightforward as it seems. Large-scale recycling is not yet up to scratch and brands and retailers strive to protect their highly-prized intellectual property and brand image.

If you have something to add to this report, feel free to contact us.

Sources & Future Reading:


Pulse of the Fashion Industry by Global Fashion Agenda and Boston Consulting Group

The State of Fashion by Business of Fashion and McKinsey Company

A new of textile economy by the Ellen MacArthur Foundation

Fashion at the crossroads by Greenpeace

The True Cost documentary

Burning deadstock? Sadly, 'Waste is nothing new in fashion'

Seven Sustainable Priorities for Fashion Industry Leaders by Global Fashion Agenda

The Sexy Off-Price Sector Has a Big Problem by eMarketer Retail

Takeaways From Future of Fashion Sustainability Panel

Overproduction: Taboo in Fashion

Oxfam Research


Authors: ShareCloth is a fashion tech startup that provides solutions for on-demand apparel production. On the manufacturing side, it helps to optimize unpredictable demand and minimize overproduction, and on the retail side, to reduce returns and increase customer loyalty.

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