stay connected with our monthly download
We’ll drop into your inbox no more than once per month with the latest news, features, tutorials and more.
The biggest Fashion Industry Challenges in 2023
The fashion industry has a large environmental impact, creating carbon emissions, pollution, waste, and water usage. Recently, several challenges within the industry have garnered significant attention. These challenges include ensuring secure working conditions, ethical treatment of working, and fair wages across the global supply chain and they are likely to persist into 2024.
As the fashion industry navigates through new technology, it encounters both opportunities for efficiency and innovation, as well as challenges. Brands need to adjust to developing consumer behaviors, utilising technology for sustainable production.
Technology can also help improve supply chain management. Brands should also leverage technology to enhance customer experiences. To pave the way toward an ethical and environmentally responsible future, the fashion industry must embrace sustainable practices. It needs to foster innovation and promote transparency.
In this blog, we will explore the top eight challenges that the fashion industry is currently facing in 2023.
Greenwashing, Sustainability and Textile Waste
The fashion industry faces interconnected challenges of sustainability, greenwashing, and textile waste.
Greenwashing worsens the sustainability challenge in fashion by misleading consumers. False or exaggerated claims can deceive buyers into thinking they are making sustainable choices when in reality, they are unintentionally contributing to environmental harm.
Unsustainable production and consumption practices lead to textile waste, particularly within fast fashion. Low-cost clothing in fast fashion leads to shorter product lifecycles and a significant increase in waste generation.
Greenwashing
Businesses in the fashion industry are under increasing scrutiny from consumers, regulators, and other stakeholders regarding their sustainability claims. The sector is grappling with its negative environmental and social effects. To prevent “greenwashing,” it is crucial for businesses to show tangible and authentic changes while meeting the growing regulatory obligations.
Sustainability
As reported by the UN, the fashion industry has a significant negative impact on the environment, contributing to 8-10% of global carbon emissions. To overcome this, sustainable materials that are recyclable, regenerated, and responsibly sourced should be utilised.
A survey conducted found that two-thirds of customers worldwide will pay more for sustainable items. This changing consumer behaviour presents both obstacles and prospects for clothing merchants, highlighting the importance of adopting sustainable practices and providing eco-friendly design options.
In 2023, fashion brands should consider the following fashion trends:
- Quality over quantity – Consumers now prioritise high-quality garments over purchasing large quantities of lower-quality items.
- Enhanced transparency in supply chains – Consumers want to understand the origin of their clothing. It is crucial for manufacturers to prioritise fair labour practices and safe working conditions.
- Virtual fitting technologies – Virtual fitting rooms allow customers to try on clothes digitally and find the right fit with no physical try-on. This helps reduce the environmental impact of shipping and returns.
- Embracing innovative sustainable materials: Brands should prioritise materials that have a lower environmental impact, require fewer resources, and reduce reliance on traditional, resource-intensive fabrics.
Textile Waste
The Ellen McArthur Foundation reports that the fashion industry produces 40 million tons of textile waste annually, a significant portion of which is unnecessary. In 2020, less than 1% of cotton materials were recycled, despite cotton being recyclable.
To address this issue and reduce waste, the fashion industry must adopt closed-loop approaches that enable continuous circulation of clothing. Achieving this goal requires improvements in garments design, focusing not only on recyclability but also on facilitating collection and sorting processes. One way to combat textile waste is having a tech pack created that has all the correct informnation in it.
Product Lifetime Management.
Over the past two decades, Product Life Management (PLM) has become increasingly important. It not only enhances supply chain efficiency, it also drives the ultimate success of products in the market.
Looking ahead, cloud-based PLM digital solutions leveraging artificial intelligence, machine learning, and the Internet of Things (IoT) are expected to have a significant impact on product innovation and optimisation. These technologies are crucial in navigating ongoing economic challenges.
PLM solutions are utilised effectively for various purposes:
- Improving the design, development and management of new product launches and engineering modifications to speed up innovation and time to market.
- Developing a holistic product development strategy by integrating data and processes seamlessly with supply chain systems.
- Ensuring product compliance and tracking modifications throughout the product’s lifecycle to meet the development of international standards.
With a range of PLM solutions available, it’s important to learn how to choose the right one for your business.
Fit Issues and Changing Consumer Desires.
Fit and style are key factors contributing to the high return rates in the fashion industry. Recent surveys indicate that customers increasingly prefer gender-fluid fashion and a gender-neutral fit. To stay relevant, brands must adapt and make necessary adjustments to cater to the needs of this clientele.
Fit Issues
Return rates have skyrocketed in recent years, with the National Retail Federation revealing that the average return rate now stands at 20.8%.
This is a staggering 96% increase since 2020. The primary culprit behind returns is poor fit or style, accounting for up to 70% of all returned items. In the online fashion realm, PwC estimates that 30-40% of purchases end up being returned.
To combat this challenge, fashion designers can leverage 3D technology. This can swiftly identify fit issues before physically producing samples. Miscommunication with manufacturers can also adversely affect the fit of a garment.
Changing Consumer Desires
The industry’s resurgence is expected to be driven by Millennial and Generation Z customers, who prioritise fashion as one of their top three spending sectors.
However, captivating these customers requires a dedication to innovation. Findings from Context Consulting reveal that 50% of consumers expressed a preference for greater utilisation of technology in retail. This is as opposed to focusing solely on lower pricing.
As the popularity of fashion NFTs and virtual worlds continues to grow, companies are now exploring new avenues. Blockchain and digital fashion are just a couple of examples of this. It is important for merchants to note this. As much as 71% of consumers express a desire to spend more with businesses that integrate augmented reality into their customer experience.
With shifting consumer attitudes towards gender identity and expression, the demand for gender-fluid apparel is on the rise. As the lines between menswear and womenswear become more blurred, it becomes imperative for companies and retailers to rethink their approaches to marketing, product design, and shopping experiences.
Inflation and Raw Materials Prices
The influence on the global economy is already clear, with the reported 6.1% GDP growth in 2021 anticipated to decrease to less than 3% in 2022 and approximately 2.5% in 2023. The level of uncertainty is high, showing the ongoing instability of the global economy.
Inflation
In response to inflation and macroeconomic instability, the market is expected to divide into two segments. The affluent class is likely to maintain its wealth and spending patterns, while the rest of the population is expected to reduce their purchases. With this comes a shift towards secondary markets, outlets, and discount options, resulting in a decline in the primary luxury market.
Raw Materials Prices
The fashion industry continues to grapple with ongoing transportation and raw material price crises. The Harpex index, which measures the cost of container ship charters, remains approximately 100% higher than its January 2020 levels.
In 2022, the Russian invasion of Ukraine triggered significant price fluctuations. Synthetic fibres now make up around two-thirds of global textile fibre production, having gained dominance since the cotton crisis of 2010-2011. While prices have gradually decreased once more, most of them have returned to pre-crisis levels.
Supply Chain Bottlenecks
In 2023, the fashion industry’s supply chain operations will face ongoing disruptions of various factors. These include geopolitical conflicts, a deflationary environment, inflationary pressures, and climate change-related extreme weather events.
These disruptions can affect product access, and transportation, reduce container availability and ocean freight capacity, cause port delays, and lead to price increases, amongst other issues. Effectively managing your business’s response to these situations presents a pivotal opportunity. The three key components you should establish are:
- Agility – Ensuring your supply chain is responsive and flexible enables you to navigate unexpected events, effectively manage risks and disruptions and achieve efficiency and profitability.
- Capability – Developing the ability to organise your supply chain, proactively address potential issues and capitalise on opportunities.
- End-to-end visibility – Establishing real-time communication with your network of supply chain partners, getting a comprehensive overview of important real-time indicators, and extending your supply chain beyond company boundaries are likely to be vital. These objectives can be achieved through the use of digital capabilities, with the ultimate aim of enhancing collaboration throughout the entire supply chain ecosystem.
Lack of Qualified Employees
The continuous struggle to find skilled personnel, a persistent challenge for years, will remain a prominent issue in the upcoming year. To attract and keep talented individuals, the fashion industry needs to address several factors, such as increasing the minimum wage, promoting diversity in hiring practices, and eliminating unpaid internships.
Time to Market
Time-to-market refers to the speed at which a fashion product moves from the initial concept to becoming available for sale.
The development process of a new fashion product involves multiple stages.
Designers, pattern makers, and manufacturers must coordinate and allocate time for each step. Any delays or inefficiencies during these stages can affect the overall time-to-market. Take, for instance, the creation of technical sketches, which can be time-consuming. However, you can optimise this process by utilising an online vector editor like Repsketch. By leveraging such tools, you can save valuable time and streamline your product development timeline.
Cyber Attack Resilience
As per IBM’s findings, the retails industry stands as the fourth most targeted sector, with an average breach incurring a cost of $3.28m. However, the financial repercussions extend beyond that, as losing customer trust can cause the loss of millions more.
To mitigate cyber risk, brands must actively manage data security throughout the entire value chain. They must ensure proper handling from data collection to disposal. When utilising a PLM system for fashion goods creation, it is crucial to prioritise the security of design data. It is advisable to assess the security standards adhered to by the new system. Easy accessibility to work files from any location is essential. Ensure data security with a comprehensive PLM system incorporating backup and encryption.
To overcome the obstacles faced, brands must embrace sustainability, transparency, technology, and talent attraction. By prioritising ethical practices, innovative materials, supply chain efficiency, and customer experiences, the industry can navigate these challenges and create a brighter future.
