- Sustainability tends to mean a price premium, with a downturn likely to test brands’ and consumers’ commitments.
- Pressure on the industry to operate more responsibly won’t go away, regardless of the economic climate.
- A downturn could push consumers to adopt more responsible shopping habits, boosting the secondhand market and encouraging a ‘buy less, but better’ mindset.
Prices are up, consumer confidence is down, and analysts are increasingly talking about when — not if — a recession will hit the economy.
The global economy‘s last major downturn in 2008 was a huge setback for the push to make fashion more sustainable, which at the time was in its infancy.
“There was so much conversation about climate change ... Everyone was jumping on the bandwagon, and there was so much momentum,” said retail veteran Julie Gilhart, who as then-fashion director at Barneys was overseeing the launch of the department store’s first organic collection.
“Once the recession hit, it hit hard, and the conversation of sustainability and responsible fashion just went away,” she said. “People were just trying to survive.”
Things are likely to be different this time around. Though a downturn will still test brands’ and consumers’ willingness to spend on sustainability initiatives and products, the context in which the industry is operating has changed dramatically.
Climate change and its impacts are increasingly visible and inescapable. The pandemic has helped elevate social issues in the cultural conversation. Regulators are intensifying their scrutiny of the fashion sector, and consumers are too well-versed in fashion’s negative impact for the conversation to dissipate entirely.
Below, BoF unpacks some of the trends that could emerge as a result of a looming recession, to both the benefit and detriment of fashion’s sustainability push.
Feeling the Squeeze
The big question for any brand looking to operate more responsibly during a downturn is whether consumers will still be willing to pay a premium for their products.
Better materials, lower-impact manufacturing and ensuring decent conditions and pay for garment workers all come at a cost. Brands with a focus on sustainability often operate at a contemporary price point, the market segment typically hardest hit during a recession. Even lower-cost retailers’ more socially responsible or climate-conscious offerings tend to come at a premium consumers may be less willing to pay when times are tough.
Roughly a third of 9,000 global consumers surveyed by research firm Kantar in June said the rising cost of living has already prompted them to change how they buy cosmetics — a market segment typically seen as relatively recession-proof. Where they previously sought out products with sustainable branding, the respondents said they’d switched to cheaper, conventional alternatives. A further 27 percent of people surveyed said they would probably make the same switch, even if they haven’t yet.
“When I think about price and how value-conscious consumers are, I think that sustainability has always found itself in a bit of a challenging place,” said Jason Mahendran, an investor at consumer-focused firm Active Partners, which counts outerwear brand Finisterre, womenswear brand The Fold and activewear label Tala among its fashion portfolio. “The reality was, sustainability was already targeting a more affluent consumer, because ... it is more expensive to produce things sustainably.”
That’s an undeniable headwind and it’s likely some spending is put on hold. But brands can’t simply abandon high-profile and public commitments to operate more sustainably. Brands that are able to maintain their efforts to operate more sustainably, communicate transparently about why they may need to make compromises and offer an accessible price point will have a particularly powerful proposition, experts say.