Does Fast Fashion cause buildings to fall down?

I’ve recently been cursed by a bevy of journalists determined to show that Fast Fashion is at the heart of recent factory catastrophes. They’re not – and this latest journo fad is missing a serious forest of abusive buyer behaviour for a handful of politically correct trees.

At first sight, there’s a lot to be said for scapegoating Fast Fashion: recent disasters at Ali Enterprises in Karachi, Tazreen and Rana Plaza in Dhaka and the second minor emergency at Wing Star in Phnom Penh all shared managers denying there was a problem, because they were desperate to get goods out. They knew there’d be serious financial penalties if those garments or shoes didn’t get out on time.

The problem is that clothing and shoe factories have been labouring under the threat of savage penalties for late delivery for at least a century before the term Fast Fashion was invented. The threat has probably got greater lately, I think that’s got a lot to do with the move of production to poorer countries – but it’s got nothing to do with Fast Fashion.

We need first to make a distinction that might strike many readers as academic, but is fundamental to how retailing works. Confusing two different things leads observers to ignore some real scandals about our industry, and it’s important to be clear on how garments are made:

-          Fast Fashion is an approach to selling clothing that’s developed in the past few years, and is best championed by Spain’s Inditex. That approach dispenses with the old system of two seasons a year, in which ranges were transformed, and replaces it by continuous exchanges in a retailer’s assortment of clothes – often involving a garment arriving in stores a week or two after the idea occurred to the designer - or often even faster.

-          Just in Time is a less recent term invented to describe a philosophy retailers have had as long as anyone can remember. Goods need to arrive at a retailer’s warehouse by a predetermined time: time, the purchase order usually says in the small print “is of the essence of the contract”. There are a few nasty wrinkles about this in the garment industry:

o   Many cross-border orders are paid for by Letters of Credit, and delays in shipment automatically create wholly disproportionate delays in receiving payment. We’ve calculated that in many developing country garment makers, a week’s delay in receiving payment can cost the factory as much as the entire wage bill for assembling the order

o    If a supermarket cancels its order from a farmer for, say, strawberries a farmer can sell those strawberries somewhere else. If a purchase order’s insistence on timely delivery lets a buyer cancel an order for a blouse designed for a specific brand or store, the factory will find selling it elsewhere very difficult indeed

o   So buyer cancellations are a spectacularly damaging weapon. And buyers’ likelihood to use it varies with the buying company’s financial health at the time. If the brand’s sales are soaring, buyers will ignore their right to cancel: if they’re looking poor, buyers will seize any opportunity (including how strictly they interpret quality reports) to cut their exposure.

Now if you wanted to describe the worst place on earth to make clothes under the Fast Fashion philosophy, you’d describe conditions in Bangladesh. Unreliable power supply, raw materials largely imported and chaotic transport between the port and the factories, corrupt officials demanding their cut for letting goods through, and constant political unrest forcing factories to suspend production.

There’s a more subtle reason Bangladesh – and most of the rest of Asia - isn’t a good place for Fast Fashion. When Inditex or American Apparel want a garment on their shelves in a couple of weeks’ time, they want the profit from selling that garment – not the penalties they extract from vendors for delivering late. So if Inditex gets that garment made by a supplier, it vets the supplier to make sure its internal organisation is capable of delivering on time, every time. In turn, a good Fast Fashion supplier is expected to be tough with the buyer’s own management: the supplier needs to be robust in demanding specs on time, and in making it clear to any new client management what the consequences are  of late, or sloppy, briefing.

That’s not so important for less time-sensitive garments, so generally factories used for fast fashion are a lot more likely to stand up to buyers if they think buyers aren’t doing their bit in making sure garments really do get out of the factory in time to meet deadlines. Factories making less time-sensitive garments are typically more tolerant of buyer messing about. Generally, Fast Fashion factories are close to the buyer: in LA or New York (or London, Paris or Prato near Florence), or at least in Central America, Turkey or Romania. Places a buyer can get to in a brief cab ride – or at least on a visa-free plane trip taking a few hours with no debilitating time zone changes.

In our experience, though, buyers have been demanding timely delivery as long as there have been buyers. But over the past decade or so, several things have changed.

•           Above all, buyers have grown more detached from factories. When Clothesource started up twenty years ago, most retail and brand buyers had learned their business in an environment where buyers and manufacturers were on the phone to each other several times a day. Now it’s an impersonal email – or even more impersonal form on an SAP system

•         Buyers have more garments to buy. All that expensive “total product visibility” IT was justified on the basis of greater buyer productivity – management-speak for fewer buyers controlling more products
•           Buyers just know less about manufacture. Most degrees in fashion studies in England these days don’t even include a module on manufacturing – except for the few days one of the Clothesource team comes and gives a few lectures on sourcing.
•    And factories know less about buyers. Twenty years ago, everyone on a British assembly line knew lots about Marks & Spencer, Next or Top Shop because they were buying clothes from them most Saturdays. With that came an almost intuitive understanding throughout the factory of what M&S (or Gap, or Etam) wanted

So buyers just don’t understand any more how messing about with specifications can kill the likelihood of a garment getting out of a factory on time.

Now Tazreen, Ali Enterprises and the Rana Plaza factories weren’t making Fast Fashion garments: they were being made in far more suitable factories, probably a lot closer to the buyers’ head offices. But they were under huge pressure to deliver on time: and in Bangladesh that pressure to deliver had almost certainly being cranked up by the recent waves of political unrest, while endless unscheduled power outages in Pakistan can’t have helped Ali Enterprises to keep to its schedules.

Obviously it doesn’t help the victims of the South Asian catastrophes to be told they were feeling the pain of a deadline-driven culture, rather than Fast Fashion. But it should help outsiders trying to think what needs to be done to avoid the risk of more such victims.

It’s always tempting in life to believe our pet hobby horse explains more than it does. To an old-fashioned Marxist, everything was the result of capitalist exploitation of workers. But most of us know the  world’s a lot more complicated than that – and since the fall of the Berlin Wall in 1989, we’ve seen that the opposite hobby horse (“free markets solve everything”) isn’t quite a perfect explanation either.

Fast Fashion has become many people’s hobby horse. The argument goes that retailers and brands have become far too clever at inventing ways to persuade customers they “need” more clothes when it’s impossible to find room in the closet for another sock. Everyone knows we’re all more likely to buy things the less time elapses between deciding we’d like it and the moment we can grab it – and Fast Fashion is the modern garment industry’s version of the old Coca Cola philosophy to ensure Coke was always “within an arm’s reach of desire” . As a result, goes the argument, the planet’s getting polluted with too many thrown away clothes, developing countries are getting  especially polluted with the effluent from textile mills and megacities in developing countries like Bangladesh are seeing the damage in victims of fires and  building collapses.

There’s a lot in that: and there’s no doubt in my mind that pressure to deliver in time was a key factor in the South Asian tragedies – both in moving production to less safe factories, and in frightened management forcing production to continue when it was unsafe. But blaming Fast Fashion (or even inventing a world where Fast Fashion didn’t exist) won’t stop that pressure.

Pressure to deliver on time has always been with us. What today’s garment industry has to do is to de-fang it: to make the pressure continue to stimulate businesspeople to provide jobs, but to stop it taking lives. That means single-mindedly banning unauthorised subcontracting – and it means, in my view, that the “nicer” buying companies (like H&M) need to be as brutally intolerant of non-compliance as Walmart has now become.

But it also means buyers have to limit the garments allocated to countries (like Bangladesh, Burma or Haiti obviously – but also Pakistan) with really awful infrastructure to those clothes that can tolerate production delays. I’d argue that in the world’s 49 poorest countries (which for the garment trade means Bangladesh, Burma, Haiti, Cambodia and Laos) buyers should modify Letter of Credit terms to speed up payment.

But above all, it means buying companies need to be as stringent in the training they give their own staff as the training they pontificate about in the factories supplying them, and as demanding of leadership skills in their own management as in overseas factories. Buyers have to learn the awful consequences of unrealistic lead-times, bad personal planning and endless indecision.

Blaming Fast Fashion for today’s problems in apparel sourcing is as pointless as an Englishman blaming the rain for being miserable: the source of dissatisfaction isn’t going to go away, and there are simple steps to take anyway.

Factory managers will keep work going on in an unsafe factory as long as they think their business will go bankrupt if they don’t. And while that’s a morally appalling decision to take, and nothing should distract us from that manager’s responsibility for any ensuing carnage, it’s also bad buying for a western retailer or brand to have let the factory get into that situation. Better buildings will reduce the horrors eventually – but more meticulous discipline is needed from buyers just as much as from factory managers to eliminate them altogether