Fast Fashion: The Paradox of Rationality

While rationality in consumer behaviour has been an increasingly popular study in economics, with consumers looking out to maximise utility given their expenditures on commodities; we shall look closely and critically at this apparent rational behaviour via the industry of fast fashion. After all, it is important to know how rational the rational consumer behaviour is.

The practice of low cost mass production of frequently refreshed clothing lines, what we know today as fast fashion has gained immense popularity. With apparels and fashion accessories available at considerably lower costs, the concept of retail therapy has gained impetus. Indulgence in spontaneous, quick, influenced and short term shopping has seen considerable growth over more than a decade. The rapid turnover of low cost garments is clearly reflected in the revenues of companies like Zara, H&M, etc. which have been pioneers of fast fashion. Starting off as a single retail store in around 1975 in Spain, fast fashion fetched this consumer brand (Zara) such profits in the 1984 that the brand has been expanding ever since then. As of 2010, it was said to have 5000 stores. In fiscal year 2014, Zara netted $19.7 billion while H&M growing around equally strong with $20.2 billion in sales that year.

According to data procured from “Fashion Industry Statistics India”, the fashion industry market share is 13.5% and the fashion industry market value stands at 42.24 billion dollars. The Unemployment and GDP per capita (PPS) is 7% and 1,586 Dollar respectively. Data from the Fashion Industry Statistics India also reveals that the Indian textile industry is estimated around 108 billion dollar and expected to reach 223 billion dollar by 2021. The industry employs over 45 million people directly to 60 million people indirectly. The Indian Textile Industry contributes approximately 5% to India’s gross domestic product (GDP), and 14% to overall Index of Industrial Production (IIP). The textile industry is also one of the largest contributors to India’s export with approximately 13.5 % of total export amounting 42.24 billion dollars.

While MNCs like Zara, H&M, Benetton, Forever21, etc. have grown significantly in terms of sales growth/per square foot sales, Indian companies like the Arvind group, Madhura Fashion, Raymond Apparel, Trent Retail, Reliance Retail and Future Group have also expanded their horizons by launching their own fashion labels.

Few statistics (from Fashion Industry Statistics India), demonstrating growth in the industry are as follows:

fast fashion 1

Despite all the growth in the industry, the rationality behind this growth is a questionable affair that we will be looking at closely. To examine this rationality, we consider multiple economic parameters of human behaviour. Two of these aspects of human behaviour are with respect to the idea behind Behavioural Economics and the Bandwagon Effect. The huge social costs- environmental and human that have been the consequences of fast fashion falls among our primary concerns. We shall get into these details by first looking closely into the evolution and development of the fast fashion industry.

Till around two centuries ago (1800s), fashion was more of a luxurious affair. It was slow to evolve as the industry was categorised as opulent and thus had limited demand. The process of developing fashion commodities was essentially ‘producing for self’ back then.

With the onset of industrial revolution came the technological advancements in the fashion industry. With the advent of new technology like the sewing machine, production of clothes not just became easier but also cheaper. This further marked the emergence of sweatshops with safety issues, which we shall look into with further depth eventually. While there were advancements in the industry, fashion still was a distinguished industry until the 1960s and 70s. It was a form of personal expression and replication of one’s personality, ideas, creativity and choices. Fashion could yet, until then be characterised as idiosyncratic.

The major change and the significant presence of fast fashion came about in the 1990s and 2000s. There was rapid replicated production of designs from top fashion houses at a significantly low cost. This low cost replication of the luxurious commodities earned a great deal of fascination from those belonging to the middle income category as they could now keep up with the fad.

The overall expenditure on fashion commodities rose significantly. Yet it formed a very small part of the percentage of income an individual spent on this category of commodities. As opposed to earlier, fashion no longer exhibited exclusivity and was a product of luxury. It increasingly became part of an individual’s lifestyle. The soul reason for this has been the production of these commodities at an absolute minimal cost.

fast fashion 2

This increased and typically non-essential spending makes us question the concept of rational consumer behaviour. This scenario can be explained by bringing to light the idea of behavioural economics. Behavioural economics makes us question the idea of consumer rationality as being a mere mirage. This study of human behaviour draws on psychology and economics to explore why people sometimes make irrational decisions, and why and how their behaviour does not follow the predictions of economic models (Investopedia). The fashion houses like those of Zara, H&M, Topshop, Primark, etc. have been immensely successful in luring individuals into buying fashion commodities even when it might be not be required (important aspect considered in evaluating rational consumer behaviour) during that point in time.

“Australians are the world’s second largest consumers of fashion. On average, they consume 27kgs of new clothing every year.”

-The Green Hub

Fast fashion brands put out new collections every week or month to make it seem like your wardrobe is all off trend. This is the reason you sit and stare at your full wardrobe thinking you have nothing to wear. Discount offers, seasonal sales, low cost products, etc. have been increasingly successful techniques in attracting a higher consumer base. Consider a hypothetical situation where in one of the top fast fashion brand replicates a Chanel Exclusive Spring Collection garment and puts it at their outlet with a discount tag attached to it. Under circumstances like this, it is but natural for an individual to fall into the producer’s trap by purchasing the commodity not because it was a requirement then but merely because it was a top fashion house replication available at a cheaper rate, carrying a delusional brand value with it.

So now the question here is, is Fast Fashion rational?

fast fashion main

With the advent of fast fashion, the fashion industry has experienced a loss of idiosyncratic characteristic and can no longer be seen solely as a way of personal expression. This loss is very evident when we bring focus on the bandwagon effect in the fashion industry. This effect can be explained as a psychological phenomenon in which people tend to do something mainly because some other people are doing it, regardless of their own views, which they generally tend to place at the side. This phenomenon of the bandwagon effect and the concept of societal upkeep, yet again, makes us ask the question of rationality in Fast Fashion!

fast fashion 4

The advent of fast fashion, as stated earlier, also bought about the emergence of sweatshops. This indeed brought with it a huge amount of social cost in terms of environmental and human cost. Low cost final products have increasingly been a result of low cost and low quality raw materials and deprived working conditions, which have proven to be detrimental for a society with a huge social cost. The detrimental consequence of pursuing the aim of minimal cost has been the provision of absolute minimal and very poor working conditions accompanied with nominal wages. This has been supplemented by low wages, leading to bear subsistence. Evidences marking the major damage that this industry has caused to its workers due to poor working conditions can be seen in incidences like that in 2013 in Bangladesh when the eight-story Rana Plaza building collapsed. This mishap took the lives of 1129 workers. Alongside dangerous working conditions, the workers in this industry are nominally remunerated. A top corporate CEO earns as much in a year as 10,000 garment workers earn in Bangladesh (The Green Hub).

Thus with all these issues of modified consumer behaviour, sustainability, social costs and ethical morality on the grounds of intellectual property, it is imperative to ask the question-

Is the Fashion Industry then an oblivious state of irrationality?

-Shrushti Dhoot (SYBA)

Sources for further reading:

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