Why Do Brands Talk About Sustainability but Continue to Intentionally Overproduce?
Photo: The Sustainable Fashion Forum
At the heart of fashion’s most pressing problems, like biodiversity loss, chemical usage, pollution, and exploitative labor practices, are two interlinked factors: overproduction and overconsumption.
While there are estimates around the total volume of garments produced annually, pinning down an exact figure is a challenge. This difficulty comes from the complexity and scale of the global fashion industry, which spans from small-scale artisans to large multinational corporations, and from the lack of clear, consistent data about production volumes.
According to Fashion Revolution’s 2023 Fashion Transparency Index, a staggering 88% of major fashion brands do not disclose their annual production volumes, masking the true extent of overproduction. Current estimates indicate that the annual production of garments ranges between 80 to 150 billion. Of this, an estimated 15 to 45 billion garments are never actually sold.
The sheer range of the estimated volume is telling, underscoring a profound lack of transparency and understanding within the industry. The inability to pinpoint a definitive production number illustrates just how limited our grasp is on the actual scale and the subsequent repercussions of global clothing production. However, regardless of the exact figure—be it 80 billion or 150 billion garments produced—one undeniable truth is clear: our current production and consumption rates drastically exceed what our planet can sustain.
In the Atacama Desert in Chile, there’s a stark testament to our global textile waste problem. An expansive field of discarded clothing stretches across the desert, so large that it can be seen from space. As reported by Agence France-Presse in 2021, the clothes in the mountain are mainly manufactured in China or Bangladesh and then sent to stores in the U.S., Europe, and Asia. The garments that aren’t sold are dumped in the Atacama.
As of 2021, it was estimated that around 59,000 tons of clothes arrive in the region each year, some of which are bought by clothing merchants, some taken by clothing smugglers to resell in parts of Latin America, leaving an estimated 39,000 tons of discarded clothing added to the mountain a year. But this is merely a glimpse into a much broader global concern.
The Kantamanto Market in Accra, Ghana, paints a similar picture. One of the largest second-hand garment markets in West Africa, Kantamanto, is faced with a myriad of challenges. Each week, an influx of about 15 million garments flood into the country, with the majority ending up at Kantamanto. Nearly 40% of these imports are destined to become waste, according to the US-based OR Foundation.
However, the global issue of textile waste isn’t just about disposal or even environmental sustainability. It's also about the socioeconomic impact and cultural dynamics introduced when second-hand garments inundate markets across different countries.
In Uganda, this broader concern about used clothing recently culminated in a bold policy decision when President Yoweri Museveni announced a ban on the importation of used garments, aiming to protect and cultivate Uganda's native textile industry. Backing Museveni's claim is data from Oxfam, which, in 2015, indicated that a whopping 70% of garments donated in Europe and the US end up in Africa.
As brands embark on their sustainability journey and integrate responsible practices into their existing operations, discussions tend to focus, among other things, on switching from virgin polyester to recycled polyester and implementing circular systems within their direct control, like resale and take-back programs. With heightened consumer awareness and urgent environmental issues at our doorstep, one can't help but ask: Shouldn't the first step be to produce less? Or at least produce according to actual consumer demand?
Predicting the Unpredictable
For decades, the fashion industry has relied on a production forecasting model that “predicts” future consumer demand based on a combination of past trends, market research, economic indicators, competitive analysis, cultural influences, and emerging social media trends. Essentially, brands guesstimate how much to produce. When these projections don't align with actual demand, surplus items are heavily discounted. Items not sold during these sales are moved to outlet stores, sold in warehouse sales, or sold in bulk overseas (where they’re still likely to become waste). Some are stored for future seasons, while others might be discounted for employees, given to charity, or funneled into secondhand channels. However, if no solution is found, many end up incinerated or in landfills.
Given the growing emphasis on sustainability and the detrimental impact of textile waste, why do brands continue to overproduce?
Economy of Scale:
The term ‘economy of scale’ refers to the cost advantages that businesses receive due to their scale of operation, with cost per unit of output generally decreasing as fixed costs are spread out over more units of output. In simpler terms, the more you produce, the cheaper each unit becomes, providing higher profit margins. Even with the cost savings from economies of scale, unsold inventory can be a financial burden because it ties up capital and incurs additional holding costs. However, the rationale many brands use is that the reduced cost per unit means that each item sold at full price has a higher profit margin.
Items that end up in clearance sales, although sold at smaller profit margins, can still be profitable because of the initial savings from large-scale production. Still, it's expected that some inventory will remain unsold, potentially being written off or discarded. Brands often factor this into their financial strategies, believing that the profits from full-priced or discounted sales outweigh the losses from the unsold stock.
Every Thursday, Lululemon updates their 'We Made Too Much' section with a variety of discounted best-selling activewear. Illustration: The Sustainable Fashion Forum / Photo: Lululemon
Global Supply Chains:
Fashion’s global supply chain spans multiple countries and continents, which means that a garment might have its fabric sourced from one country, be manufactured in a second, and then sold in a third or even multiple countries.
One of the primary implications of a global supply chain is the "lead time," or the time taken from placing an order to receiving the finished product. With processes spread across different countries, each with its own logistics, customs clearances, and transportation times, lead times are naturally extended. As a result, brands often have to commit to production decisions well before the selling season begins, as any miscommunication or delay in one step can have cascading effects.
Given the extended lead times, brands have to predict what consumers will want to buy months in advance. Predicting fashion trends and consumer demand so far ahead is challenging and often involves a degree of guesswork. As a result, there's a higher likelihood of mismatches between what is produced and what consumers eventually want. Once production orders are placed, it becomes challenging to adjust them. If a certain style becomes unexpectedly popular, by the time a brand recognizes this and tries to produce more, the trend might have shifted, given the time it takes for production in a global supply chain. Global supply chains are also vulnerable to a myriad of external factors like geopolitical events, tariffs and trade wars, natural disasters, and pandemics. These unpredictable events can disrupt the chain, leading to further misalignments in supply and demand.
Demand Uncertainty:
Predicting consumer demand is hard. While brands have become masters at selling and influencing our purchasing decisions, they can’t always determine what will be successful. Overproduction serves as a buffer, ensuring brands aren't caught off guard if a product suddenly becomes popular; the brand is ready to cater to the surge in demand.
While overproduction has its costs (holding inventory, potential wastage, or having to discount items), brands often weigh this against the potential lost revenue and reputational risk of stockouts. Overproduction, to an extent, provides brands flexibility in how they manage distribution, marketing, and sales. They can ramp up promotions if they see products gaining traction or offer incentives to clear stock if some items aren't selling as well.
Fear of Stockouts, Visual Merchandising, and In-Store Presentations
Brands will often overproduce with the goal of creating a visually appealing in-store experience. A well-stocked store not only offers a sense of abundance but communicates variety and choice to the customer. Brands fear sparse or understocked shelves might inadvertently signal to shoppers that the brand lacks diversity or isn’t in demand. By having a full range of sizes, colors, and styles readily available, brands ensure that the store remains attractive. The extra stock also gives brands flexibility in visual merchandising strategies, like creating window displays and dressing in-store mannequins.
However, with the growth of online shopping, the dynamics of overproduction have evolved. Online stores don’t need to maintain the same kind of visual abundance as physical stores. But, they do need to ensure product availability across sizes and colors to avoid disappointing potential buyers. Large inventories can also allow for flash sales, promotional offers, and swift shipping, all of which can enhance the online shopping experience.
The Fast Fashion Model:
With the growth of fast fashion, brands have conditioned consumers to expect new designs almost weekly. To meet these demands and avoid stock shortages, brands have ramped up production, producing more and more clothing. This constant influx of new trends has not only shaped consumer shopping habits but has also exacerbated the issue of overproduction. Given the short lifespan of fashion trends, brands have a limited window to sell products at full price. If they misjudge demand, they're left with significant unsold stock. Still, many brands justify this surplus with the assumption that unsold items can be offloaded in anticipated end-of-season sales, where consumers look for deals.
The Tug of War Between Consumer Expectations and Sustainable Production
After a TikTok video went viral claiming Coach had intentionally destroyed unsold inventory by "slashing" unwanted items for tax benefits, the internet was abuzz with shock and criticism, many targeting Coach and the broader industry for its wasteful practices.
No doubt, destroying unsold inventory is wasteful and environmentally harmful; however, while it's easy to point fingers at the industry, it’s important for consumers to recognize and address their own consumption habits.
More and more, consumers are expecting brands to be environmentally and socially responsible. Yet, the same consumers also want brands to stay on top of the latest trends, ensure constant availability, and quickly adapt to changing tastes. This dichotomy places brands in a challenging position: On the one hand, brands are tasked with meeting consumers’ demands. Conversely, brands are simultaneously faced with scrutiny over the sustainability (or lack thereof) of their operations.
The complex interplay between overproduction and overconsumption mirrors the age-old "chicken-and-egg" conundrum. While there's much debate over whether overproduction drives overconsumption or vice versa, what remains clear is that both are intrinsically linked, each fueling the other in a cycle that continues to exacerbate environmental degradation and economic and social disparities.
Old ways won’t open new doors.
The fashion industry has long operated according to entrenched systems and processes. Brands that have seen success often trust their time-tested methods because they've consistently yielded positive results. This trust in "what has always worked" or “how it's always been” can make it difficult to convince stakeholders of the need for change. After all, it's one thing to recognize the need for a new direction and quite another to mobilize an entire organization, with its history and established ways, to take that new direction.
Over time, brands have established specific operational modalities — from material sourcing to production scheduling to sales strategies. Once these processes become routine, they are often resistant to change, especially if brands have invested heavily in infrastructure, technology, or systems that support their traditional way of operating. Shifting to new methods might require additional investments, and the sunk costs in old systems can deter this.
But, as the adage goes, “old ways won’t open new doors.” In a landscape shaped by shifting consumer expectations, technological innovations, and environmental imperatives, brands' adaptive, forward-thinking approach isn't just commendable; it's essential.
However, the mantle of change doesn't solely rest on the brands. Consumer demand undeniably drives production. Thus, consumers, wielding substantial influence, play a key role in shaping demand dynamics.
Photo: The Sustainable Fashion Forum
Brands must take responsibility for their production choices, but change in the industry doesn't rest on their shoulders alone. Consumers have a powerful influence; their purchasing decisions can significantly shape production trends. For a truly sustainable shift in fashion, consumers must not only demand ethical practices but also reflect these values in their buying behaviors.
This doesn't detract or absolve governments and brands of their roles in steering consumerism and sustainability. All stakeholders – from brands to consumers to regulators – need to collaboratively address the challenges of overproduction and overconsumption. It's not about deflecting accountability but understanding that the roadmap to addressing the tangled web of overproduction and overconsumption demands this collective ethos. By fostering synergy, brands, consumers, and governments can co-create a more responsible and sustainable fashion landscape.
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