In hardly any other industry is the green transition as important and urgent as in the fashion industry. After all, according to estimates by the UN Environmental Programme (UNEP), it is responsible for 10% of global CO2 emissions – that is more than international aviation and shipping combined. But the necessary change has been put on hold in 2024. While awareness of sustainability and ethical production has seemingly increased, brands that place these values at the heart of their business model are facing growing challenges.
Several well-known sustainable fashion labels had to close their business in 2024. This has sparked a discussion about the future viability of business models that put sustainability and fair production first. Many industry experts are already talking about a "slow fashion recession". But what is behind this development? What factors have led to even established and popular sustainable brands getting into financial difficulties? And what does this mean for the future of sustainable fashion? Below we get to the bottom of these questions and analyze the complex challenges facing the industry.
The Death of Sustainable Brands
Some pioneer of sustainable fashion have announced their closure in recent months, shaking up the industry. The announcement of Mara Hoffman in May 2024 to close her eponymous label after 24 years. The New York designer had been completely committed to sustainable production since 2015 and was thus considered a role model for many up-and-coming labels. In an emotional statement on her website, Hoffman explained that despite all efforts, it had become increasingly difficult to implement the vision of sustainable fashion in an industry whose structures are not designed to prioritize the planet and its inhabitants. "It's no secret that their 'success' is still linked to damage, uncontrolled growth and exploitation in many areas," said the designer.
Mara Hoffman was followed by other well-known, sustainable brands such as ARQ, Elena Bridgers, Kit X and Sotela, who had to close their businesses in recent months. The reasons for this are varied, but what they all have in common is the difficulty of building a profitable business model that simultaneously meets the highest ethical and ecological standards.
The challenges for sustainable brands
To understand the current crisis, we need to look at the specific challenges facing sustainable fashion brands:
- Rising costs with constant price pressure
A key problem is the discrepancy between rising production costs and the ongoing price pressure in retail. Sustainable brands rely on high-quality, environmentally friendly materials and fair working conditions. This drives up costs while consumers continue to expect low prices from fast fashion Inflation in recent years has exacerbated this situation. While the costs of raw materials, energy and labor rose, many brands could not raise their prices to the same extent without losing customers. This led to a compression of profit margins that was no longer sustainable for many. - Difficulties in scaling
Sustainable production methods are often more labor-intensive and less easy to scale than conventional mass manufacturing. This makes it difficult for brands to grow and get volume discounts on material purchases and producers to reduce their costs. Many labels therefore remain trapped in a niche where they have a loyal fan base but do not reach critical mass to become truly profitable.
- Complex supply chains and limited resources
Sourcing sustainable materials and working with ethical producers often requires complex, global supply chains. It is an enormous challenge for small and medium-sized companies to manage these while ensuring the transparency that their customers expect. In addition, many sustainable Resources only available to a limited extent, as ecologically produced materials have so far been difficult to scale.
- distortion of competition through greenwashing
While real sustainable brands struggling with higher costs, many conventional fashion houses rely on superficial "Greenwashing". They suggest sustainability through marketing without really making fundamental changes. This confuses consumers and makes it more difficult for authentic sustainable brands to differentiate themselves and communicate their added value.
- Short-lived trends vs. longevity
Social media has led to an acceleration of fashion trends. Many consumers want new styles all the time, which contradicts the principle of longevity that many sustainable brands pursue. The challenge is to create timeless designs that are still perceived as modern and relevant.
Structural Problems in the Fashion Industry
The difficulties of sustainable brands and the slow fashion recession are also a symptom of deeper structural problems in the fashion industry:
- dominance of the fast-fashion model
The focus on fast consumption and low prices fast-fashion model continues to dominate the market. It has shaped consumer expectations and sets the benchmark for prices and availability by which sustainable brands must also be measured. - Lack of regulation and standards
There are currently no uniform, binding standards for sustainable fashion. This makes it difficult for consumers to recognize truly sustainable products and creates space for greenwashing. At the same time, there are no incentives for companies to invest in sustainable practices. - Short-term thinking in the financial world
Many investors and Financial institutions are focused on short-term profits. This contradicts the long-term investments that are necessary to build truly sustainable business models.
How to stop the slow fashion recession?
Despite the current challenges, there is hope for the future of sustainable fashion. Here we have compiled some possible solutions:
- realignment of business models
Sustainable brands need to find innovative ways to be profitable without compromising their values. This could mean, for example, focusing even more on luxury market and, if necessary, for less financially strong customers Rental models Increased integration of circular economy principles, such as the use of second-hand fabrics could reduce production costs. - collaborations and partnerships
By increasing cooperation among themselves, sustainable brands could pool resources and expand their reach. Examples of possibilities include purchasing groups for sustainable materialsto benefit from volume discounts or the shared use of production capacities.
- creating awareness
A key task remains to raise awareness among consumers about the importance of sustainable fashion and to convey the value of ethically produced clothing. It is therefore particularly important for sustainable labels to communicate transparently about production processes and costs. Working with influencers and media can also help spread the message. - Political framework and regulation
Political measures are also necessary to promote truly sustainable practices in the fashion industry. This includes, among other things, the introduction of binding standards for sustainable and ethical production. Tax incentives for sustainable companies would also be an option that legislators could use to support sustainable fashion and stop the slow fashion recession. In addition, stricter regulation of greenwashing and a ban on misleading advertising are urgently needed. - Technological innovations
Technology could become a key factor in the search for a solution to the slow fashion recession. Advances in material development and scaling of sustainable materials reduce production costs while reducing environmental impact. Advances in manufacturing such as 3D Print or On Demand Production could enable more decentralized, demand-oriented production and thus reduce overproduction and waste.
Conclusion: The Slow Fashion Recession is a Symptom of Change
The current crisis in sustainable fashion is part of the transformation process of the fashion industry. While the closure of popular labels such as Mara Hoffman is undoubtedly a setback, it also shows the urgency of fundamental change. The challenges are immense and range from cost pressures to changing consumption habits to structural problems in the industry.
But there is also reason for hope. Technological innovations, growing environmental awareness among consumers and new business models could open up paths to a more sustainable future for fashion. It will be crucial that all players - from designers to producers, retailers and consumers - pull together to create a system that rewards and promotes true sustainability. Only in this way can the vision of fashion that is both aesthetically pleasing and ethically and ecologically responsible become a reality.
The Slow Fashion recession may be a painful phase, but it could prove to be a necessary catalyst for long-overdue change in the fashion industry. The brands and companies that manage to adapt to this new reality and develop innovative solutions will be the pioneers of a new era of fashion - an era in which style and sustainability, profit and ethical principles finally go hand in hand.
