Can Sustainable Fashion be Profitable?

Can sustainable fashion be profitable?

Amidst changes in global consumer behavior, intense competition, and a complex economic environment, this past year has been challenging for slow fashion businesses. Last Fall, the pioneering British fashion brand People Tree was liquidated after 30 years in business. A few months later, another industry veteran shut down: Mara Hoffman, the founder of the eponymous American brand, announced its closing in May.

It’s perhaps no surprise that the current economic headwinds hitting the fashion sector might destabilize sustainable brands even more than the rest of the industry. After all, while regular businesses can bank on the old-school principle of generating revenue via the maximization of product sales, sustainable brands have to play smarter to achieve profitability while upholding their ethos. But what does playing smart entails for a slow fashion business? A recent study tried to figure that out.

Figuring out the profit drivers of successful slow fashion brands

Despite the ubiquitous attempts at greenwashing, a lot of reliable knowledge is available about the policies that make a fashion brand sustainable. Yet, there isn’t much out there about the intricacies of pursuing and maintaining profitability while implementing slow fashion practices.

This knowledge gap is what the paper “Pursuing profitability in slow fashion: Exploring brands’ profit contributors” contributed to filling in. In their study published in the Dutch transdisciplinary journal “Journal of Cleaner Production” this year, the Cambridge University and Maastricht University scholars Sasha N. Sarokin and N.M.P. Bocken conducted semi-structured interviews with British slow fashion brands to probe which practices are connected to profitability.

The researchers focused their work on small and medium enterprises (SMEs), which comprise a sizable part of the British fashion industry and whose independence allows them to adapt their business models effectively. Some interesting results emerged from their semi-structured interviews with the owners and founders of twelve British slow fashion SMEs.

Achieving profitability through desirable products, efficient operations, and consumer alignment

Unsurprisingly, good products are critical not just for sustainability but for profitability, too. A focus on product quality, aesthetic appeal, and versatility has, in fact, emerged as a profit contributor for the analyzed companies. Similarly, slower collection development with fewer styles and a trans-seasonal, non-trend-based approach can benefit this kind of fashion brands. Implementing fit-for-purpose production strategies, like close supply chains, on-demand or small-batch production, and the vertical integration of parts of the supply chain also work in favor of slow fashion SMEs.

The same goes for maintaining a close relationship with those in the supply chain, which reduces costs and increases transparency. Attitude towards sustainable products has been shifting. While in the United States, according to the management consulting company McKinsey & Company, the sales of goods with claims related to their environmental performance overtook that of products lacking them, fewer American and European Gen Zers and millennials identified sustainability claims as a significant purchasing criterion compared to 2023. Yet, the key to profitability is finding the right customers rather than having the broadest possible appeal.

The study shows that aligning with consumer values, fostering emotional attachment to goods and the brand, and effectively communicating slow fashion values to reinforce consumer loyalty are profitable practices for these businesses. Efficient storytelling can make a miscellaneous customer base feel like they are part of a like-minded community.

Diversifying revenue streams by offering product services that promote sustainability, such as repair and customization or rental and resale, can also lead to positive outcomes if the companies manage these services to combine the promotion of slow fashion with the pursuit of additional revenue streams.

This study shows that despite potential challenges with the proper knowledge and means, fashion companies can implement slow fashion values and thrive while promoting a positive and necessary shift in the fashion industry.

About the Author

Roberta Fabbrocino is a journalist specialized in climate change and sustainability-related topics. Her articles have been published in several international eco-publications. Roberta also works as a content writer for sustainable companies.