Two Australian fashion SMEs champion sustainability in the recovery from COVID-19

Like most retail industries, fashion has been hit hard by the COVID-19 pandemic. We spoke to leaders of two Australian-grown brands about how they have pushed forward using such measures as crowdfunding, e-commerce and social enterprise, and about how adhering to sustainability is proving to be an advantage.

Fashion’s dirty laundry

The fashion industry is one that has historically rewarded fast and cheap production, but the crisis has shown up the cracks in brittle supply chains. Businesses that have chosen resilience over expedience are perhaps for the first time finding this approach to be a strategic advantage.

Internationally, runway and other industry events have been cancelled and cashflows have tanked due to reduced consumer spending. These factors, together with supply delays due to closed borders, have forced labels and manufacturers to reimagine their business models in order to survive – and this has many in the industry calling for permanent change.

The drop in spending in the sector was so acute that brands cancelled billions of dollars’ worth of orders from manufacturers in Bangladesh, Myanmar, Cambodia and India almost overnight. This has been disastrous for businesses which, in order to be competitive, often accept payment weeks or even months after delivery, upfronting the cost of materials and wages themselves.

Some brands withheld payment for orders that were partially or even fully completed. News of this sparked the #payup petition, calling on brands to take responsibility for the people in their supply chains.

There is global concern for the welfare and livelihoods of the millions of vulnerable people working for the industry, many of whom already live in poverty. And as the virus continues to ravage economies, orders won’t return to their previous volume any time soon.

Even before the pandemic hit, awareness among consumers of the environmental and social impacts of fashion had increased. The slow fashion movement, a consumer- and business-led push for the environmentally and socially responsible production of garments that are made to last, and the new modern slavery legislation in Australia have drawn attention to the far-reaching ramifications of the industry.

Outland Denim and Ginger & Smart are two labels that are demonstrating that a move away from fast fashion can be done – and done successfully.

Outland Denim

Outland Denim has experienced enormous growth since Meghan Markle, newly married Duchess of Sussex, sported a pair of their jeans during the royal pair’s Australian tour in 2018. They now have stockists across the world, including David Jones in Australia and Bloomingdales in the US.

But measures taken by governments to reduce the spread of the virus have affected big chains and small boutiques alike. Outland Denim’s founder and CEO James Bartle told the AICD that they had to respond quickly to a large drop in sales.

“We instantly suffered a huge loss of wholesale accounts, which had a big impact on us. So we put far more effort into our direct sales.”

Outland are something of a rarity in the fashion world: they’re a social enterprise. “When I had an opportunity to travel through Southeast Asia, I saw a little girl who was for sale. It was a life-altering moment for me. I wanted to be a part of a change,” explains Bartle. The company, founded in 2008, provides employment and training for vulnerable people who have experienced sex trafficking, giving them a sustainable career path with a living wage.

They’re a B corporation (the first Australian denim brand to achieve the certification), received an A+ in the Ethical Fashion Report in 2018 and 2019, and earlier this year were awarded the Thomson Reuters Stop Slavery Enterprise Award in the SME category.

It’s due to this social purpose that Outland Denim avoided some of the fallout of the crisis. “Because we manufacture all our own products, that’s a massive advantage over many brands. We saw some small interruptions with supply, but we were able to continue on. I think we’re in quite a healthy position, considering what’s going on, but we have to stay on our toes.”

The last few months have proven to Bartle that being bold can pay off. In April the business launched a crowdfunding campaign that raised over $1.3 million. Outland plans to develop manufacturing capability so that they can produce garments for other like-minded brands. This has all been in the works for a while, says Bartle, but he saw the crisis as the moment “to pivot and push forward”.

Of nearly 1000 of their new investors, 83% said they were spurred by the positive impact of the label’s operations. The campaign’s success in spite of the crisis demonstrates the magnetism of social enterprise and a continuing trend that consumers are re-evaluating their spending choices.

In the Australian Consumer Sentiment Snapshot #2 released in June, there was a noted increase in consumers buying from local brands. One in four consumers in Australia supported brands that promote sustainability or bring tangible benefits to the local economy. While overall spending on non-essential items is down, the survey indicates there is a burgeoning desire among consumers to spend their money where it will do good.

Ginger & Smart

Alexandra Smart is Co-Founder and Managing Director of Ginger & Smart, a womenswear brand that has held sustainability as a priority from the get-go.

"The three pillars of sustainability – environmental, social and economic – have always been a very strong focus for us,” says Smart. “Now, people are actually seeking us out. We’ve seen a real uptick in demand for products that have been consciously and sustainably produced. It’s thrilling for us, because it’s been important to us since we started in 2008.

“We’ve always looked at different ways to manufacture, scrutinising supply partners...innovating in fabrication. Now, I suppose what is exciting is the work and the effort and the thinking behind it is being valued and responded to.

“I do think it’s going to be a strategic advantage for us, coming out of COVID-19.”

In June 2019, Ginger & Smart sold a majority interest to private equity firm Alceon Retail Group to help them open new stores and build the brand overseas. Smart says COVID-19 has shaken up the road to getting there, but their goals for the future haven’t changed.

“We were absolutely affected by retail closures. We’re not back to pre-COVID sales by any stretch, but what will be more important than ever is the focus on the customer. She’s not attending as many weddings or the races, so how do we serve her in the other parts of her day?”

The label’s typical proportion of event and evening wear in their collections has already reduced, making way for more everyday and flexible pieces. Smart says they’re also throwing out the rule book on when certain stock is available on the floor.

“We’re looking at making sure that the right stock is available for our customers when they actually want it. Traditionally in the industry, spring stock is delivered in the middle of winter and winter stuff gets delivered in the middle of summer.” This incongruity is a tactic to encourage shoppers to buy for the coming season while they shop for the present season.

Other brands have also taken a step back from current cycles and planned obsolescence. Heads turned when Italian luxury giant Gucci announced its decision to abandon the seasonal calendar and reduce its number of annual collections.

Change and innovation will be essential to survival, says Smart. The brand’s new spring collection makes use of sustainable technology that didn’t exist five years ago.

“Innovation is really important...Being at the forefront and knowing what’s going on out there is critically important. Technology is changing all the time, allowing us to move online, but also to really step even further into the sustainability space. There are always new ways of creating, of presenting.

“We’ve had our heads down, running as fast as we ever have. When COVID-19 hit, we very quickly moved our wholesale showroom completely online. So we showcased our resort collection in a digital showroom and we managed to reach budget. It shows that digital works.”

The fashion industry after COVID-19

Both Smart and Bartle hope that the pain being felt now marks the beginning of a sweeping re-assessment of business models in the industry, but from experience, they know the way forward is tough.

Smart warns that it needs to be genuine: “To bring those values into the business at a core production level and then to be able to tell the story behind it, to be authentic and transparent...It’s one thing to say. It’s another to walk it. It takes commitment from top to bottom in any organisation to do it, to make it part of everyday decision making.

“People are really thinking outside the square and that’s super exciting. So I don’t think it’ll go back to the way it was. By all accounts, the industry was a on a mouse wheel, running to keep up with itself. There are enough voices now saying that’s not a sustainable way forward as an industry. That could be a silver lining to all this,” she says.

Bartle believes there is no way around it. “If you don’t have a purpose, if you’re not adding something of value, then there’s really no space for you anymore. We can see it happening already. It’s so sad...but we must use our industry for creating solid, positive change.

“What many businesses are doing globally is not sustainable economically at all. I believe we have a unique moment in history to create a future that we want. I know that sounds corny, but I really believe it.”