PEST Analysis

Political Economic

France banning the burning of designer waste products has left brands questioning what to do with surplus stock to preserve brand value.

“We are aware that some businesses are facing challenges with specific aspects of our new trading relationship with the EU. To this end, we are operating export helplines, running webinars with policy experts and offering businesses support via our network of 300 international trade advisers. This is on top of the millions we have invested to expand the customs intermediaries sector.” - Government Spokesperson (BBC, 2021).

The fashion sector in the United Kingdom (UK), built on duty-free access to the EU, is facing the risk of export tariffs into its biggest trading partner from 2021 onward (Arnett, George. 2020).

Complex VAT charges and handling fees now in place have led shoppers in Europe to stop ordering or to reject deliveries (The Guardian, 2020).

UK manufacturers and designers say they have suffered delays and additional costs on shipping materials, samples or components to and from Europe (The Guardian, 2020). Shopping for pre-owned items is also on the rise. The secondhand market is expected to hit $64 billion by 2024 (Morgan, Blake. 2020).

In the UK, there are a total of 3,943 stores specialising in selling second-hand goods and it is an industry employing approximately 36,000 people. During 2019, sales in these stores saw a 17.6 percent rise in value, a notably large increase on the past two years (Statista, 2020).

The fashion industry contributes more to UK GDP than fishing, music, film and motor industries combined (BBC, 2021).

The UK clothing industry is the third largest in Europe and a study found British consumers spend an average of £980.50 a year on new clothes (Circular Online, 2020).

Social Technological

Nearly 50% of fast fashion retailers have reported a recent decrease in customer purchases as consumers look for brands that take a stand for the environment (Morgan, Blake. 2020).

Fashion shopping app Lyst has seen a 37% increase in searches for sustainabilityrelated keywords in early 2020 compared to the year before, with average monthly searches topping 32,000, up from 27,000 in 2019 (CB Insights, 2021).

Consumers who perceive the risk of COVID-19 to be very high are almost four times more likely to shift their shopping habits in the long-term. This group reflects those in society who have in the past been slow to adopt online banking and shopping. They have now been forced to shop in new ways for essential items, and they do not intend to change these new habits (Business Reporter, 2021).

Nearly half (48%) of UK consumers plan to avoid busy destinations such as large shopping centres, suggesting scepticism in the ability of retailers to reimagine the customer journey (Business Reporter, 2021).

According to research conducted by sociologist Sophie Woodward at the University of Manchester, on average 12% of clothes in the wardrobes of women she studied could be considered “inactive” (Beall, Abigail, 2020). Online secondhand shopping is set to grow 69% between 2019 and 2021, compared to a 15% contraction in the broader retail market, according to a report by online consignment platform ThredUp (CB Insights, 2021).

Aside from changing Covid-19 restrictions, consumers increasingly prefer the convenience and speed of online shopping, even if it means not being able to try an item on in person (Morgan, Blake. 2020).

Artificial Intelligence (AI) and advanced technologies may also have a part to play in the push for sustainability in fashion. More accurate systems will help to reduce production waste (CB Insights, 2021).

Nearly three quarters of those surveyed (73.5%) reported that they are shopping online more now than they did prior to the spread of Covid-19. Moreover, nearly 9 in 10 (88%) said they will continue to shop online more even after a cure or vaccine for Covid-19 is developed (Conca, James. 2020).