The rise of TikTok and the increased popularity of Instagram stories and reels have revealed new consumer habits, according to online fashion rental platform The Volte's CEO and co-founder Bernadette Olivier.
“Consumers are turning online shopping into ‘online trying,’ often posting their ‘hauls’ to followers to decide which garments to keep while returning the majority,” Olivier said.
“Retailers have been slow to identify this trend and report as much as 50% of inventory sold online is returned, with a significant portion ending up in landfill or incinerated due to cost-effectiveness.”
Olivier said retailers are grappling with these challenges, in addition to changing consumer sentiments such as rapid decreases in brand loyalty, increased regulatory costs as governments attempt to curb overproduction and increase supply chain transparency.
She also points the finger at Chinese fast fashion businesses, Shein and Temu.
“These new players, with criminally low prices and massive advertising budgets, have left an already fragile industry on the edge of collapse.”
This comes amid a slow rise in fashion businesses calling in the administrators this year, including Tigerlily, Colette by Colette Hayman parent company Marquee Retail Group, and - just this week - Dion Lee.
Referencing Us-based firm Boston Consulting Group, Olivier said the mismatch in supply and demand has resulted in up to 30 per cent of inventory produced never being sold, exacerbating textile waste and costing the industry up to US$210 billion annually (A$317.88 billion).
“This overproduction not only poses a financial threat but also a rapidly increasing environmental threat globally,” she said.
Olivier said the solution is leveraging data analytics and artificial intelligence to improve demand forecasting, helping brands align production more closely with actual consumer demand.
“Enhanced development of virtual try-ons, accurate sizing, descriptions, and imagery, and using AI to offer personalised recommendations based on previous purchases can reduce returns.
“Brands must also embrace and integrate with the circular economy. The resale economy is growing 10 times faster than the traditional apparel industry, indicating that consumer demand for circularity is permanent.
“Part of the integration must allow brands to earn from these new business models, enabling retailers to generate revenue aside from producing and selling more garments.”