The Economics Behind Fast Fashion

Written By: Arshiya Chaudhary

A world without shifting consumer preferences is difficult to imagine, especially when it comes to the textile industry, since fashion evolves constantly. The ardent need to stay with the trend often forces consumers to shop every few weeks, propelling them to indulge in fast fashion, because who doesn’t love cheap, fast-moving, up to the minute clothes, right?

Fast fashion follows a linear business model. Brands acquire raw materials, transform them into apparel, and then sell them to the customers. As straightforward as it sounds, the actual process is quite the opposite.

Acquisition of Raw Materials

If we break down the supply chain, the process begins from the acquisition of raw materials, wherein, brands look for resources with a less durable quality, and hence source cheap materials for further production, since fast fashion does not aim to provide indispensable and long-lasting clothing to consumers.


Next, the process of manufacturing is a multiphase operation, involving spinning, dyeing, weaving and stitching, during which, the producer strives to minimize costs. Most of the production is outsourced to developing countries, with flexible labor laws, that often exploit workers by offering poor working conditions. As per the reports published by the Global Labour Justice, fast fashion chains like H&M and GAP have repeatedly transgressed laws, reporting several instances of physical abuse, sexual harassment and forced overtime. (7)

Since fast fashion intends to cater to the instant gratification of customers, little attention is paid to details, resulting in the mass production of poorly made garments, thereby trading quality for quantity.

Sales and Marketing

The last step of the supply chain, that is, the final sale of garments, is strongly facilitated by the clever marketing strategies of these companies. The idea is to offer apparel imitating designer styles at cheap prices, which works as a great attraction force for customers. Brands like ZARA, have adopted a strategy of portraying a sense of scarcity, that is, keeping a low stock of items at the store, in order to trick consumers into buying products by minimising their decision making time, because if they don’t buy the clothes now, someone else will. Additionally, the “impulse buying” strategy also works well for these brands, wherein, accessories are placed directly next to the cash counters, in order to prompt customers to buy items that they don’t need. The low production costs help these fashion chains to offer lucrative prices to consumers while intensifying their profit margins.

Contribution of Fast Fashion Brands to the Economy

As their profits skyrocket, it only makes sense to consider whether fast fashion companies benefit the economy. The apparel industry is largely supported by fast fashion, which has been growing at a rate of 8% annually (2).

Although, the pandemic did cause a 20% decline in revenues for the fashion sector, the industry is expected to return to growth in 2022. As described by McKinsey & Company, “In many global regions, the business of fashion is set to pick up momentum in 2022, as consumers unleash pent-up buying power and dress to impress (where the pandemic allows).” (1)

The expected revival of the fashion sector, dominated by fast fashion strategies, points towards the possibilities of growth for the economy, especially because the sector employs more than 75 million workers worldwide (3).

Economic Downsides of Fast Fashion

But does growing employment really help the economy if it’s not generating any additional income? Majority of the production is outsourced to developing countries, offering employment opportunities to those who are willing to work at any costs. According to a report published by Oxfam Australia, 0% of Bangladeshi garment workers, and 1% of Vietnamese workers earned a living wage in 2019. (4)

Workers are often overburdened to meet the high production demands, and are forced to work overtime without receiving any compensation. Moreover, the unsafe working conditions that these workers are subjected to, have consequences on their health, predisposing sickness and injuries to the labor, thereby negatively impacting the global economy’s workforce.

Fast Fashion as a Business Strategy

“The fast fashion business model is finite. Fast fashion depletes the Earth’s resources and uses slave labour all over the world. Eventually the resources will deplete, the profit margins will shrink, and there will be revolutions in the streets. If you are a smart businessman, you would address those issues today.” (6)

As quoted by Livia Firth, Founder and Creative Director of Eco Age, fast fashion is highly reliant on resources that are depleting by the minute. The constant need to introduce new apparel, as trends change, puts a great pressure on physical, environmental and human resources. Thus, even though fast fashion generates fruitful profits today, it is not a long term strategy.

Circular Fashion Economy

A linear business model is responsible for the finite nature of fast fashion. To devise a strategy that is profitable and sustainable in the long run, a shift from the linear business model to a circular business model is required. A circular business model allows apparel to be circulated in the society till the time they are utilized fully, and are then either recycled or disposed in an environment friendly manner.

A circular fashion economy requires that clothes are designed with a purpose in mind, that is, great emphasis is placed on quality rather than quantity. As opposed to fast fashion, where more than 60% of the garments are made of synthetics, a circular fashion economy consists of apparel sourced out of low impact materials.


As portrayed in the graph above, although the GDP and clothing sales have been on a rise since 2000, where fast fashion has been the dominant strategy, clothing utilisation has been declining significantly. The fast fashion model has led to overproduction and overconsumption of clothes, and most importantly, the development of a disposable mindset, where clothes aren’t utilised till the time their value can be extracted.


Introducing substantial improvements at every step of the supply chain will result in a radical transformation of the fashion sector, after all, moving towards a circular fashion economy is imminent.


Works Cited

1.Amed, et al. 2021. “State of Fashion 2022: An uneven recovery and new frontiers.” McKinsey & Company.

2.Drew & Reichart. 2019. “By the Numbers: the economic, social and environmental impacts of Fast Fashion.” GreenBiz.

3.2021. “Fast Fashion.” Investopedia.

4.2021. “The Impact of Fast Fashion on Garment Workers.” Good on You.

5.Motif Organisation. 2021. “Moving Towards a Circular Fashion Economy.”

6.2015. “The True Cost Explores the Global Impact of Fast Fashion.” Vogue.

7.2018. “Factory Exploitation and the Fast Fashion Machine.” Green Business Network at Green America.

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