After reading HBR Course Pack Case, The Future of the Fashion Industry in a Post COVID-19 World, answer the following questions. Students should conduct external research on the impact of COVID on the fashion industry and use the research to substantiate the points, as well as, using information from the case. Students may also use previous cases from this course.

1. What challenges did the fashion industry face during the COVID-19 crisis?

2. Which macro-economic forces are likely to impact the fashion in the aftermath of the pandemic (consider using the PESTLE framework to conduct the analysis, Political, Economic, Sociocultural, Technological, Legal, Environmental).

3. If you were Emilie working on a report about what the fashion industry can expect in a post-pandemic future, what three trends would you highlight based on your answers to #1 and #2 above.

It was late on a Saturday night in early January 2021; Emilie had not visited her family for Christmas in 2020 because she, like many others, had decided to sacrifice seeing her relatives over the holidays in order to avoid the risk of spreading the Coronavirus. Stressed and fatigued by the COVlD-19 crisis, the prolonged lockdown measures and her demanding new position, Emilie was despondently staring at a blank PowerPoint template on her laptop. She had been asked to prepare a proposal on the future of the fashion industry in the post-pandemic era. She was due to present her proposal the following Monday to the board. The chairman had already recommended multiple times that she should be very clear on formulating relevant projections and recommendations for the board members. Emilie was fully aware this was a crucial deliverable and presentation for her career trajectory within the company. She had already done extensive research over the past week, but she needed to structure her findings into a concrete presentation. The year 2020 had been extremely tumultuous for the global fashion industry, which had contended with major system shocks on both the supply and demand sides, and it was facing an ever-mounting barrage of public criticism around social and environmental issues. Going through all her research notes, Emilie began formulating key questions and expectations for the fashion industry in the aftermath of the COVlD-19 pandemic. THE GLOBAL FASHION INDUSTRY'S EXISTENTIAL CHALLENGES The global fashion industry, worth $2.5 trillion by 2020, was one of those hit hardest by the COVlD-19 crisis, suffering both demand and supply shocks as never before.1 The average market capitalization of apparel, fashion and luxury players decreased by 40% from the beginning of January to March 24 (a steeper decline than the total stock market), and revenues for the global fashion industry were expected to contract by 2730% in 2020. A McKinsey report projected that just two months of store closures could put 80% of publicly listed fashion companies in Europe in nancial distress and a large number of global fashion companies would face bankruptcy throughout 2020 and 2021.'2 The fact was, however, that the fashion industry was in distress before the pandemic, and even without the events of COVlD-19, it was facing a slowdown in growth in 2020. Additionally, in the last decade the industry had come under intensifying scrutiny for being exploitative, environmentally damaging, and unsustainable. By the end of 2019, consumers were buying nearly 100 billion new clothing items worldwide each year, nearly 400% more than in 2000.3 Fashion companies in Europe had gone from offering an average of two collections per year in 2000 to ve in 2011, and fast fashion players offered even more. H&M was releasing between 12 and 16 per year, while Zara was offering as many as 24 collections a year.4 Along with the rise in rapid consumption, however, had come a shift in consumer attitudes toward clothes; fast fashion had become synonymous with disposable fashion as people were both buying c 2021 by MD 2 nent is authorized for use only by Justin Sguera in FM300 822 0L1 taught by Shelley Kohan, Fashion Institute of Technology from Jan 022 For the exclusive use of J. Sgu eggs REAL LEARNING. REA- IMPACT THE FUTURE OF THE FASHION INDUSTRY and discarding clothes at increasingly higher rates. Retailers were dealing with growing amounts of \"deadstock\" as new collections were going out of fashion ever faster. Certain brands incinerated unsold stock to artificially preserve product scarcity and brand exclusivity; Burberry, for instance, had burned 228.6 million of unsold merchandise in 2018.5 Globally, over 92 million tons of textile waste were being generated by the fashion industry, with over 85% ending up in landlls or being incinerated. The fashion industry was also one of the highest polluting and most resource-intensive industries in the world. Fashion production was responsible for 10% of global anthropogenic carbon emissions, generating a carbon footprint that outweighed international ights and maritime shipping com bined.6 It was the world's second-largest consumer of the world's water supply, using around 93 million cubic meters of fresh water annually and accounting for 20% of water waste and industrial water pollution through textile dyeing and treatment. It was also responsible for 2035%, or around half a million tons, of plastic microfibers (the equivalent of 50 billion plastic bottles) owing into the ocean, which could not be extracted from water and could spread throughout the food chain.7 The fashion industry was also highly labor intensive, with around 300 million people working in the industry, and the explosion of fast fashion was largely made possible by companies chasing the lowest labor costs around the world.3 In order to meet the rising demand for cheap clothing at an increasingly faster rate, fashion brands outsourced production to developing countries, predominantly in Asia; more recently, Africa had become a new hotspot for cheap labor. As supply chains became longer and more complex, they also became opaquer and more difficult to regulate. In Bangladesh, a garment manufacturing hub, contactors found themselves needing to use sub- contractors themselves in order to meet their customers' demands. Many of these smaller sub-contractors were not in compliance with international labor standards and local labor laws regarding, for instance, working hours and wages, as they were pressured to keep costs low in order to satisfy customers looking to buy cheap. This disregard for workers' rights, living standards and safety led to one of the most infamous casualties of the fashion industry the 2013 collapse of the Rana Plaza building, which housed ve garment factories.9 The incident, which killed 1,138 people, sparked public outrage as it was widely perceived that it could have been prevented had adequate safety measures been taken in time. Deep cracks had been detected in the cheaply constructed eight-story building the day before the collapse, but warnings not to use the facility were ignored by garment factory owners on the upper floors who were pressured to full production orders and avoid losing business. Nervous garment workers were ordered to continue working under threat of termination, putting productivity before safety and human lives. The Rana Plaza case garnered international media attention and generated critical debates over the responsibilities of fashion brands, suppliers, sub- contractors, governments and consumers. THE COVID-19 CRISIS In 2020, the Bangladeshi garment industry, which accounted for 85% of the nation's exports in 2019, was back in the spotlight of international news.\" Consumer demand for apparel began plummeting in staggered stages across different countries throughout Q1 and Q2 2020, as governments enacted lockdown measures and consumer condence in the economy decreased. Clothing sales fell by 34.8% from February to March in the UK11 and by 73.5% from March to April in the US.12 Apparel consumption was projected to drop by 40% in the US and 45% in the EU in 2020, amounting to a total decline of $308 billion.13 In the economic fallout, many buyers, including major American and European brands such as Primark, began cancelling orders and deferring payments with garment factories in Bangladesh, invoking force majeure clauses in their contracts. Since buyers typically paid their suppliers weeks after delivery, suppliers usually paid upfront for the materials used to produce orders, making large cancellations by brands financially devastating for garment manufacturers. By the end of March 2020, as many as 1,089 Bangladeshi garment factories had had orders canceled, including orders for which production had already begun or was complete, amounting to a $1.5 billion loss, with exports plummeting by 84% in April.14 By October, the Bangladeshi garment manufacturing sector had incurred a loss of $3.5 billion in cancelled or suspended orders, with at least 70,000 people estimated to have lost their jobs. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) warned that the livelihoods of over 2 million Bangladeshi garment workers were severely impacted, as they were facing risks of unemployment, hunger and an increased vulnerability to the Coronavirus.15 Brands working with suppliers in Bangladesh included H&M, Adidas, C&A, Marks and Spencer, Target and PVH.16 While not all Western brands were bailing out of order and payment commitments, the industry as a whole was once again scrutinized over the issue of ethical sourcing. Other garment manufacturing hubs, such as Cambodia and Myanmar, suffered the same fate. Globally, garment factories lost approximately $16.2 billion in cancelled orders, leaving many small suppliers in ruin and costing textile workers $1.6 billion in wages putting not only livelihoods but also lives at risk.17 As with the Rana Plaza incident of 2013, the people at the bottom of the value chain were the most vulnerable and ultimately paid the highest price for fast fashion. SUPPLY CHAIN DISRUPTION In addition to the sharp decrease in demand, supply chains began facing serious challenges early on during the pandemic, in part due to vulnerabilities that stemmed from a high reliance on cheap labor and sourcing, as well as the interconnectedness between supply chain links. The clothing industry, which accounted for 43 million jobs in Asia on 2021 by MD 4 nent is authorized for use only by Justin Sgusra in FM300 822 0L1 taught by Shelley Kohan, Fashion Institute of Technology from Jan 0 For the exclusive use of J. 89 eggs REAL LEARNING. REA- IMPACT THE FUTURE OF THE FASHION INDUSTRY alone,\" was characterized by complex value chains with multiple suppliers in different countries and long shipping times between continents. A piece of clothing may be manufactured in Bangladesh, but its production could rely on essential components, such as buttons and zippers, sourced from China, as well as raw materials, such as cotton, sourced from India.19 Therefore, factory closures and shipping restrictions mandated in China during the pandemic held up final assembly in garment factories in Bangladesh. A disruptive event in any country from which a company was sourcing an essential component could disrupt the entire supply chain, and planning for such contingencies was challenging due to the unpredictability of COVID19. Both consumer demand and production capacity in different countries was highly dependent on governments' abilities to manage the virus within their national borders. As supply chains contended with disruptions on both ends, brands and retailers were additionally faced with mounting piles of unsold inventory, filling up stockrooms and warehouses. H&M, for instance, was sitting on 23.4 billion in unsold merchandise by April 2020.20 Apparel companies scrambled to pivot toward online sales, and many brands had no choice but to resort to deep discounting strategies, as well as internal staff sales, but this was not nearly enough to clear the rising mounds of so-called deadstock. Much of this unsold inventory continued to overburden landlls or it was incinerated a controversial approach to textile waste as it produced more carbon dimrir'ln than hllrninn nnal 21 Thn fashinn inr'lllntru'g nlnhnl waste! nrnhlnm was: the.- nrndlmt W additionally faced with mounting piles of unsold inventory, filling up stockrooms and warehouses. H&M, for instance, was sitting on 23.4 billion in unsold merchandise by April 2020.20 Apparel companies scrambled to pivot toward online sales, and many brands had no choice but to resort to deep discounting strategies, as well as internal staff sales, but this was not nearly enough to clear the rising mounds of so-called deadstock. Much of this unsold inventory continued to overburden landlls or it was incinerated a controversial approach to textile waste as it produced more carbon dioxide than burning coal.21 The fashion industry's global waste problem was the product of a culture of excess, resulting of both overconsumption and overproduction, enabled by cheap overseas labor. SUSTAINABILITY IN FASHION POST-COVID-19 According to a McKinsey US cohort survey, 66% of respondents (and 75% of millennial respondents) said they considered sustainability when making a luxury purchase.22 To feel more responsible, an increasing number of consumers preferred to buy \"investment\" pieces that were long-lasting. According to the BoFMcKinsey State of Fashion 2020 senior executive survey, the majority of participants identified sustainability as both the biggest challenge and the biggest opportunity for the fashion industry in 2020.23 The BoFMcKinsey State of Fashion 2020 report warned that the fashion industry had not been taking its environmental responsibilities seriously enough and brands needed to replace "platitudes and promotional noise\" with "meaningful action and regulatory compliance while facing up to consumer demand for transformational change.\"24 News stories about the social casualties of the fashion industry, such as communities of garment factory workers in developing countries losing their livelihoods and food security due to Western brands cancelling orders or deferring payments during the pandemic, or the Black Lives Matter movement in the US, were making issues such as social justice and equal representation more salient with consumers. Global leaders in fashion were feeling the pressure and many responded. To name a few: Nike committed to powering its plants with 100% renewable energy by 2025, Zara pledged to use only organic, sustainably sourced materials for its clothing by 2050 and Wrangler aimed to halve its water usage by 2030.25 Fashion companies were also directing increasingly more investments toward innovation around sustainability, for instance, in revolutionary, sustainable materials and fabric dyes.\"5 Sustainability was likely to play a more fundamental role than ever in the aftermath of the pandemic presenting great challenges as well as opportunities.27 WHAT WILL THE FUTURE OF THE FASHION INDUSTRY HOLD? The fashion industry was, without a doubt, facing an existential crisis in 2020.23 Arguably, however, it had long since become unsustainable and was headed toward fundamental change with or without the pandemic, albeit at a slower pace. The COVlD-19 crisis brought to light complex problems throughout global fashion value chains, from the power disparity between Western brands and their suppliers in developing countries, to the negative environmental impacts of waste, pollution and resource overuse by the industry, fashion companies' inability to respond quickly to supply chain disruptions and sudden shifts in consumer behaviors. The pieces were coming together for Emilie, though her presentation was still menacingly empty. She cracked her ngers and went to work, starting with the global fashion industry's most urgent questions for 2021 and beyond: Which threats and opportunities did fashion and apparel companies needed to consider for their post-pandemic strategies? What global changes, from demand to supply, would affect the fashion industry's value chain? What role did business sustainability have to play in future- proong companies in the fashion industry