Factors that will Impact the Textile Value Chain in 2023

Gerard Ortiz

Between rising inflation, continuing globalisation and the introduction of new business models, change is the only universal factor that the textile and fashion industry will witness in 2023. This article explores ten of the factors that will play key roles in changes to this industry and discusses how firms around the world can adapt to them.

If the changes that the world has faced in the last several years have taught us anything, it’s that everything is connected. This planet is a closed system, and what one company does can easily have a lasting impact halfway across the globe.

In this complex world, there is no single element that will revolutionise the world of textiles as the world welcomes the new year. A person can only examine each of these factors as part of a larger whole. However, it is critical for players in the textile industry to understand each of these factors that are changing the value chain.

Renewed Focus on the Circular Economy

Without a healthy, clean environment, the planet can have nothing else. The textile industry plays a major role in the resources the world uses. For instance:

   It takes 22,500 litres of water to grow one kilogram of raw cotton.1

   Leaching of chemical dyes into groundwater can contaminate drinking water for years.2

   Fashion production comprises up to 10 per cent of humanity’s net carbon dioxide emissions.3

There are a variety of ways in which textile manufacturers can reduce their environmental footprint, and 2023 is the year that many of them are taking the plunge. One of the ways that manufacturers are maximising their positive impact is by opening their supply chains to include recycled and reused materials.

Some companies are even utilising blockchain and Internet of Things technologies to ensure their long-term sustainability and allow consumers to track the origins of their clothing. Others are moving entirely away from the fast fashion business model, reducing the dual problems of wastage and oversupply.

Meanwhile, an increasing number of clothing manufacturers have signed on to the Ellen MacArthur Foundation’s Jeans Redesign guidelines, which the Foundation most recently updated in 2021. These guidelines apply to the entire textile value chain, from growing and picking cotton to stitching jeans together, and their goal is to make jeans more reusable and recyclable from the beginning of the manufacturing process.

Many other companies have even begun to offer clothing rental, subscription services, and peer-to-peer clothing sharing to help keep old clothing out of landfills. Some clothing retailers have started to expand their return and resale options, circularising the economy while still allowing consumers to purchase like-new items.

Inflation Increasing the Cost of Living

Inflation is rising in almost every nation, and people are paying more for goods and services. As it happens with many systemic issues, the impact of inflation is not universal. For a very rich person, paying more for petrol is merely an annoyance, while for a poor person, the same difference in price can be the deciding factor in whether he can even go to work that day.

With the increase in the cost of living, consumers are being forced to redefine their priorities. For many people, new fashion is low on the list of necessities. Consumers are wearing their clothing for a longer time, and they are investing more energy into repairing tears instead of replacing items. One study by Consumer Pulse in the United States found that the number of American consumers who have switched clothing brands or retailers in 2022 is greater today than it was before the pandemic began.4

Inflation isn’t only a problem on the consumer’s side, either. Apparel manufacturers and suppliers have to pay much more along all stages of their supply chains, from the cost of freight to wage increases for their workers. Many of them have no choice but to pass these costs down to their consumers, which in turn fuels the previously mentioned drive for clothing reuse and rental. The subsequent reduction in demand is placing textile producers on a knife-edge.

Increasing Demand for Luxury Fashion

Humanity is full of contradictions. On the one hand there are many consumers who are focused on reducing the amount they pay for clothing, on the other there has been a dramatic increase in the demand for luxury fashion. In 2023, this change in demand will force fashion designers and producers to rethink their strategies.

Many of these luxuries are domestic. After facing two years of strict limits on international travel, some fashion designers have changed their focus to their home countries. Some innovators in the world of fashion have done this out of necessity. Others have done it out of a sense of national solidarity and pride. In both cases, it results in innovation and novel forms of luxury.

In many cases, these novel forms of luxury feed into the circularisation of the global economy. Some luxury designers are turning to 3D printing and seaweed-based fabrics, while others like Stella McCartney are recycling cashmere from off-cuts.

Advancements in technology have also allowed the popularisation of complex garments that were formerly the sole purview of the rich. Improvements in knitting machines, for example, have sped up the production of knitwear that used to be knitted by humans.

Between 2020 and 2022, the world’s focus shifted to local designers and creators. The disruption to global shipping brought people’s attention to what they could acquire at home. With the dawn of the new year, these designers have started to utilise their newfound audience in hopes of growing their brands internationally.

High-end textile and fashion providers, meanwhile, are being forced to reformulate their strategies yet again as the world reopened its borders. As people begin to travel to fashion hubs such as Milan once again, these cities need to prepare for the influx of shoppers.

The Lingering Impacts of Covid-19

COVID-19 has been the key driver of the global economy since the beginning of 2020, and it isn’t about to go anywhere. With vaccines and antiviral drugs available to help prevent its spread, the virus may have less of an impact on the apparel industry now than it did at the beginning of the pandemic. However, suppliers and manufacturers still need to account for its existence when making plans.

In the early days of the pandemic, retailers were forced to shift to selling online and offering delivery and pickup of orders, and this trend is continuing even as people get vaccinated. Many fashion manufacturers who had shifted to also creating masks in 2020 will be moving their focus back to traditional fashion in 2023.

One of the knock-on effects of living in a global economy is that a single COVID-19 outbreak in one factory can disrupt clothing sales halfway across the world. Shipping delays, understaffed retailers, and the rise in second-hand fashion have all permanently changed the global outlook on the textile industry.

Key Players Are Changing Their Trade Policies

All industry in the 21st century is global, and that has never been more evident than it is today. Every industry, no matter how small, depends on global trade and international cooperation.

The ongoing Russian invasion of Ukraine has had a massive impact on the textile industry, since many countries have now suspended their textile exports to Russia. The invasion’s effect on fuel and oil prices is equally impactful on the price of clothing and fabric around the world.

In addition, many countries are now implementing fair trade policies and even placing sanctions on textile exporters who have poor records on human rights. While larger importers (such as the United States) remain steadfastly focused on free trade, every change to the industry has greater significance than it did decades ago.

As the world’s most populated nation, China has been taking many steps to change its domestic and international policies regarding textiles. From shutting down unauthorised factories that use toxic dyes to driving the rebound in demand for natural fibres, China is enacting sweeping changes to its trade policy. These policy changes are in turn altering how other countries do business.

Many countries and regional trading blocs are also in the process of changing their trade policies to account for the continuing impacts of climate change. Canada and the European Union in particular are prioritising lower-emissions goods and services of all types and placing tariffs on technologies that are unfriendly to the climate.

In addition, inflation is changing the outlook of entire governments and industries, not simply individuals. Many countries — especially smaller ones — are focusing inwards rather than placing their priority on importing new textile goods.

Continued Globalisation of Value Chains

The global economy is not a simple chain, where one thing leads to another, causing a single net effect. Instead, it is a web, and every one of its elements is interweaved. The more the world globalises its value chains, the more complex this web becomes — and the more problems can be caused by a single disruption to those chains.

The very shape of these global value chains has changed in the last few decades, and the rate of that change is only increasing with time. Businesses are compartmentalising and subdividing the products and services they offer.

While small businesses have kept their focus on domestic production, the increase in globalisation has led to more large companies outsourcing early aspects of their work to foreign countries. Instead of a vertical value chain, they are increasingly relying on a lateral one.

In addition, the globalisation of value chains has led to an increasing gap between the needs of textile manufacturers and textile importers. Importers are consolidating the number of countries they get their textiles and materials from, even as they expand the amount of material they buy. Textile manufacturers, then, are feeling the impact of this consolidation. Some manufacturers are even being forced to open factories in neighbouring countries to preserve the client relationships that keep them in operation.

Greenwashing vs. Sustainability

Consumers are making more environmentally focused choices than they used to, and as the 2020s move forward, industries across the globe are being forced to address their impact on the environment. They generally have two methods of doing this: embracing sustainability or improving their optics. In an industry that has such a dramatic impact on the planet, textile manufacturers are not exempt from this choice.

The manufacturers that focus on sustainability are making a variety of changes to their methods and processes, including relying on renewable materials, obtaining certification from standards such as the Global Organic Textile Standard, and improving transparency in their supply chains. Some manufacturers are doing this willingly. Others are making the move to comply with new regulations in regions like the United Kingdom and the European Union.

When they engage in greenwashing, textile brands make unsubstantiated claims about the eco-friendliness of their products. They may make claims that their textiles are GOTS-certified when in fact only their raw materials are, or boast about using recycled materials while still relying on toxic heavy metals in their dyes. Manufacturers will commonly make unverifiable claims about the materials they use, for instance stating that they are “organic” without any certification to back up their claim.

The more greenwashing techniques they encounter in daily life, the better consumers become at seeing through them. The textile companies that aim for long-term success are the ones that can prove their green values to consumers. Some textile manufacturers have introduced mobile apps that can track the origins of their fabric using blockchain technology. Others have begun to provide transparency and traceability statements on their websites. In all cases, the textile companies that can back up their claims with credible results are the ones that tend to come out as winners.

Using standardisation tools such as the Higg Index and product passports is one of the most effective ways for brands to demonstrate this commitment. These technologies can account for factors such as working conditions in factories as well.

Greenwashing doesn’t just do direct harm to the environment. It also damages the credibility of the textile producers who are focusing on improving the footprint of their industry. As textile value chains trend toward creating meaningful change, key figures in the industry need to decide where their loyalties lie and act accordingly.

New And Emerging Business Models

If there is one common thread that ties millennia of human history together, it is innovation. Humans are endlessly creative. No recession, pandemic, or other catastrophe will ever be able to change that. The world of textiles and fabric is no exception to this principle.

Over the last several years, many companies have joined the industry to take advantage of the shift towards the circular economy. This goes beyond reselling and reusing clothing, however. One study by United States firm Deloitte estimates that alternative models of commerce could account for a 9 per cent share of the industry by the end of 2023 and a 30 per cent share by 2030.5

Whether they are using social media as a platform for buying and selling clothing or creating fully customised apparel, retailers have begun to truly embrace these alternative models. Some examples of this innovation include:

   Clothing subscription and other rental “re-commerce” models

   Consumer customisation of apparel

   Custom printed, one-of-a-kind products

Advancements in technology are introducing even more innovation in textiles. From 3D printed fabrics to direct purchasing on social media networks, expect these trends to continue in the future. Predicting their impacts on the textile and fabric industries is difficult, but one thing holds true: they will have an impact.

This means that textile and clothing producers need to stay abreast of these innovations, put serious thought into implementing them and then embrace them if they want to stay afloat in the changing global economy.

Logistical Gridlock Across Industries

The latest technological advancements are affecting every industry differently. The same developments that strongly benefit one industry can actively harm another. Although these shifts are causing changes in the way companies do business, the infrastructure that supports these companies has remained the same as it was a decade ago or longer.

For example, the majority of the world’s commerce travels over the sea for at least part of its route. This requires robust ports, cranes and trucking infrastructure on both ends of the shipping route. Without major expansions to this infrastructure around the world, there is a hard limit on the volume of goods that can be shipped by sea, and many of these ports are in urban centres with no room to expand. Ports such as Auckland have circumvented this by installing self-driving cranes that can move and stack shipping containers more quickly, but many other ports cannot afford these upgrades.

Likewise, the world has only a fixed amount of road and rail infrastructure. Expanding busy roads is not always a feasible solution, and when it is, these additions in turn contribute to the amount of traffic congestion in the area. Expanding rail access takes even longer, and there are still functional limits on the number of trains that can use a set of tracks.

As a result, many shipping companies are now being forced to make difficult decisions about what they ship. This gridlock has been one of the major drivers of rising prices. As the world’s population crosses over eight billion, this demand will only increase.

The Growing Talent Deficit

Since the beginning of 2020, the textile and fashion industries have become acutely aware of the talent deficit they are facing. As 2023 dawns, this deficit is only increasing.

Although the era of legally enforced remote work is ending, many job seekers who can work from their homes are prioritising jobs that allow them this benefit. Throughout the supply chain, the companies that allow their employees the ability to work remotely are outperforming their competitors. Many fashion houses, including Tapestry, have made remote work a permanent benefit.

The talent deficit may be impacting multiple industries, but textiles and fashion are among the hardest ones hit thanks to consumers’ and job seekers’ renewed focus on environmental sustainability and good working conditions. Labour forces are organising, demanding safer environments and increased pay. Companies that cannot provide these improved conditions are struggling to hire, let alone keep their employees.

With the growth of the internet, job seekers also gain the ability to communicate with each other about the working conditions and bypass applying for these companies in the first place. Millennials, in particular, are avoiding employment with firms that have poor standards for social responsibility. As this generation enters its prime years, employers are being forced to keep up.

One 2016 study by Cone Communications demonstrated that even before the pandemic struck, three-quarters of United States millennials considered their potential employers’ environmental and social commitments when job searching.6 Nearly two-thirds of them would refuse employment at firms without strong social responsibility policies. Companies across the fashion and textile industries are in for a surprise if they don’t think this percentage has grown.

Many brands have experienced this effect at high levels, as well. The companies that survive 2023 will undoubtedly be the ones that can learn from, and adapt to, this new set of ideals.

Other Elements to Consider About The Textile Value Chain In 2023

The textile value chain was incredibly complex even before the 21st century began, and as new technologies are developed, that complexity will only increase. Fashion and textile brands need to be able to adapt to these technologies as they are introduced.

The shift to online commerce, especially over social media, brings another concern for the industry: cybersecurity. It is critical for companies to prevent data breaches before they happen, rather than scrambling to fix them afterwards. If they are to truly embrace these changes to the landscape of the industry, they need experts to set them up for success.

Ultimately, players across the textile, apparel and fashion industries need to embrace flexibility above all. The amount of change to these industries has been immense, but the rate of change within them is only growing. The ability to adapt to the changing climate, both literally and figuratively, will separate successful companies from ones that fail.

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