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“It’s Collapsing Violently”: Coronavirus Is Creating a Fast Fashion Nightmare
Dana Thomas, the author of the fast fashion deconstruction ‘Fashionopolis,’ explains the severe impact of coronavirus on Bangladesh’s garment export industry.

By Rachel Tashjian
April 2, 2020

Could the coronavirus pandemic bring a reckoning to fast fashion? Many fashion industry insiders have posed the question over the last few weeks, imagining a silver lining to the industry’s forced pause. If fashion is forced to operate at a new, slower pace, even temporarily, might fast fashion, which epitomizes the industry’s obsession with speed and novelty, come to an end? Or at least...slow down a little?
But the reality of the virus’s impact on fast fashion is far from positive. Earlier this week, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), which represents factory owners, reported that $2.81 billion worth of work orders, made to 1,025 factories, had been canceled. And if fast fashion is facing a disaster, it is the workers in Bangladesh, which is the largest exporter of garments in the world after China, who are bearing the brunt of the crisis. A survey of factory owners by Pennsylvania State University’s Center for Global Workers’ Rights released last week stated that the canceled orders—which many Western companies are refusing to pay for—have left millions of workers, many of whom are women from rural areas, without wages owed or severance. Nearly all Western buyers have refused to contribute to worker wages, the survey found. “Our situation is apocalyptic,” Rubana Huq, president of the BGMEA, told the New York Times.
Fast fashion experts have seen this coming. Late last year, writer Dana Thomas released Fashionopolis: The Price of Fast Fashion and the Future of Clothes. Thomas traveled to factories in Bangladesh to see the fast fashion factory system up close, and to measure its impact on human life, speaking to workers who survived the Rana Plaza factory collapse, which resulted in the deaths of 1,134 people, with more than 2,500 injured. If you read her book, you will never look at your closet the same way.

I can’t even imagine. I’ve been to Bangladesh. I saw how poor it was. I [went with people] and saw the shanties that were their homes; they aren’t even going to get their $95 a month now, which is half a living wage. [Note: economists calculate that the living wage, or the amount needed to cover essential needs such as housing, food, and clothing, is $214 per month in Bangladesh.] There’s just going to be no work for months. I just can’t begin to imagine the poverty, the illness, the malnutrition. It’s going to be so profound.
When I was there, I thought, This country is relying too much on one industry to support the entire economy. Eighty-four percent of its exports is garments, and it’s an export country. You have a new crew of young executives [at major fashion companies] who all just counted on the Chinese consumer for the luxury industry, and young consumers in the U.S. and Europe for the fast fashion industry, and it was just: volume, volume, volume, and pushing us to buy more and more and more, not ever thinking something could happen like 9/11, like SARS, like this, where boom—we just stopped shopping.
It never occurred to them because it hadn’t happened in a generation, and they’re getting clobbered with the way they set up the supply chain. Countries like Cambodia, Vietnam, and Bangladesh, were so dedicated to making all these clothes to fill that [demand for] volume. It’s a gigantic house of cards, and it’s so delicately balanced. One thing goes and it’s just all collapsing. And it’s collapsing violently.
But is this the end of fast fashion?
We may not see the end of fast fashion. I was reading this really interesting piece by David Chang, about the restaurant industry, and he said, What I think you’re going to see is that it’s the big chains that survive. I think H&M, LVMH [the luxury conglomerate, which does not operate fast fashion companies], and Zara—they’re going to be fine. It’s going to be smaller companies, or ones that were already teetering, that were putting into place turnaround plans…that won’t survive.
The incredibly inhuman and demanding structure of these factories suggests that even if they close because fast fashion brands stop placing orders, they can very quickly open up again and produce stuff as soon as a brand snaps their fingers.
All these brands have canceled their orders, [and] they’re going to have all this leftover inventory because no one’s buying anything. And when they finally run out of the inventory, they’re going to say [to factories], We need clothes fast. So they’re going to make everyone work. And the workers are just desperate for anything, any kind of work. They’ll come running back, and they’ll probably be paid less.
And they don’t have unemployment, and they don’t have health insurance, and they don’t have maternity leave, and they don’t have paid vacation.
The price of eggs, ground beef, gasoline, a house, the price of a car, the price of gasoline during the Depression: it’s all gone up since that. But the price of clothes is the same.
What happens a lot of the time, as you explain in your book, is that a big brand might have a contract with a factory, but that factory outsources some of the labor to a semi-legal factory or sweatshop, and the brand is totally unaware that their apparel is being made so unethically. We saw that in the recent New York Times exposé on Fashion Nova, for example, where the brand said they had no idea their clothes were being made [in Los Angeles] by underpaid workers.
I went to see those factories in LA with someone who said, ‘I come in here and I see Forever 21 [on a label],’ and then [the company will] say, ‘Well, we had no idea.’ It’s like, wait a minute. You lose track on the other side of the planet—I get that. You have your contractor, you trust your contractor, but he does things behind your back. But you are not in Dhaka—you’re an LA-based company, producing in LA. You can’t keep track of your supply chain, and they’re making things just around the corner from your headquarters.
It’s a shady thing that goes on because [brands] are trying to get the cheapest prices possible. Fast fashion is ridiculously, wrongly cheap. [If you look at] the price of eggs, ground beef, gasoline, a house, the price of a car, the price of gasoline during the Depression, it’s all gone up since that. But the price of clothes is the same. And that’s because [these brands] keep paying less and less and less. ‘Can you do this for 10 cents? We want it for eight.” And then the only way they can do it is to find somebody who’s off the books, who’s got illegal workers, who can do it for five cents a piece. So then the middleman makes three cents, and he’s delivering it at eight cents.
The pyramid that I was talking about is a very fragile pyramid: if Forever 21 stops calling the first guy, the rest of it falls apart.
So because of this very interdependent pyramid structure, this house of cards, that you’re talking about, what does reform of this system or radical change look like? Who could lead that?
I don’t know. I’ve been thinking about this since the book came out. I’ve been thinking about it since I went to Bangladesh and I was like, This is just so wrong.
First, it takes integrity, and courage, and conviction, and there isn’t a lot of that—not just in fashion, but in general, these days. Those things went to the wayside in the age of globalization. And that’s why we’re all being squeezed, and yet other people are getting really rich. We need a dash of Marxism, to be sure. I don’t think you need a complete Marxist revolution, but sort of like Tabasco—we could use a dash of it, right?
[Fast fashion] just needs to be regulated, seriously regulated. And then you go, well, who would regulate it? Would we have the equivalent of WHO [the World Health Organization], or the East European Commission in Brussels, or the FAA?
Maybe we need something that’s non-political, like the Federal Communications Commission, that establishes some basics in garment and apparel production, and also sets standards for imports, and then you have to meet the standards. And if you don’t meet the standards, your clothes can’t come in. But, I mean, there are always people who are going to find ways around it.
One can only hope for a huge Democratic sweep, but then everything’s going to be such a mess. The last thing you’re going to think about is the clothing industry, even though it’s so important to the economy.
I’m also curious about the creativity supply chain, as it were. You trace in one chapter how a dress is developed over a period of months by the designer Mary Kantrantzou, and how quickly—instantaneously—it is knocked off, because of social media at the shows and the speed with which factories can produce these clothes. What do you think happens to a fast fashion brand when fashion week is canceled? What do they have to copy?
We might just miss a whole season, and if we do, that’s okay. We have enough clothing out there that we don’t need to make any more clothes for decades and we’ll still have plenty to wear.
So what are H&M and Zara going to do? They’re going to just keep recycling stuff. They kind of tweak things all the time anyway. They have something in red? They make it in blue. And you know, what in the end do we mostly wear? T-shirts and jeans. At any given moment of the day, half the planet is wearing jeans. The first table you see when you walk into [Uniqlo or Zara] is jeans. That’s their bread and butter—it’s like when you walk into a luxury store and you see handbags. So they’ll just keep making jeans.
The way you lay out that production schedule makes me realize that there is a dystopian possibility that clothes we saw at the men’s shows in January, or the women’s in February and March, might exist as knockoffs in stores right now but the originals may never go into production.
Yes, absolutely. You could get things right now at H&M and Zara and Mango that were on the runways in February and March, that they banged out really fast, and the [originals] will never see the light of day. [Note: here’s a $190 jacket at Zara that appears to nod heavily at the sequin bomber shown on Celine’s fall runway in Paris in February.]
It’s weird and heartbreaking. As Rana Plaza went down, I realized that the clothes that those people were making, the day the building went down, when thousands of them were crushed in that building—those clothes still went to store floors, and people bought them.
Oh my god. That’s horrifying.
What’s most frustrating is that when I was working on the book, I was reading stuff from the early 19th century and except for the language, which was far more formal, it was the same story. Oliver Twist—it’s the same story. If you told Charles Dickens that in 2020 the sweatshop will still exist, but it will be in Southeast Asia, he’d say, You’re out of your mind. Surely we’ll have evolved more than that by then.
This conversation has been edited and condensed for clarity

From the above article answer the question 1 and 2 in paragraph form and also with the graph

1. H & M, Primark, Zara and the like, are part of the ‘fast fashion’ industry. What industry structure do you think they operate in: perfect competition, monopolistic competition, oligopoly, or monopoly? Use the characteristics we have talked about: (# of firms, freedom of entry, differentiated products, shape of the demand curve, ability to earn a long-run economic profit) to support your assertion. One or two word answers will not do for example: Q. Number of firms? A. Lots. Use a little imagination in describing your reasoning. You could ever use a neat well organized table to help answer this.

2. In the short-run, what will these firms have to do to survive the Coronavirus disaster. Think in terms of Total Cost, Variable Cost, and Fixed Cost. The average cost structure of the firm may be helpful ATC, AVC, AFC
I would like you to do in approximately 250 words is to read the article and answer the above two questions. A graph is helpful.
What I am looking for is how you think and use the tools of economics to explain what will happen in this market keep your answer short and succinct.

Answer 1

1. H & M, Primark, Zara and other clothing companies world wide operates in a monopolistically comapetitive industry structure. The main characteristics of this industry is large number of operators in the market. A huge number of producers from different countries of the world especially from Bangladesh, China, Australia, US and many other countries operate in the market. Clothing is one of the main production of many developing countries.

Another characteristic is differentiated products in garment and fast fashion industry. Profit margin in this industry depends on continuous product differentiation.

2. During the coronavirus disaster, this industry is facing a huge decline in demand from all over the World. Numerous workers engaged in this industry are in distress. The fear of joblessness push them to offer labor at a very cheap rate. Many firms have left over inventory, which they have to clear first.

When revenues fall, firms need to decrease their costs. Fixed cost cannot be changed. Therefore, they have to focus on cutting operational and other variable costs. Low cost structure (by lowering average total costs and average variable costs) with creative supply chain can manage the disastrous situation.

In the below figure, the shaded area is the amount of profit that a firm in this market can earn in normal situation. However, during Coronavirus disaster, total revenue and marginal revenue falls. Profit level falls due to cost of operation and inventory accumulation. If ATC or AVC costs can be reduced so that the firms can survive in the market.