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  • Writer's pictureZoe Cirillo

The Rise of Sustainable Shopping: Why Consumers are Willing to Pay More for Eco-Friendly Clothing

This article was written based on a research project provided as part of the "Level Up" program at the University of Colorado Boulder.


Introduction: The Rise of Sustainable Shopping in the Clothing Industry


Along with the verticals of solar panels, electric vehicles, and composting, clothing and retail is an important vertical to consider when considering how much consumers view the climate crisis as a growing concern and how much they are willing to pay for sustainable options to combat the issue. The fashion industry is not only a significant part of the $14 trillion of total US consumer spending annually [1] but also a highly profitable one, showing "a 21 percent increase in revenues in 2020-21, and EBITA margins doubled by 6 percentage points to 12.3 percent," [2] according to McKinsey & Company. The younger generations, particularly Generation Z, have shown a greater preference for sustainable products in the apparel industry. In this article, we will delve into the rise of sustainable shopping in the clothing industry, including the growing demand for eco-friendly clothing, factors driving consumer demand, the impact of regulations and the climate crisis on the industry, the environmental impact of fast fashion, and the importance of resale and rental models in promoting sustainability.

 

Sustainable Shopping Made Simple

 

Market Share: The Growing Demand for Sustainable Clothing


The demand for sustainable clothing has been steadily growing over the past few years, with consumers increasingly making sustainable choices.


Data collected by Statista shows that the percentage of sales of sustainable clothing items globally is projected to climb to 6.1% of the total market in 2026. [3]


According to McKinsey & Company, sustainability has become a key driver of growth in the fashion industry, with revenues from sustainable products expected to grow by 10-15% annually over the next five years. The consulting firm also notes that sustainability is becoming increasingly important to consumers, with 67% of consumers globally saying that they are willing to pay more for sustainable products. [1]

Additionally, the younger generations, particularly Generation Z, have shown a greater preference for sustainable products in the apparel industry. According to a U.S. consumer study by First Insight, Gen Z's preference for sustainable shopping has influenced not only their parents but also their grandparents. Gen X consumers' preference for sustainable brands has increased by 25%, and their willingness to pay more for sustainable products has increased by 42%. Consumers across all generations are now willing to spend more for sustainable products, with nearly 90% of Gen X consumers willing to pay an extra 10% or more for sustainable products. [4]

As the demand for sustainable clothing continues to grow, companies that fail to prioritize sustainability risk losing market share. Companies that are proactive in addressing sustainability concerns and meeting consumer demand for sustainable products will be better positioned for long-term success.



Factors Driving Consumer Demand for Sustainable Clothing


Consumers are willing to pay more for eco-friendly clothing for several reasons. One major factor is that eco-friendly clothing is often made with high-quality, sustainable materials that are produced using ethical and environmentally conscious practices. These materials tend to be more durable, longer-lasting, and better for the environment compared to traditional materials like synthetic fibers.

According to a Statista survey, 78% of US respondents consider the importance of sustainability when purchasing apparel, and the most important factors when buying sustainable apparel are the use of organic or natural materials, fair trade or ethical manufacturing practices, and the reduction of waste and water usage [7].



Another reason is that consumers are becoming more aware of the environmental and social impacts of their choices. Many consumers are choosing eco-friendly clothing options as a way to reduce their carbon footprint, support ethical labor practices, and promote sustainable living. They are also increasingly concerned about the health risks associated with traditional textile production methods, which often involve the use of toxic chemicals and other harmful materials.

In addition, consumers are recognizing that investing in higher quality, eco-friendly clothing can ultimately save them money in the long run. By purchasing clothing items that are made to last, consumers can avoid having to replace items as frequently, which can ultimately save them money on clothing expenses over time. Moreover, investing in eco-friendly clothing can help consumers build a more sustainable wardrobe that is both stylish and environmentally conscious.

Overall, the willingness of consumers to pay more for eco-friendly clothing is a testament to the growing importance of sustainability in the fashion industry. As more consumers continue to prioritize ethical and sustainable practices in their purchasing decisions, companies will need to adapt to meet these demands or risk losing market share.


Impact of Regulations and the Climate Crisis on the Clothing Industry



Fashion and retail are one of the most impactful when it comes to making changes towards ethical environmental practices. The industry itself has capitalized off of the overconsumption that is so common in the United States without considering the externalities up until recently.

Greenwashing is an immediate problem in the apparel industry as there are not any specific regulations when it comes to marketing to fulfill consumer preferences on sustainability. According to McKinsey & Company (2023) [1], “products making ESG-related claims averaged 28 percent cumulative growth over the past five-year period, versus 20 percent for products that made no such claims." The only current regulations on the industry are implemented from the research done directly by the consumer.


In a current New York Times article titled “The New Laws Trying to Take the Anxiety Out of Shopping” [5], there are states within the US that are implementing state bills to accelerate and ensure sustainability within the apparel industry. For example, California has passed a bill that requires clothing and textile products to be labeled with their environmental impact, and New York has proposed a bill that would establish a recycling program for textiles. These state-level initiatives could pave the way for federal regulations on sustainability in the fashion industry. Federally, there is also work on the FABRIC Act, or the Fashion Accountability and Building Real Institutional Change Act, which is intended to improve the labor rights of garment workers and buoy the American garment manufacturing industry after decades of offshoring. This would encourage transparency from large brands about their ESG efforts and environmental impact. Although this legislation could take years to be implemented, the preferences of sustainable consumers are being noticed by leaders of policy change. More state policy change will most likely kickstart what will be legislated federally.

When it comes to sustainability, the industry’s track record remains a source of concern. The textile sector still represents 6 percent of global greenhouse-gas emissions and 10 to 20 percent of pesticide use. Washing, solvents, and dyes used in manufacturing are responsible for one-fifth of industrial water pollution, and fashion accounts for 20 to 35 percent of microplastic flows into the ocean [2]. The apparel industry is being affected by the climate crisis, which is leading to a growing concern for the environmental impact of the industry. According to the Bureau of Labor Statistics, the apparel industry is responsible for 8% of global carbon emissions, making it one of the largest contributors to climate change [6]. As consumers become more aware of this impact, they are increasingly seeking out sustainable clothing options.

The push for sustainability in the clothing industry has implications beyond just reducing carbon emissions. It also involves promoting ethical labor practices, reducing waste, and promoting transparency in the supply chain. The industry has a long way to go, but with the increasing demand for sustainable options and the potential for policy change, there is hope for a more sustainable future.


The Environmental Impact of Fast Fashion on Clothing


Fast fashion is the process of quickly producing and distributing clothing items in response to rapidly changing fashion trends. Fast fashion brands prioritize speed and low cost over ethical and sustainable practices, resulting in negative impacts on the environment, labor conditions, and overall sustainability of the apparel industry.

The production of fast fashion involves large amounts of water usage, toxic chemical dyes, and non-biodegradable synthetic fibers. These practices contribute to pollution and water scarcity in regions where textile manufacturing is prevalent. Additionally, the fast fashion industry is known for its exploitation of low-wage workers, with many garment workers subjected to poor working conditions and even forced labor.



Consumers have become increasingly aware of the negative impacts of fast fashion and are turning to sustainable alternatives. While fast fashion brands still hold a significant share of the market, consumers are beginning to prioritize ethical and sustainable practices over low cost and convenience. Brands that prioritize sustainability and transparency are gaining popularity among consumers, and fast fashion brands that fail to adapt to these changing preferences risk losing market share.


Importance of Resale and Rental Models in the Fashion Industry


As consumers become more environmentally conscious, they are increasingly seeking out sustainable options when it comes to fashion. One way to reduce the environmental impact of the industry is by promoting the use of resale and rental models for clothing.

According to thredUP's 2023 Resale Report [9], the U.S. secondhand apparel market is projected to reach $70 billion by 2027, and online resale is the fastest-growing sector of the market, expected to grow 21% annually on average over the next 5 years. This growth is driven by consumer behavior amid economic uncertainty and persistent inflation, with value being the #1 driver influencing purchasing decisions. In fact, 52% of consumers shopped secondhand apparel in 2022, and 1 in 3 apparel items bought in the last 12 months was secondhand.

The report also reveals that shopping secondhand has a positive environmental impact, with resale having the potential to cut new clothing production. Buying and wearing secondhand clothing instead of new reduces carbon emissions by an average of 25%, according to Green Story Inc. Moreover, U.S. consumers bought 1.4 billion secondhand apparel items in 2022 that they normally would have bought new, up 40% from 2021.

Furthermore, resale is driving Gen Z's purchasing decisions, with 82% of Gen Z having considered the resale value of apparel before buying it, and 64% of them looking for an item secondhand before buying it new. Retailers are recognizing this demand and the potential for resale models to generate positive ROI and satisfy investor demands around ESG. In fact, 82% of retailers who offer resale expect it to generate a positive ROI, and 45% of retail executives who offer resale say they're satisfying investor demands around ESG.

Promoting resale and rental models in the fashion industry is crucial for reducing the environmental impact of the industry and satisfying the demand for sustainable options among consumers. With the growth of the secondhand market and the adoption of resale programs by retailers, there is hope for a more sustainable future for the fashion industry.


Conclusion: The Future of Sustainable Shopping in the Clothing Industry


As the world becomes increasingly environmentally conscious, the apparel industry is taking notice. Consumers are demanding more sustainable options, and companies must adapt their business models to meet these demands. The younger generations, particularly Gen Z, are leading the charge in prioritizing sustainable options in the clothing industry, and their influence is spreading to other generations.

The rise of e-commerce has given consumers more access to information and options, but it has also led to a greater need for personalization and critical decision making. Companies must amp up their technological capabilities to cater to the need for personalization and to differentiate themselves from competitors. Additionally, the COVID-19 pandemic has accelerated the shift to online shopping, further emphasizing the importance of e-commerce and technology in the clothing industry.

The trend towards sustainability is only going to continue, and companies that do not adapt will be left behind. While there are no specific regulations in place to ensure that companies are fulfilling consumer preferences for sustainability, there are signs of progress. States like California are implementing bills to accelerate and ensure sustainability within the apparel industry, and federally, there is work being done on the FABRIC Act.

askBelynda can be a valuable resource for consumers looking to make sustainable choices in the clothing industry. By providing information and guidance on sustainable options, askBelynda can help consumers make informed decisions that align with their values.




References

[2] The State of Fashion 2023: Holding onto growth as global clouds gather, McKinsey https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion

[3] Sales share of sustainable clothing items within the global apparel market from 2013 to 2026, Statista https://www.statista.com/forecasts/1307848/worldwide-sales-of-sustainable-clothing-items

[4] Consumers Demand Sustainable Products and Shopping Formats, First Insight https://www.firstinsight.com/greg-petro-forbes-blog/consumers-demand-sustainable-products-and-shopping-formats

[5] The New Laws Trying to Take the Anxiety Out of Shopping, New York Times https://www.nytimes.com/2022/09/30/fashion/fashion-laws-regulations.html

[6] June 2012 Fashion, Bureau of Labor Statistics https://www.bls.gov/spotlight/2012/fashion/pdf/fashion.pdf

[7] How important is sustainability to you when making purchasing decisions for apparel, fashion, and footwear?, Statista https://www.statista.com/statistics/1303946/sustainability-importance-apparel-purchase/

 

Zoe Cirillo is a junior year undergraduate student at the University of Colorado Boulder studying strategy and entrepreneurship within Leeds School of Business. She has a strong passion for sustainability through business and hopes to implement more sustainable and ethical practices within the fashion industry in the future.

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