As fast-fashion companies cash in, costs are mounting
The reach of fast-fashion retailers has grown in recent decades — but so has textile waste. As people buy more and more, and wear items less and less, where does this clothing end up?
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00:00Is fast fashion a lucrative business?
00:03One of the hottest fashion retailers Shein sure hopes so, and is now rumoured to be planning
00:07a stock market debut in London where they're hoping to raise $64 billion.
00:13Smartphone apps and gamifying the shopping experience are driving purchasing for many
00:17of these companies.
00:18But what happens to these clothes once they're no longer trendy?
00:22Many unwanted items are sent abroad.
00:24One big importer is Chile.
00:26In this episode, we look at the business of new and old clothes.
00:30Even though used garments for many global brands can end up here, predictions for the
00:34sector are trending up.
00:37Chinese-founded Shein has been growing in popularity with millennials and Gen Z in recent
00:43years.
00:44The company boomed during pandemic lockdowns and grew to over $30 billion in revenue in
00:502023.
00:52But other cheap retailers have been around for decades.
00:55We're talking about companies like Zara, H&M and Primark, just to name a few.
01:01The value of the sector is worth billions and is expected to grow to $185 billion by
01:072027.
01:08Critics say fast fashion dominates the retail sector.
01:12On 10 clothes sold in France, 7 are low cost.
01:18So this model has become hegemonic.
01:24Julia Foer is a member of En Mode Climat, a French group looking to reduce the environmental
01:28impact of the textile and fashion sector.
01:31She points out that even while the cost is going down, people are buying many, many more
01:35pieces of clothing every year.
01:37A French person, on average, buys 50 pieces a year.
01:44This is twice as much as in the 80s.
01:47Ah, the 80s.
01:49Compared to now, it was really just the beginning of widespread free trade deals and globalization.
01:54So fast fashion is a big influence on the market.
01:57But what is it?
01:59So fast fashion is a mix of two things.
02:03A huge quantity of clothes being produced and then consumed.
02:08And very low prices.
02:11Low cost is primarily enabled by globalization.
02:14Industries over time have developed specialized workforces in cheap countries and source materials
02:19from where they can get the lowest possible price.
02:22All of this is enabled by a complex web of production and trade.
02:26For example, let's look at cellulose that's made into viscose fabrics.
02:30Now we have a huge industry here that are making viscose, cellulose for viscose.
02:36Barbara Pinho is the director of the Fashion Observatory of the Diego Portales University
02:41in Santiago, Chile.
02:43They are selling this cellulose from viscose to China, okay, that are producing viscose.
02:49Most of the textiles are produced in China, tailored or made in, making clothes in India
02:57and then goes to the huge markets that are the United States or Europe.
03:03Looking around the world, some of the top exporters of clothing by value share are China,
03:08followed by the EU and then Bangladesh.
03:12China seems obvious, but the EU, well, the block is also the top importer of textiles.
03:17Lots of these exported textiles are actually made elsewhere and re-exported
03:22and luxury goods pump up the EU numbers.
03:27Back to Bangladesh, which has an international reputation as a clothing maker.
03:31Producing clothes in this South Asian country is cheap, but working conditions can be terrible,
03:37with the average salary for a garment worker in that country being just about $100 per month.
03:42Minimizing costs by moving around the world to get the best prices,
03:46all while taking advantage of free trade agreements.
03:49This helps keep prices low and creates, like we discussed earlier, big volumes.
03:55So that means we produce a lot and we sell a lot with very thin margins.
04:02And so we have to sell a lot of clothes.
04:05Here's everyone we reached out to for this story.
04:08While H&M, Primark and Zara have responded by pointing to their existing sustainability concepts,
04:14Timu doesn't acknowledge any responsibility for sustainability.
04:17They say they're only a platform and don't produce goods.
04:20We had hoped to find a time to visit a store or packaging facility to film.
04:25None of the companies were able to find a time before a deadline in Germany.
04:28Some never answered our emails.
04:31Online shopping allows companies not only to show customers seemingly endless options,
04:36but also to incentivize shoppers online to buy more using all sorts of methods.
04:42On the internet, you can push people to buy stuff they don't need even harder.
04:47Within a physical shop, you can push them to buy novelty,
04:52but you cannot put a big amount of novelty because you are limited by the surface.
04:58On the internet, you can propose millions of novelties.
05:02This is what SHEIN is doing.
05:04SHEIN adds at least 2,000 new items every day, according to an investigation by Rest of World.
05:11We talked about SHEIN and their rumored initial public offering earlier.
05:14Since the latest reports that SHEIN wants to go public in London started percolating,
05:18Reuters reports that SHEIN has increased prices on average on many items,
05:23which could boost revenue and profits and make them more attractive to investors.
05:27According to global data, the US, Germany and the UK are SHEIN's biggest markets,
05:32but across the world, the company has really gamified online shopping.
05:36Their clothing has gained even further exposure on platforms like TikTok,
05:39where hauls are a popular form of content, according to global data estimates.
05:44But what happens to this clothing after it's no longer trendy,
05:47when these shirts, dresses or shoes are recycled or donated?
05:51Some could someday end up here, in this clothing graveyard in Chile's once pristine Atacama Desert.
05:56We'll return to this site later.
06:00But first, let's talk about what happens to clothing after you try to donate it.
06:04Whether it's a charity shop or a recycling bin at a retailer,
06:08the next life for your old shirts or jeans is murky,
06:11with H&M's Close the Loop campaign being accused of, quote,
06:15greenwashing in recent years.
06:17But recycled textiles are rare.
06:20Now, research shows that actually across the whole industry,
06:24less than 1% of the materials that are used to make clothes
06:29are currently recycled back into clothing after use.
06:33Jules Lennon is the fashion lead at the Ellen MacArthur Foundation,
06:36a group that promotes circular economies.
06:39We'll return to some of her solutions later,
06:41but she points out that choices during the construction process
06:45can make clothing harder to recycle.
06:48Currently, when textiles are recycled,
06:49it's common to turn them into cleaning materials,
06:52and recycled threads and fibers can even be made into things like tote bags.
06:56So what happens to the other overwhelming majority of clothing?
07:00Well, that brings us here, to Iquique, in the northern part of Chile.
07:05This country is the number one importer of used clothing in South America,
07:09and the port of Iquique is a popular destination.
07:12Since 1975, this stunning seaside is also home to the Iquique duty-free zone,
07:18Zofri for short.
07:19The Zofri has been in operation for over 40 years,
07:25which is the free trade zone that's part of a state policy
07:28to inject resources and improve the economy in this sector in the north.
07:33And that then allowed the entry of a series of products
07:36from all countries, all regions, and taxes.
07:40Other items was used clothing.
07:45Labeled by country of origin, or brand, or type,
07:48clothes are bought and sold here by the bale, which can weigh 25 kilos.
07:53First and second categories are the best quality.
07:56Clothing importers and exporters are all over Iquique.
07:59The local name for the used clothing that comes in is even ropa americana,
08:03or American clothing.
08:05Some clothing will be exported to other countries,
08:08and sometimes even sold locally.
08:10Close to Iquique is the town of Alto Hospicio.
08:13Here, clothing that isn't sent abroad or elsewhere in Chile is sold.
08:19This market in Alto Hospicio is called La Quebradilla.
08:23It's home to small-time vendors that buy packages of clothing from Iquique,
08:27then sell items individually.
08:29Merchants told our reporter that a package of fourth category used clothing
08:33can cost about 30 to 40 euros in the Zofri.
08:36Prices here are cheaper than in stores,
08:38which makes it economical for bargain hunters and people on a budget.
08:43The other day I bought a pink jacket that in stores would be 40 euros.
08:48It was 5 euros, or like 10 euros at the most expensive.
08:51But the difference was a lot.
08:56And even small-time sellers hunt for specific brand names
08:59in order to resell online.
09:03This one came out to 10 euros, and I can sell them for up to 20.
09:06These, I got them for 4, and I can sell them for 15.
09:11But ultimately there are items that can't be sold,
09:14and that's when they end up here, in this clothing graveyard.
09:18These abandoned clothes are on the edge of the town of Alto Hospicio.
09:21These sand dunes that you can see here,
09:23under them lay clothes that were simply buried,
09:25or the remains of burnt merchandise.
09:28This all means that what we can see now is only the tip of the iceberg
09:32when it comes to the abandoned clothes.
09:38For comparison, this is what the graveyard looked like just a few years ago.
09:46Edgar Ortega is the head of the environmental directorate in Alto Hospicio.
09:50It's a very old problem.
09:52They brought clothes from the Zofri here,
09:54which obviously doesn't have any type of permit or environmental qualification.
09:59Edgar says poor-quality clothing items with no resale value
10:03are the reason for these dumps,
10:05with small-time merchants left holding the bag for clothes they can't sell.
10:10They buy items in the free trade zone as clothing, not as waste,
10:14and once the clothes don't have a value in any of the markets or in the community,
10:18they end up in charge of finding a way to eliminate it.
10:22Municipal officials say hundreds of cameras have been installed in the last few years
10:26and that dumping overall has decreased.
10:29But even during our filming,
10:30authorities caught two vehicles allegedly dumping and issued citations.
10:34But tracking down individuals one truck at a time won't stop the flood of used clothing,
10:39so what will?
10:42Stepping back, what can be done to stop the avalanche of clothing,
10:46which is, as we know, a global problem?
10:49Let's look first to Europe, to France.
10:51You remember, we talked about how much fast fashion is sold here.
10:55A new law has been approved by the National Assembly,
10:57but is still waiting to go through the Senate.
11:00Some of the major impacts of the law would be putting in place an eco-point system
11:04to evaluate companies.
11:06Those that perform poorly will face fines of 5 euros per item.
11:10The government will also ban publicity for fast fashion companies.
11:16If we maintain the ambition of the French law,
11:19and if we copy it at the European level,
11:22that could change everything in the textile industry.
11:25Proponents of the law say France is trying to lead in the EU on the topic of overconsumption.
11:31Other groups are hoping to unify the businesses themselves to tackle the problem.
11:36The Alan MacArthur Foundation has worked with some of the top brands from around the world,
11:41like Primark, to try to create minimum standards for clothes.
11:45Goals include making materials last longer and easier to recycle.
11:50For example, eliminating rivets from jeans.
11:53Technically, there's no question over whether or not they would be needed
11:57and still deliver the same performance for the jeans.
12:00It's a design choice to have them and they interfere with the recycling.
12:05Part of Jewell's mission is to make it clear that companies can make money
12:08while reducing their impact on the environment.
12:11That's why she's pushing against unnecessary waste.
12:14The result of this is really that the fashion industry is missing out
12:18on hundreds of billions of dollars of valuable materials.
12:21Or let's take a look at this project at the Diego Portales University in Chile.
12:27The students and professors there are looking to transform discarded textiles
12:30into a new product that can be used in construction.
12:34My dream is why not to become a center of recycled textiles in South America.
12:44But the big question remains, can this huge problem with fast fashion
12:48that so many clothes are ending up trashed be solved by businesses and consumers?
12:53Or ultimately, will such a huge problem require regulation
12:57or court intervention to solve it?
13:00A lawsuit is exactly what's happening in Chile now.
13:03Filed two years ago in Chile's environmental court to try to stop the dumping
13:07and then clean up the once pristine Atacama Desert.
13:13The landowner has to make sure that his land, his property
13:17does not threaten to endanger other people.
13:21Pauline Silva Heredia is a lawyer, but she filed a lawsuit as a citizen.
13:26She grew up in this region and has family in both Iquique and Alto Justicio.
13:31She says the government is ultimately responsible for taking care of the land.
13:37And that's what I'm claiming.
13:38You're a negligent owner.
13:39That's what I mean.
13:40You're a negligent owner because clothes are deposited on your property
13:44and clothes are burnt.
13:48But the Chilean environmental court has not yet come to a final conclusion on this case.
13:54So how lucrative is fast fashion and what are the dark sides?
13:58While fast fashion practices pervade the retail sector
14:01and companies like Shein are betting big on online shopping,
14:05we know where millions of tons of clothes end up.
14:08The question is, will companies really make their products more sustainable?
14:12And is sustainability profitable?
14:15Or will it take court cases and new laws to solve the problem?
14:19Until those come into force, business will continue and so will the dumping.
14:24And yes, it is lucrative.