Fast fashion has changed the face of the high street and revolutionised consumers’ relationships with their wardrobes. Companies have employed innovative techniques to bring affordable styles from the catwalk to the shelves (or the web) quickly and efficiently, which has helped make fast fashion one of retail’s fastest-growing areas.
The UK fashion industry as a whole was worth a record £32 billion in 2018, and figures from Pi Datametrics show fast fashion companies made up half of the 20 most-searched fashion retailers over the last four years. However, McKinsey’s State of Fashion report predicts this year will be “a year of awakening” for the industry, because traditional approaches “simply won’t work”.
“Regardless of size and segment, players now need to be nimble, think digital-first and achieve ever-faster speed to market,” the report states. “They need to take an active stance on social issues and satisfy consumer demands for ultra-transparency and sustainability.”
Forward-thinking companies can respond to these trends by engaging in research and development (R&D) to take their fast fashion offering to the next level.
The success of fast fashion depends on efficient production methods, and a radical change in consumer habits demands a constant supply of new styles. These must be available soon after the looks they were inspired by were seen on the catwalk. The R&D that goes into developing those new production and supply processes creates a strong case for tax relief through the R&D Tax Credits scheme, as it often helps achieve a clear scientific or technological advancement for the industry.
Meanwhile, companies are using the insights they gain from production and commercial data to streamline, continuously improving and evolving their techniques. Given the clear trends in the market, however, the industry is going to have to do more than improve the speed at which clothing is produced. Consumers are more concerned about provenance and sustainability than ever before, and a recent report by the House of Commons environmental audit committee highlighted the need for a responsible approach.
More than a million tonnes of clothing are disposed of in the UK each year, and the committee noted resource efficiency is essential to reducing the environmental footprint of the fast fashion industry.
R&D can play a key role in that effort and Alan Wheeler, director of the Textile Recycling Association, told the committee that innovative projects are already underway within the field.
“There is interesting R&D work going on to develop new techniques to recycle post-consumer polyester and cotton waste, and it is already possible to produce a wool yarn from recycled fibres that performs as well as one made from virgin fibres,” he explained.
Transparency and Trust
Industry leaders such as Zara and H&M helped usher in the age of fast fashion by redesigning distribution techniques so they could respond quickly to consumer trends. Now, companies are using data analytics to predict those trends, and technology companies are developing digital techniques to allow retailers to see and place orders for products before they are ever manufactured.
Robotics for fully automated sewing, 3D printing and microfactories designed to rapidly produce prototypes are also helping to improve the production process itself, and research into these areas is often eligible for tax relief. But fashion companies must also consider the need to improve transparency and trust, and McKinsey suggests they take inspiration from outside the industry to achieve this.
The management consultancy gives the example of Marks & Spencer, which engaged in extensive R&D to improve the traceability of its meat products in the wake of 2013’s horsemeat scandal. The company developed new techniques and processes to create a system that now allows it to trace the origins of every piece of beef to an individual cow.
Consumers expect these levels of traceability in other areas too, and one of the biggest challenges for fashion retailers is demonstrating responsible and sustainable sourcing in a chain that can include thousands of separate suppliers. But those who invest in the research required to achieve this kind of significant change will be able to position themselves as leaders in a growing industry.
Making a Claim
Fashion companies have generally been slow to realise the incentives available to them because many see their research and development as part and parcel of their commercial activity. However, the R&D Tax Credits scheme exists to support and encourage exactly the type of research that is occurring in fast fashion, as innovative companies are going beyond traditional techniques. Current activities in the sector that could be eligible for tax relief include:
– Innovative automation of production facilities;
– Use of robotics in manufacturing;
– Research into 3D printing techniques;
– Developing more sustainable supply chains; and
– Creating software to analyse data and predict trends.
Around £3.5 billion is claimed under the UK’s R&D Tax Credits scheme each year, but the entire retail sector only accounts for £180 million. Innovative companies that take advantage of the incentives available will continue to change the face of the fashion market in the years to come, and expert advice is needed if they are to fully realise the benefits. R&D Tax Shop can help you identify eligible activity and compile and submit claims that can be backdated for up to two financial years.
Contact us today to find out if you are eligible.