Business Challenges Facing the Fast Fashion Industry in 2020

The fast fashion market can shift almost as fast as fashion.

Australians spend a significant amount of money on fast fashion items, but retail is undergoing significant challenges. Businesses will need to manage shifting trends and opportunities in fashion and various compliance issues in order to succeed in 2020.


  • Diminishing marginal utility and low consumer confidence impacts the clothing industry. Consumers are more aware of the common value in fast fashion items, and a ‘too much stuff’ mentality means a cut back on the number of new outfits they buy, even as prices fall.
  • Increased awareness of the environmental cost of clothing surplus. In particular relation to fast fashion, there is a growing concern about the environmental impact the production and consumption of quickly obsolete clothing is having on the planet. The average Australian buys 27 kilos of new textiles a year and accounts for 23 kilos of textile waste that goes to landfill.
  • Compliance and strategic challenges. Businesses in fast fashion need to consider tightening cost pressures and the unlikelihood that customers will bear higher prices. Rising expenses in light of stricter payroll regulations and increased Fair Work audits and the risk of tax audits if operating in cash through retail shopfronts need also be faced. And, just as with most small businesses, you need to factor break-even point, opening hours, licensing costs, leasing or buying of premises, and other issues, against workforce management in a tightening economy. With the boom of the online sales market increasing the speed of product cycles, you’ll need for systems to measure the profitability of each item long-term and structure changes in sales accordingly.


Consumers have more options than ever for fast fashion through the plethora of online shopping options. With the demand for new styles continuing despite cutbacks in spending, anticipated revenue growth is at 4.4% in the current year. This is in addition to the burgeoning value of fast fashion in emerging and Asian markets which can be accessed through online portals. From La Chapelle and Forever21 to international giants H&M and Zara, Asia is taking up fast fashion at a greater extent that in local markets; within sportswear, Asian markets are generating absolute value growth of USD24 billion.

The cut back mentality of the past five years has not only pushed consumers to reconsider the utility value of fashion. Somewhat ironically, it has also prompted consumers who wish to save to turn to fast fashion in pursuit of cheaper clothing alternatives. Clothing is, after all, essential, and in particular in regards to children’s ware, there is a need for more cost-efficient fast fashion items.

Industry revenue, according to Ibisworld, is expected to grow at an annualised 11.8% over the five years through 2018-19, to $2.1 billion.

Planning for 2020

How can fast fashion businesses strengthen their position in 2020?

  • Ethical brands: Incorporate sustainability, not just in your marketing and items, but throughout the entire value chain, from sourcing to supplying. Considering the well-known fact and perception that the fashion industry is one of the biggest contributors to water and waste pollution, fast fashion businesses in particular needs to demonstrate how they intend to counter this. This also helps counter the commonality and diminished utility that deters consumers from buying homogenised fashion items; ethical branding can bring differentiation.
  • Seamless online sales experience: Digital is reigning supreme, with raised expectations of convenience stemming from the boom of e-commerce in fast fashion, online retailing is projected to grow. The fast-paced nature of fast fashion and rapidly changing consumer tastes mean AI and improved digital consumer experiences are needed to track customer data and the retail value of products. The benefit of an investment in digital is the capacity to reach Asian markets.
  • Business strategy, compliance, and restructuring: A virtual CFO can provide profit and loss visibility and open up new financial options, while a tax team that specialises in structuring advice for retailers can reduce risk. This level of financial planning gives you an assurance that your business can manage the ups and downs and changes in the fashion market, and make the most of growth factors. Experts can keep abreast of ATO and government actions in the fast fashion sector, maintain consistent record keeping systems, and implement AI accounting systems.

Calibre Business Advisory invests more time than most firms into finding solutions for our clients. Contact our business advisors and tax accountants to discover new options for your business in Australia and beyond.

Important Disclaimer: Readers should not act solely on the basis of the material on this page. Items herein are general comments only and do not constitute or convey advice. Legislation and proposals of legislation are also subject to constant change. We therefore recommend that formal advice be sought before acting in any of the areas. This news article is issued as a guide to the readers. Calibre Business Advisory Pty Ltd and its associated entities disclaims any losses that may be incurred as a result of the reader undertaking any action based on this article.