The Fashion Council Germany (FCG) and Ebay Germany recently published the study “Status of German Fashion 2024”. Together with the research institute Oxford Economics, the economic significance of the German fashion industry (clothing, shoes, accessories, bags and jewelry) was investigated. It also looked at the key challenges and opportunities facing the sector, as well as the impact of global trends such as sustainability and globalisation.
The study was first published in 2021; However, the latest edition focuses on the consequences of the corona pandemic for the sector and its influence on sustainability and market structures. The key finding: Between 2019 and 2023, employment fell by an estimated 20 percent, meaning one in five jobs were lost.
“The pandemic has exposed many weaknesses in our globalized fashion world – from the fragility of supply chains to the need to rethink our production strategies. But it has also shown us the opportunities of accelerated digitalisation, which is now emerging not only as a trend for the future, but should be seen as a necessary condition for the further development of the sector,” Christiane Arp, Chairman of the Board of Directors, and Scott Lipinski, CEO of the Fashion Council Germany, summarize in the foreword of the study.
It is recommended to provide greater political support, create synergies within the fashion industry and with other sectors, strengthen domestic production and promote the “Made in Germany” label. In addition, it is important to expand the digital infrastructure to remain competitive in the long term.
“With the publication of the second edition of our study on the status of German fashion, we want to bring about a change. The collaboration with Ebay Germany and Oxford Economics provides us with valuable, up-to-date insights into the challenges and opportunities facing the fashion industry. waiting – especially at a time when the consequences of the corona pandemic and other social events are still affecting us and the digital transformation is in full swing. The study shows us clearly: it is time to set the course for a sustainable future Lipinski said in a press release.
Contribution of the German fashion industry
The fashion industry drove a total GDP contribution of approximately 70 billion euros in 2023 and itself contributed 29 billion euros in gross value added (VAT) to GDP. Industrial purchasing costs in other economic sectors stimulated €23 billion and employee consumption expenditure (in the sector and the supply chain) a further €18 billion in VAT. “For every 100 euros the fashion industry itself contributed, it supported 140 euros of additional VAT in the rest of the German economy,” the study concluded.
In terms of employment, the fashion industry supported around one million jobs in 2023, of which around 620,000 in the sector itself, another 210,000 in the supply chain and 180,000 through employee consumer spending. “This means that for every 100 jobs in the fashion industry, a further 63 jobs in other sectors were supported,” the study said.
Strengths and weaknesses of the German fashion industry
One of the strengths of the sector is the high consumer confidence in fashion products from Germany, which are known for their durability and quality. “The large German sporting goods manufacturers in particular are known worldwide and are among the largest fashion companies in Europe,” the study notes.
Numerous German companies are also committed to sustainability and transparency in the supply chain, which means they are internationally seen as future-oriented and socially responsible. The industry is also known for its innovative strength, for example the development of new fibers or textile machines, which keeps it competitive.
Weaknesses include high production costs, which have contributed to the relocation of production abroad. This leads to a loss of expertise and endangers the innovative power of the sector.
Furthermore, the sector lacks cultural anchorage compared to abroad: “Accordingly, the domestic sector enjoys a lower status than in countries such as France and Italy, where the fashion industry is more strongly anchored in culture,” the study notes. This, among other things, makes it more difficult to attract skilled workers and talent and the increasing shortage of young professionals threatens the future profitability of the sector.
Long-term challenges
Given global calls for more environmentally friendly production methods and a growing interest in the circular economy and digital innovations, the sector must carefully plan and invest to combine technological advances with sustainability values and be a driver of growth.
While legislation, such as the EU Corporate Sustainability Reporting Directive (CSRD), allows for a uniform regulatory framework, implementing the required detailed sustainability reporting poses a challenge.
“Compliance is no longer a matter of simply ticking boxes, but an ongoing process that requires transparency at every level. Brands must map their entire supply chain, identify areas of risk and work with partners to promote a culture of accountability. This requires in-depth understanding of the different actors involved and a continuous commitment,” said Philipp Mayer, CPO and co-founder of Retraced.
Circular economy initiatives may also be “positively assessed”, according to the study, but may entail higher production costs and longer production times. “This balance between cost pressures and sustainable practices remains an important issue, as consumers are sometimes unwilling to pay a corresponding premium for sustainability.”
Digital innovations such as the Digital Product Passport (DPP), Artificial Intelligence (AI) and technological textile innovations, which are increasingly characterizing the sector, have their specific advantages and disadvantages. “For example, the DPP improves transparency and sustainability, but does not ensure a balance between data transparency and the protection of corporate interests,” the study warns.
AI and technological innovations are useful, but they pose risks for jobs and social inequality, or have consequences for people and the environment.
Recommendations
An important recommendation is to promote German craftsmanship. “A successful transformation of the fashion industry requires more than just technological innovations and digital transformation – we must also invest in the traditional crafts that form the foundation of our sector,” the study advises.
“The craftsmanship behind the production of high-quality fabrics, precise tailoring and unique designs cannot be lost. Innovations, as important as they are, can only reach their full potential if they are built on this artisanal foundation,” the study said.
Therefore, traditional craftsmanship must be combined with modern technologies to future-proof the sector. “We must therefore promote digitalization as much as strengthen crafts to ensure the long-term innovativeness of the sector while preserving our cultural and technological identity,” the conclusion reads. Interviewees from companies such as Mended, Carbon Trust, Rehubs and Retraced, who were surveyed as part of the study, also recommend greater political support for fashion companies in implementing sustainability strategies. They are also asking for more financing options in this area.
Globally, they recommend making German fashion more visible and promoting appreciation for it – for example through political support, partnerships and international activities, as well as synergies within the sector and with other sectors.
Domestic production must also be strengthened to regain the know-how lost due to offshoring (moving work to another country). Tax adjustments can increase the attractiveness of production in Germany. Furthermore, they point out the potential of the “Made in Germany” quality mark, especially in light of sustainability: the German fashion industry could distinguish itself as a supporter of responsible production.
At the same time, they emphasize the need to expand digital infrastructure to meet the future demands of the sector and remain competitive in the long term. “A dynamic environment such as the fashion industry is characterized by technological advances, changing consumer preferences and global economic conditions. A flexible and innovative approach is crucial for the long-term success of fashion companies,” adds Mandy Krüger, Head of Fashion at Ebay Germany, On.
Conclusion
“The fashion industry must fundamentally change its way of thinking – from a “take, make, dispose” model to a circular system that saves raw materials and extends the life cycle of products,” the study recommends. This includes the implementation of circular principles, which requires innovative materials and design concepts, as well as new business models that promote the reuse and recycling of clothing. “This is not only an environmental necessity, but also an economic opportunity for companies that want to position themselves as pioneers in a future-proof fashion industry,” the study advises.
“The need to transition from a linear to a circular textile industry is driven by many factors, including consumers’ growing awareness of sustainability, the urgent need for climate action and an increasingly regulated environment,” summarize Kirraly Antcliff, Petra Schweiger and Chris Devote ReHubs together.
“Upcoming regulations from the European Commission, such as the Waste Framework Directive (WFD), the Ecodesign for Sustainable Products Regulations (ESPR) and the EU Strategy for Sustainable and Circular Textiles, aim to potentially impose requirements on the recycling rate, the disclosure of product information on sustainability, restrictions on textile waste exports and more. Moreover, before January 1, 2025, Europe’s member states face the mandatory challenge of setting up separate collection systems for used textiles. To remain competitive, the sector will have to undergo a profound need to undergo a transformation to circular business models,” the experts said.
The study can now be downloaded from the FCG website. The Fashion Council Germany and Ebay also invite you to a digital presentation on January 14, 2025.
This article was translated by Susan Zijp using an AI tool called Gemini 1.5. .
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Source: fashionunited.nl
