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Gen Z Still Loves Fast Fashion, but Boohoo Investors are Spooked

Gen Z are often cited as the most sustainably minded generation. But for a large proportion of young consumers, it’s not easy to stop buying £9 dusty pink cropped lounge sweats and other fast fashion online.

Fast fashion firm Boohoo was one one of the rare winners of the Covid-19 lockdown, with sales up 45 per cent in the three months to May. But its share price has fallen by nearly a third in the last week, wiping out £1.5 billion in value, after allegations of malpractice by suppliers in the English city of Leicester including vastly underpaid staff working in cramped, unsafe conditions by Labour Behind the Label and The Sunday Times newspaper. Campaigners have partially attributed a spike of Covid-19 cases in the region to poor social distancing at the factories. The area is still in tight lockdown despite easing across the UK.

Still, that’s not been enough to change the mind of consumers, who bought over £1 billion from Boohoo last year, a tenfold increase in five years. Over half of 105 Gen Zs surveyed by Vogue Business reported buying “most of their clothes” from Boohoo and other fast fashion e-tailers like Asos, PrettyLittleThing and Missguided. And of those who shop with these brands, half said they would continue to buy from Boohoo-owned brands (PrettyLittleThing, Boohoo and Nasty Gal) even after hearing about the Leicester coverage. Boohoo has rejected the allegations, but accepts there have been breaches of its code of conduct and has launched an independent investigation.

Analysts and Gen Z agree that Boohoo and its peers’ winning formula is attributable to its heavy reliance on influencer marketing, competitive pricing and the fast flow of new styles. Having a local supply chain means products worn on TV shows like Love Island or popular Instagrammers can be mimicked and made available days later. If social engagement suggests demand is there, even more product is ordered. If it can maintain those drivers, it seems unlikely that a significant enough number of its target consumers will abandon the brand. However, nosediving investor sentiment suggests it can’t continue being opaque about its supply chain.

Low price fast fashion meets Gen Zs needs

The majority of young shoppers consulted prefer fast fashion e-tailers because of their trend-led, influencer inspired clothing, extensive sizing and fast delivery. The most common descriptors used for brands like Boohoo and PrettyLittleThing were “accessible”, “affordable” and “fast delivery”.

Mehak Akhter, a 19-year-old from Manchester, regularly posts “haul” videos on TikTok, (a common format among Gen Zs where users show or try on all the things they have bought from fast fashion sites). Akhter buys most of her clothes from Boohoo, PrettyLittleThing and Nasty Gal because they stay on top of the trends and delivery is quick.

“When I’m bored I end up going through them and I always end up buying something,” she says. “All these brands are affordable, they also offer new discounts everyday or student discounts which make you feel better about spending.”

On all of the fast fashion e-tailers, you can sign up to unlimited next-day delivery for around £10 per year. This, coupled with pay later services like Klarna, means young consumers with low funds can buy a fast fashion haul without exchanging any money, until they decide what to keep.

“From a consumer perspective, can you get fashion at that price anywhere else and the buzz and engagement you get from Boohoo? Not at the moment,” says Eleonora Dani, equity research analyst at investment bank Stifel.

Boohoo said it was committing £10 million to a supply chain audit and commissioning an independent review led by Alison Levitt, former principal legal advisor to the UK director of public prosecutions. This is a relatively unusual situation given most major supply chain revelations, including the Rana Plaza disaster in 2013, are typically followed by a quick bounce back in investor sentiment.

Concerns about Boohoo’s supply chain practices are not new, with newspaper exposés and even open criticism in a 2018 report by the UK Parliament’s Environmental Audit Committee, with calls to end the era of “throwaway fashion”. Peel Hunt analyst John Stevenson says that an increasing focus on environmental and social governance by the investment community has shifted the dial and ensured that negative PR like this hits a lot harder. “The point of difference actually is the fund managers, which is interesting,” he says.

Boohoo’s largest external shareholder Jupiter Asset Management says it had previously undertaken site visits to several of Boohoo’s UK suppliers. “We have been given strong assurances by management that any suppliers found to be in breach of the company’s strict code of conduct will be terminated immediately and we will continue to engage with the firm regarding this situation,” it said in a statement. Invesco, another investment management firm who owns Boohoo shares, said we “don’t generally comment on rumours in the press… but we take issues of company governance very seriously and will be investigating these reported concerns to assess their circumstances and validity.”

Young people stick with brands for lack of a better alternative

Less than half the Gen Zs consulted for this story were aware of the Leicester factory news reports prior to speaking with Vogue Business. Laura Nuñez Peguero, 21, in York, northern England, feels there’s a lack of awareness of ethical issues in the TikTok community. “After hearing [about Leicester] I will try to spread the news as I’m sure most people aren’t aware — this should be brought to light.”

Data provided by market research firm YouGov suggests that the story is resonating with the wider population. More Brits now say they would not be proud to work for the company than would be, a measure YouGov uses to track the strength of a company’s brand.

Akhter was horrified at the Leicester coverage and said she would only continue to buy from Boohoo owned companies if they “actively work on resolving this issue and not making the same mistakes”. But for those used to posting haul content, it will be challenging to find new retailers where they can afford the same level of consumption.

Sophie Martin, 21, from East Sussex often posts her high-volume fast fashion purchases on Instagram and TikTok (pictured above), but is now “actively looking” for alternatives to Missguided and PrettyLittleThing.

For those who will continue to shop from Boohoo-owned brands, affordability is the key driver. “I wish I didn’t have to buy from these brands but I do, purely because they are cheap and I can get more for my money,” says Tara, 17, from Manchester.

Respondents felt the onus shouldn’t be on those unable to afford sustainable fashion labels to change their habits and stop buying cheap clothes.

“A lot of my friends who have a similar socio-economic background to me shop on sites like PrettyLittleThing because they don’t have a choice,” says Grace Samuel, a 20-year-old Manchester fashion student. “Boohoo group gets so much [criticism] for how unethical they are. But I think if you look at kind of what a lot of high fashion luxury companies do, many of them are the same in terms of ethical practice.”

YouGov data shows that the longer lockdown went on, the more interested 18 to 24 year olds were in shopping with Boohoo. “The way we consume clothing is tied up in our identity in a way that is very different from other environmental issues that this generation may be concerned about,” says Stella Claxton, a fashion lecturer at Nottingham Trent University.

It’s difficult to break the consumption cycle, where young people today feel pressure to wear the latest trends because of Instagram and reality shows like Love Island, says London student Iona Spensley, 21. She feels that it shouldn’t be down to Gen Z to boycott.

“It’s time for brands to make a change so that people can make change. We need to address the whole behavioural issue with consumerism and the idea that we constantly need to buy. We’re all susceptible to it.”

Credit: Vogue Business – Click here to view the article

More related articles: Gen Z isn’t ready to rent clothes – yet, What Do Gen Z Shoppers Want? A Cute, Cheap Outfit That Looks Great on Instagram, and Gen Z Consumers are Making Companies Bend to Their Will

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