Bcard

Economic Resilience

Companies usually rely on external funding, meaning investments are mostly covered by institutional banks or other investors. However, this makes companies less willing to take risks and more vulnerable (liable) to economic issues.

VET: Can you think of alternative ways of financing entrepreneurial risk (e.g. crowdfunding, or sharing risks with others)?

HEI: How has the financial landscape changed in the last few decades, and how does it impact your organization today and in the future?


Economic Resilience refers to the ability of fashion businesses and the overall fashion industry to withstand and adapt to economic disruptions, shocks, and changing market conditions while maintaining their operations, profitability, and long-term sustainability. It involves strategies and practices that enable fashion companies to navigate uncertainties and challenges, ensuring their continued viability in the face of economic fluctuations.

Adaptability to changing market conditions

Economic resilience in the fashion domain requires the ability to adapt to changing market conditions. This includes monitoring and analyzing market trends, user preferences, and competitive dynamics. Fashion businesses need to stay agile and flexible, adjusting their product offerings, pricing strategies, and marketing approaches to meet evolving customer demands and market trends. This adaptability helps fashion companies stay competitive and relevant in the face of economic uncertainties.

Diversification of product portfolio

Economic resilience involves diversifying the product portfolio to reduce dependence on a single product or market segment. Fashion companies can expand their offerings to include a range of products, styles, and price points, targeting different customer segments. By diversifying their product portfolio, fashion businesses can mitigate the risks associated with fluctuations in demand and market preferences. It enables them to capture opportunities in various market segments and reduces the impact of economic downturns on their overall revenue.

Supply chain optimization

An essential aspect of economic resilience in the fashion domain is optimizing the supply chain. This involves building strong relationships with suppliers, ensuring efficient inventory management, and having contingency plans in place for disruptions such as raw material shortages, transportation delays, or labor issues. By establishing robust supply chain networks, fashion companies can respond swiftly to changes in demand and minimize the impact of external economic shocks.

Financial stability and risk management

conomic resilience requires maintaining financial stability and implementing effective risk management strategies. Fashion businesses need to have sound financial practices, including managing cash flow, controlling costs, and diversifying funding sources. They should also assess and manage risks associated with currency fluctuations, interest rates, and market volatilities. By maintaining financial stability and implementing risk mitigation measures, fashion companies can better withstand economic downturns and position themselves for long-term success.

Embracing sustainability and ethical practices

Economic resilience in the fashion domain is closely tied to sustainability and ethical practices. Fashion businesses that prioritize sustainable sourcing, responsible manufacturing, and ethical labor practices are better positioned to navigate evolving user expectations and regulatory requirements. By incorporating sustainable practices, fashion companies can enhance their reputation, attract conscious users, and mitigate the risks associated with changing societal values and environmental concerns.

Innovation and technology adoption

Economic resilience also involves embracing innovation and leveraging technology advancements. Fashion companies that invest in research and development, adopt innovative manufacturing techniques, and leverage digital technologies for marketing and operations are better equipped to adapt to changing economic conditions. By staying at the forefront of technological advancements, fashion businesses can improve efficiency, reduce costs, enhance user experiences, and gain a competitive edge.

Case studies

MUD Jeans – Lease A Jeans circular denim model

MUD Jeans, a Dutch denim brand and certified B Corporation, has built economic resilience around its “Lease A Jeans” model, where customers pay a monthly fee to use jeans and return them for repair, resale, or fiber-to-fiber recycling. This shifts revenue from one-off sales to recurring cash flow and secures a steady stream of secondary raw material, reducing exposure to cotton price volatility and unsold stock.
Project link

Community Clothing – Local manufacturing and factory downtime buffering

Community Clothing is a UK social enterprise that places orders with regional factories during their low-season periods, smoothing highly seasonal demand and keeping skilled workers employed year-round. By combining direct-to-user sales of durable basics with this “downtime-filling” model, the initiative increases the financial resilience of both its own brand and the wider local manufacturing network against macro-economic shocks.
Project link

EILEEN FISHER – Renew take-back and resale program

EILEEN FISHER Renew is a take-back and resale program where the brand buys back used garments, cleans and repairs them, and resells them through a dedicated channel. This circular service layer generates additional revenue from existing products, reduces dependence on virgin production, and builds a more resilient business model by diversifying income streams and deepening long-term relationships with wearers.
Project link

For Days – Closed-loop subscription and take-back system

For Days operates a membership and swap model in which wearers can return used garments for credit and purchase new items made from recycled fibers, supported by products like the “Take Back Bag.” By tying revenue to continuous circulation of materials rather than linear throughput, the brand reduces inventory risk, stabilizes demand through subscription-like behavior, and strengthens economic resilience via material and customer lock-in.
Project link

Vestiaire Collective – Resale marketplace for luxury fashion

Vestiaire Collective is a global resale platform for pre-owned fashion that enables wearers to monetize existing wardrobes and brands to benefit indirectly from extended product lifetimes and higher asset liquidity. As a service infrastructure for resale, it creates new revenue opportunities for sellers, mitigates economic risk tied to primary market downturns, and supports a more resilient fashion ecosystem by distributing value across multiple use cycles.
Project link

References

D’Adamo, I., & Lupi, G. (2021). Sustainability and resilience after COVID-19: A circular premium in the fashion industry. Sustainability, 13(4), 1861. https://doi.org/10.3390/su13041861

Hileman, J., Flanigan, L., Griffith, S., Lane, A., McGregor, A., & Watson, D. (2021). A sustainable and resilient circular fashion and textiles industry: Towards a circular economy that respects and responds to planetary priorities. Zenodo. https://doi.org/10.5281/zenodo.4561848

Ostermann, C. M., Nascimento, L. S., & Zen, A. C. (2021). Business model innovation for circular economy in fashion industry: A start-ups’ perspective. Frontiers in Sustainability, 2, 766614. https://doi.org/10.3389/frsus.2021.766614

Todeschini, B. V., Cortimiglia, M. N., Callegaro-de-Menezes, D., & Ghezzi, A. (2017). Innovative and sustainable business models in the fashion industry: Entrepreneurial drivers, opportunities, and challenges. Business Horizons, 60(6), 759–770. https://doi.org/10.1016/j.bushor.2017.05.009

Amed, I., & Berg, A. (2021). The State of Fashion 2021. McKinsey & Company & The Business of Fashion. Retrieved from https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion