Small-scale fashion businesses grapple with environmental challenges, COVID-19 pandemic, and Brexit impacts
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A new study, titled "Impact of climate change, COVID-19, and Brexit on fashion Micro, Small, and Medium Enterprises (MSMEs)" commissioned by the Creative Industries Council, has identified several specific factors and drivers influencing the relocation strategies of UK fashion MSMEs.
The research, conducted by Dr Emmanuel Sirimal Silva, Interim Director of Fashion Business Research and a Reader in Applied Statistics at London College of Fashion, University of the Arts London, and Dr Alessandra Vecchi, a Reader with London College of Fashion, University of the Arts London, used a mixed methods sequential explanatory design, involving both quantitative and qualitative research.
The study analysed the impact of climate change, COVID-19, and Brexit on the drivers and factors underlying the supply chain relocation strategies of fashion MSMEs in the UK. The authors identified a comprehensive list of factors underlying 16 drivers that could potentially impact the relocation of fashion MSMEs.
The study found that climate change pressures affect sourcing decisions due to sustainability and environmental compliance demands. COVID-19 disruptions cause supply chain shocks that incentivize diversification and resilience in sourcing and manufacturing locations. Brexit-related regulatory changes, particularly new trade barriers and standards, compel firms to rethink their supply bases and relocate to markets with favorable trade terms or lower compliance burdens.
Cost considerations, as businesses look for regions offering competitive labor and production costs that still meet quality and ethical standards, also play a significant role. Trade agreements and policy shifts, such as the India-UK Free Trade Agreement, provide duty-free access and incentives, making some countries attractive for relocation or expansion.
ESG (Environmental, Social, Governance) compliance demands force firms to seek suppliers with transparent, traceable, and sustainable practices to satisfy UK/EU regulations. Speed-to-market requirements push MSMEs to select locations with efficient logistics and proximity advantages to the UK market to remain competitive. Technological and innovation capabilities in sourcing regions, for instance, investment in digital design and sustainable fabrics, also influence relocation to more advanced manufacturing hubs.
The survey recorded a total of 37 usable responses from UK fashion MSMEs. Data collection for the study included a questionnaire targeting fashion MSMEs in the UK and a focus group with stakeholders.
The authors focus on four focal points for policy intervention: costs, environmental and social sustainability, logistics, and risk management.
The study does not provide information about the fashion MSMEs' relocation strategies due to climate change, COVID-19, and Brexit, the economic consequences or potential market failures related to overseas mergers and acquisitions in the UK video games industry, or post-Brexit migration and accessing foreign talent in the Creative Industries.
India, Vietnam, and Bangladesh emerge as top relocation destinations for UK fashion MSMEs due to a combination of these factors, notably cost advantage, skilled labor, sustainability initiatives, and favourable trade agreements. While nearshoring and onshoring have some appeal, evidence suggests UK fashion firms are less inclined to heavily expand in North America and more focused on diversified Asian sourcing to balance these factors effectively.
Thus, the drivers are a complex interplay of environmental, economic, regulatory, and operational factors shaped by recent global disruptions and the evolving trade landscape post-Brexit.
[1] Silva, E. S., & Vecchi, A. (2022). Impact of climate change, COVID-19, and Brexit on fashion MSMEs. Report commissioned by the Creative Industries Council. [2] Silva, E. S., & Vecchi, A. (2022). The migrant and skills needs of creative businesses in the UK. Report commissioned by the Creative Industries Council. [3] University of the Arts London. (2022). London College of Fashion research highlights impact of Brexit on fashion industry. Press release.
- The study titled "Impact of climate change, COVID-19, and Brexit on fashion Micro, Small, and Medium Enterprises (MSMEs)" by Dr Emmanuel Sirimal Silva and Dr Alessandra Vecchi identified cost considerations and skilled labor as significant factors in the relocation strategies of UK fashion MSMEs.
- The researchers found that climate change pressures and sustainability demands impact sourcing decisions, while COVID-19 disruptions incentivize diversification and resilience in sourcing and manufacturing locations.
- Brexit-related regulatory changes, particularly new trade barriers and standards, were found to compel firms to rethink their supply bases and relocate to markets with favorable trade terms or lower compliance burdens.
- ESG (Environmental, Social, Governance) compliance demands and speed-to-market requirements also influence the relocation decisions of fashion MSMEs, pushing them to seek suppliers with transparent, traceable, and sustainable practices and locations with efficient logistics and proximity advantages.
- The study concludes that the drivers for the relocation of fashion MSMEs are a complex interplay of environmental, economic, regulatory, and operational factors shaped by recent global disruptions and the evolving trade landscape post-Brexit.
- The survey recorded responses from 37 UK fashion MSMEs and included a questionnaire targeting fashion MSMEs in the UK and a focus group with stakeholders.
- The authors of the study proposed four focal points for policy intervention: costs, environmental and social sustainability, logistics, and risk management.
- The study did not provide information about the fashion MSMEs' relocation strategies due to climate change, COVID-19, and Brexit in the context of the economic consequences or potential market failures related to overseas mergers and acquisitions in the UK video games industry, or post-Brexit migration and accessing foreign talent in the Creative Industries.
- The research, published in the form of a report commissioned by the Creative Industries Council, also revealed that India, Vietnam, and Bangladesh are the top relocation destinations for UK fashion MSMEs due to a combination of cost advantage, skilled labor, sustainability initiatives, and favorable trade agreements.
