Why fast-fashion brands like H&M are losing millennial customers in Malaysia and Singapore

Growing awareness of environmental and workers’ issues, as well as intense competition from online brands, are contributing to a dip in demand for fast fashion. But do enough people really care to make a lasting difference?

PUBLISHED : Thursday, 28 June, 2018, 8:46am
UPDATED : Monday, 09 July, 2018, 1:14pm

Melissa Chi, 30, remembers when her wardrobe was full of H&M clothing and accessories. After discovering the Swedish brand during an internship in Washington, the Singaporean, who runs an online healthy lifestyle store, quickly became a fan of its smart design, decent quality and affordable prices.

Today, however, Chi rarely wears fast-fashion items, H&M or otherwise. Since she became a convert to sustainable living two years ago, she has learned just how damaging the fast-fashion industry is for the environment.

“The whole mentality that we should buy more because it’s cheap just didn’t seem right any more,” she says.

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It was a 180-degree sartorial turn for Chi, one that many other young Singaporeans and Malaysians are going through.

More than 1,000 shoppers queued outside H&M’s Singapore flagship store when it opened in 2011, excited to become its first customers. The following year, about 1,500 people did the same at its Kuala Lumpur flagship on its first day of business. And when H&M collaborated with luxury brands Balmain and Kenzo, launching the collections in 2015 and 2016 respectively, similar frenzies occurred.

Fast forward and H&M’s quarterly report ending February 28 indicates Asian millennials’ appetite for the brand’s trendy apparel may be on the wane. Malaysia recorded a 1 per cent drop in sales over the quarter, while the Singapore operation saw sales fall by 10 per cent.

A similar downward trend is being seen in other parts of Asia, including China. That’s after two decades of strong growth globally during which the company regularly reported double-digit sales increases.

In the three months to February 28, H&M’s operating profit fell by 62 per cent, causing its shares to hit a 13-year low on Stockholm’s bourse. A US$4.3 billion stockpile of clothing and accessories had accumulated in thousands of warehouses and stores around the world, the company reported.

What had happened? Business analysts say the company failed to adapt to fierce competition from the boom in online retail and lower prices offered by a growing number of similar fast-fashion outlets. Chi agrees that these have been factors in Singapore and Malaysia.

“I definitely think the demand [for fast fashion] is cooling off and not just because of the growing awareness that fast fashion is bad,” she says, referring to allegations of abuses against workers and environmental concerns. “It is also because of intense competition from all sorts of brands online, globally.”

Abby Wee, communications manager for H&M Singapore and Malaysia, told the Post that 2018 is a “transitional year” for the brand, adding that the fashion retail landscape is changing rapidly.

“While there is a decline in sales in Singapore and Malaysia, we don’t see that as an indication that we are not one of the top fashion destinations for our customers,” she says in an email.

Wee points to last year’s launch of the online store, and the positive reviews that it has been getting in both Singapore and Malaysia, as proof that its “omnichannel presence” is expanding.

However, is competing in a crowded online market of brands that have had a web presence for years. Singapore government data shows that as early as 2011, 50 per cent of the country’s internet users aged 15 years and older were already shopping online. In 2012, regional e-retailer Zalora set up operations in both Malaysia and Singapore. Other e-retailers, such as Asos and American Apparel, had been targeting Singaporean shoppers by offering free shipping long before came along.

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Sarah Kok, a 22-year-old broadcast journalism student in Malaysia, says she no longer shops at H&M for several reasons. Since Uniqlo, the Japanese mass-market clothing brand, expanded in Malaysian malls several years ago, Kok now does most of her shopping for daily work outfits there. She says it offers more comfort, better quality and greater diversity than H&M.

Environmental sustainability and a fair supply chain matter, too. These are Kok’s main reasons for shunning H&M today, she says.

H&M has been accused of using prison labour in China, employing children in Myanmar, firing Cambodian women who got pregnant, suppressing unions, and causing environmental damage, among other issues.

“If you can sell things at such a cheap price overseas, that means you’re getting it cheap as well,” Kok says. “So, that equals cheap labour.”

Uniqlo may not be entirely innocent, either. A report by anti-poverty charity War on Want asserted in 2016 that Chinese factories making clothes for Uniqlo were abusing workers’ rights. Despite the brand’s commitment to “corporate social responsibility” and “making the world a better place”, undercover investigations by Students and Scholars against Corporate Misbehaviour said it found excessive overtime, low pay, dangerous working conditions and oppressive management practices in Uniqlo’s supplier factories in China.

In an emailed statement, Wong Xinyi, sustainability manager for H&M Southeast Asia, points out that the company has signed a “global framework agreement” with workers’ organisations based in Sweden aimed at improving workers’ rights in the supply chain.

Unfortunately, not enough young people in Singapore and Malaysia are conscious enough about ethical fashion for it likely to make much of an impact on sales
Nicholas Harrigan, senior lecturer, Macquarie University

It is also one of a number of global brands that have initiated the ACT (action, collaboration and transformation) agreement, which aims to ensure fair wages and better working conditions in the supply chain.

Wee claims that the supplier factories H&M works with the most through long-term partnerships – representing 50 per cent of its product volume – have democratically elected representatives who can speak on behalf of the workers, achieving one of the company’s 2018 goals.

To address the issue of environmental pollution, Wee points to the brand’s collaboration with the Zero Discharge of Hazardous Chemicals Programme to raise awareness and industry standards, and its partnership with the organisation Changing Markets to implement the “road map towards responsible viscose and modal fibre manufacturing” within its existing sourcing policy.

H&M has also set 2030 as a target date to have all products made from recycled or otherwise sustainably sourced materials. By 2040, it aims to become “climate-positive” throughout its value chain.

“Our customers in Malaysia and Singapore trust our brand and they have also responded positively towards our sustainability initiatives,” Wee says. “Therefore, it is clear to us that our customers expect us to operate our business responsibly and we are determined to exceed their expectations in this area.”

However, whether all this means we are seeing a new dawn for fashion in Southeast Asia, with fast-fashion companies complying with a more sustainable and ethical framework in their production lines, is questionable. So, too, is whether there is really enough demand for more conscionable clothing among Malaysian and Singaporean millennials – known for being materialistic – to encourage companies to follow more sustainable practices.

Both are highly unlikely, according to Nicholas Harrigan, a senior lecturer in sociology at Sydney’s Macquarie University.

“Unfortunately, not enough young people in Singapore and Malaysia are conscious enough about ethical fashion for it likely to make much of an impact on sales,” says Harrigan, who previously lectured at Singapore Management University.

Google “sustainable fashion in Malaysia and Singapore” and a few brands with limited offerings will pop up. Biji-Biji Design, arguably Malaysia’s most prominent eco- and labour-friendly company, sells bags and accessories made using discarded advertising banners, car seat belts and even old kimonos, with some products at prices comparable to H&M. Such companies, however, are few and far between.

People need to realise that quality and sustainability have an extra cost and [be] willing to pay for it
Norashahera Hakem, head of fashion at Biji-Biji

Harrigan believes other factors could be at play, such as the growing influence of blogshops – retailers operating on blogging platforms – on Singaporean youth, which provide more variety and are more convenient than going out shopping.

Price could be another issue. Harrigan posits that despite H&M’s products being cheaper than brands such as Zara, they are still expensive given the quality.

Still, sceptics note that the relatively low prices of fast-fashion brands will continue to be attractive to young people.

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Norashahera Haleem, head of fashion at Biji-Biji, remains optimistic. Although it is difficult for a brand like hers to survive in Malaysia, there are signs of a shift in mindset. People are starting to care more about quality and the effect of their unused piles of clothes on the environment, she says. Price is no longer the sole factor, as millennials are looking at the stories behind a product.

“It is possible to survive with a lot of hard work and determination, as the concept is still quite new in this region,” she says. “People need to realise that quality and sustainability have an extra cost and [be] willing to pay for it.”