From High Fashion To High Vis - AFC
From high fashion to high visThe economic contribution ofAustralia’s fashion and textileindustry31 May 2021Maara Collective
ContentsKey messagesPart IShowcasing our fashionand textile industryPart IIThe economic value of theindustryPart IIIFashioning the futurePart IVOur approachCopyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
ForewordThis is a critical moment for Australia’s fashion andtextile industry. Covid-19 has been a once-in-a-lifetimedisruption to the economy, upending retail and globalsupply chains. But as an industry, we are weatheringthis storm and shaping a stronger and more excitingfuture.Clothes, uniforms, and the materials they are made ofare core to our lives. They touch us — literally — everyday. Apart from their obvious role protecting us fromthe elements, they help us express our individuality,values and creativity.Beyond this, there exists a dynamic and diverseindustry that employs hundreds of thousands ofAustralians and sits front and centre within Australia’screative economy. Ours is an industry that bringstogether creatives, makers and manufacturers, andworld-class retail platforms. It truly is a multi-layeredand dynamic ecosystem.This report showcases the economic and socialfootprint of our industry, highlighting its incredibledepth and scale.Significantly, the report finds our fashion and textileindustry contributes more than 27.2 billion toAustralia’s economy, generating 7.2 billion inexports each year. It employs more than 489,000people, 77% of whom are women.The Australian fashion and textile industry has provenwe punch well above our weight on the global arena.We are on the cusp of a great digital, industrial andcircular business transformation. By collaborating andbeing fearless, we can lean into the future, reshapingan industry that continues to be a world-leader ininnovation, creativity and human-centricity.I encourage you to read this landmark report and helpus celebrate the success of our industry.This report was made possible by the generoussupport of Afterpay. Thank you.Leila Naja HibriCEO Australian Fashion CouncilCopyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
Key messages: A vibrant part of Australia’s creative economyAustralia’s fashion and textile industry is large,diverse and globally connected The industry is much more than high-enddesigner fashion. Indeed, it encompasses acomplex ecosystem of design, textile,manufacturing, retailing and educationactivities.Helping drive our national economy In 2020-21, Australia's fashion and textileindustry contributed more than 27.2 billionto the national economy. This representsabout 1.5% of the economy. (See next slide).— Industry exports were around 7.2 billion in 2021, with the industryforming a high-value component ofAustralia’s trade portfolio. The industry generates more than 489,000jobs across its broad spectrum of functions.— Its employment is higher than Australia’smining and utilities industries. About 77% of the fashion and textileindustry’s workforce is female, making it a keydriver of women’s economic advancement. While there are high levels of global sourcingwithin supply chains, much value adding occursin Australia.— Some of our leading fashion brands are trueglobal icons, helping elevate Australia’sinternational brand equity.Building industry capabilities The industry is facing some major challenges asit emerges from the impacts of Covid-19. Thisincludes the need to innovate, embrace moresustainable production, and manage higherpenetration of online merchandising. This will place greater emphasis on:— Upskilling workers to secure futureopportunities and adapt to new businessmodels, with a concerted focus on women.— Embracing new technologies and innovationsto accelerate growth, maximise localcontent, and enhance operational resilienceto future market disruptions. Fashion and textiles is one of Australia’s leadingcreative industries. The industry will be crucialin driving our collective prosperity in the yearsahead.Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
Our diverse fashion industry contributes 27.2 billion to thenational economy in 2021 27.2 bAustralia’s fashion industry spans a complexecosystem of design, manufacturing, retailingand education activities The industry is heavily interlinked with thebroader economy, including with wool andcotton production, tourism and creativeprofessional services. The industry employs more than nical1.50.5Design Manufacture Textilesupply1.2Uniforms&workwearDesign & productionRetailWholesale Services EducationDistributionEvents& tourismMediaServicesFashion and textile industry contributions shown in billion.Note, references to 2021 in this report are for FY 2020-21.Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards LegislationComplementaryactivitiesTOTAL
CGT AustraliaShowcasing our fashionand textile industryCopyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
The studyThe fashion and textile industry is a core pillar ofAustralia’s creative economy The Australian Fashion Council (AFC) engaged EY to undertake a study on the economic contribution of thefashion and textile industry to the national economy.The study shifts the spotlight from consumer trendstowards the industry’s place in our dynamic economy, andwhat is likely to shape its future development.For the first time, the study surveyed the entire fashionand textile ecosystem to understand its economic profile,current challenges and where the industry is heading.— The EY Australian fashion and textile industry survey2021 provides the most comprehensive picture of thisdynamic industry.— Industry players and businesses were asked abouttheir business financials (before and during Covid-19),export and supply chain linkages, and workforces, aswell as their view on key challenges and prospects.— This information, together with official industry datasources, was used to develop a whole-of-economyfootprint of the industry.Australian Defence ApparelPage 7Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
Contours and dynamics of the fashion and textile ecosystemAustralia’s fashion and textile economy isdiverse, involving a complex ecosystem The system is much broader thandesigner labels. In fact, itencompasses everything from patternmaking, textile production, retailingand education. The value chain is expansive andinvolves design, production,distribution, as well as other istributionWholesalersDesignDesignerlabels andbrandsFashionand textileeconomyThe industry’s complexity makes ithard to draw clear boundariesComplementary To highlight its contemporaryactivitiesfeatures, we have developed anTourisminner and outer fashion and textileeconomy.EventsCircularity and Inner economy activities (e.g. fashionsustainabilityInner economydesign and production) fit firmly withinArtservicesa traditional industry construct. Outer economy activities (e.g. tourism, education,Outer economymedia and waste circularity) have higher cross-overswith other industries.Fashion andtextile servicesPage 8Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards essionalservices
Remodelling for a post Covid-19 worldThe impact of Covid-19 was unprecedented with thepandemic upending many parts of the industry The pandemic caused a change in consumerbehaviour and sentiment, and many people shiftedtheir purchases from services to goods. Bricks and mortar retailing was especially devastatedby the lockdowns and restrictions. This causedconsumers to pivot to online platforms — changingwhat people purchased, and how they accessed it.The crisis amplified and accelerated the rise of trendsthat emerged before the pandemic Businesses adapted to Covid-19 conditions. Freightcosts have risen and many companies have beenunable to review production samples.— As a result, processes have become moredigitised (a trend that will only continue). Reflecting a sharp rise in working from home, therehas also been a ‘relaxing’ of the modern wardrobewith an increase in athleisure and casual wear sales. Online sales have spiked and moving forward therewill be an ongoing focus on reimagining the role ofthe traditional store.The impact of Covid-19 on fashionand textile businesses*Full timeworkers1.5%4.8%Revenue14%Businesscosts*Based on the EY Australian fashion and textile industry survey 2021.This is an average among respondents and is not based on value.Page 9Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
The economic value ofthe industryCopyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
The fashion and textile industry boosts Australia’s economy 27.2 billion1.5%489,000 workersadded to the Australianeconomy in 2021contribution toAustralian GDPin 2021 (about 3.8% of theAustralian labour market)376,000 women 7.2 billion1.7%in export revenue in2021of all Australian exports(by value) in 2021working in the industryin 2021Page 11Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
The industry makes up about 1.5% of the national economyAustralia’s fashion and textile industry makes a sizeablecontribution to the national economy Across the value chain, workers in specialised industryroles (e.g. stylists, services) generate additional valueadded due to the technical nature of their work. The pattern of indirect economic benefits changes fromactivities across the industry’s inner and outer cores.Activities within the outer core generally exhibit highereconomic linkages with the broader economy. The economic activity from Australia’s fashion and textileindustry sits alongside other creative-economyheavyweights such as arts and recreation (0.8% of theeconomy), and information media andtelecommunications (2%).The fashion and textile industry’seconomic impact in 2021 DDirect 16.3 billionIndirect 10.9 billionTotal 27.2 billion I T7.07.5Economic contribution of the fashion and textile industry value chain ( nPage 121.2Uniforms & EducationworkwearDirect economic impact1.3Wholesale1.41.5Comple- Manufacturementaryactivities1.8MediaEvents &tourismIndirect economic impactCopyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards LegislationServicesRetail
The industry’s smile curve: A picture of high value addedacross the fashion supply chainAnalysis based on the EY Australianfashion and textile industry survey 2021and ABS data highlights high levels ofeconomic value added across theecosystemValue added is particularly pronounced at theupstream and downstream components of the fashionand textile production chain. These parts of theecosystem have more localised dimensions and highlevels of professional service intensity.58Value added as a proportion of output ManufacturingProfessionalservicesMediaProduction chain Page 13Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards LegislationWholesaleRetail
The industry employs thousands of AustraliansThe industry generates significant jobs for Australiansin all states and territories There are a total of 489,000 Australians in thefashion and textile industry.— High levels part time and casual employment inthe industry help promote flexible workingarrangements. This can be particularly successfulin supporting workforce engagement by womenand young people. The industry directly employs more people thanAustralia’s mining sector. The industry pays over 15.7 billion in wages —workers and households circulate this moneythroughout the economy, creating additionaleconomic flow-on impacts.The fashion and textile industry’semployment impact in 2021 9,000workers I T169.4115.9Workers across the fashion and textile value chain ect economic impact27.027.539.0Uniforms Manufacture Events &&tourismworkwear40.9EducationIndirect economic impactPage 14Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards LegislationServicesRetail
An industry that is front and centre to the economicsecurity of Australian womenFemale workers sit at the heart ofAustralia’s fashion and textile industry About 77% of employees in the industryare female, compared to the nationalaverage of 47%. This is comparable to service sectors likeeducation (72% women) and healthcare(78% women). As one of the few professionally-ledindustries dominated by women, theindustry provides opportunities forwomen to showcase their entrepreneurialspirit and business acumen. The proportion of female employment ishigh across the value chain, especially insectors like retail, media and design. Given the high concentration of womenworking in fashion and textiles, theprosperity of the industry matters for theeconomic advancement of Australianwomen.Events & tourism60%Uniforms & workwear71%Textile esale80%Design82%Retail84%Media89%Based on responses in the EY Australian fashionand textile industry survey 2021.Page 15Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
The economic dividends are dispersed throughoutAustralia’s states and territoriesThe industry’s contribution to economicoutput and employment spans from coast tocoast National breakdown of the total economic benefitsof the fashion and textile industryAn important feature of theindustry is its incredible dispersion.From small countrytowns to busy city hubs,the industry touches thelives of all Australians.The industry has aWAphysical presence in 2.3bevery local shopping41,000 workerscentre throughout thecountry.It also plays an important rolein driving regional prosperityand tourism growth,particularly through eventslike Fashion Week.NT 0.1b2,000 workersQLD 4.6b83,000 workersSA 1.6b28,000 workersNSW 9.7b174,000workersACTVIC 8.2b147,000 workers 0.4b7,000 workersTAS 0.4b7,000 workersPage 16Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
The industry has deep global linkagesAustralia’s national fashion brand is unique — itis one of our most creative and globallyintegrated industries Our fashion and textile exports have animportant place on the international fashionstage, helping elevate ‘team Australia’.— The Government’s support for the industryin the 2021-22 Budget highlights this. As creative-intensive exports, the industryhelps diversify Australia’s trade portfolio,generating almost 7.2 billion of exports eachyear. This represents around 1.7% of nationalexports — more than double the value ofAustralia’s wine and beer exports. Australian businesses, through their globalmanufacturing facilities, also generateadditional revenues by selling directly tooverseas markets in Europe and the UnitedStates. The value of these supplyarrangements is estimated to be around 565 million each year.While the industry has strong links throughoutglobal supply chains, there are largeopportunities to add value in Australia The EY Australian fashion and textile industrysurvey 2021 highlighted that 88% ofbusinesses designed their products inAustralia, yet only 29% sourced some of theirmaterials from local suppliers. There is a majoropportunity for greater domestic sourcing. Every 1 million in industry productionpotentially on-shored back to Australia —should this be commercially viable — couldgenerate an economic return of around 1.2 million.Proportion of Australian exportsWine and beer0.7%Fashion and textilesMeat exportsPage 17Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation1.7%3.0%
CreditFashioning the futureCopyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
Positioning the industry for success Covid-19 has been a shockwave to the fashionBright spots and opportunitiesand textile industry, with bricks and mortar Responsible business — In tune withretailing activities being particularlyconsumers, the industry is emphasisingdevastated. While the economic recovery hasresponsible business models across the valuebeen promising, it still has some way to go.chain. Large changes to consumer behaviour and— Circular business models (based on productsupply chains will have lasting implications forstewardship and resale), coupled withthe industry. Indeed, the pandemic may wellsustainable sourcing will be paramount.amplify structural shifts and trends that were Technology and advanced manufacturing —in play before the crisis erupted.Compared with many other industries, apparelSome big changes in motionproduction, consumer analytics and recycling While the fashion ecosystem has expanded, itsin the industry have substantial scope forboundaries often blur at the edges, especiallydigitisation and (semi) automation.in design and professional services. Much more— There are major opportunities to leverageis globally tradable and subject to fiercenew digital technologies for industrycompetition from overseas.growth and innovation. The industry occupies an expansive retail Reskilling talent — As the industry evolves tofootprint, reaching into every shopping centreembrace more complex models of design,and high street in the country. This physicalproduction and retail, workers will need newpresence — and its accompanying workforce —skills. Simply, they will need to be adaptableis vulnerable to greater digital transformationand technology-savvy to reap the gains fromand online purchasing. It must adapt, becomefuture industry growth. Future-ready skillsmore engaging and experiential.need careful investment by businesses andgovernment.Page 19Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
Some big challenges facing the industry Industry players identified some keynear and far term challenges.We need to constrain costs (manybusiness costs like freight havesurged over Covid-19), embrace newmodels of sustainability, and adapt toongoing digital disruption and globalcompetition.The industry’s vast physical retailpresence is a major vulnerability, butprovides entrenched opportunitiesfor more engaging socialexperiences.OtherInclusive cultureBricks and mortar retail10%19%3%19%10%41%Digitalisation 1%41%Foreign competition11%Consumer shifts11%Sustainability11%Supply chain volatilityBusiness costs62%66%68%14%68%28%81%Identified as the biggest challengeIdentified as one of the top five biggest challengesBased on responses in the EY Australian fashionand textile industry survey 2021.Page 20Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
Bright spots on the horizon There are many exciting prospectsfor our fashion and textile industryas we recover from Covid-19.Encouragingly, many of the keyopportunities are the ‘flip side’ ofaddressing the industry’s pressingchallenges (see previous slide).The industry emphasised the needto harness new sustainablebusiness models, embrace digitalchannels and new technology, andfoster deeper engagement withconsumers.The advantages of making morethings in Australia — especially astechnology advances — wasconsidered vital, withgovernments having a key role insupporting a market environmentin which this can occur.Other5% 7%Media presence 1%Branding19%4%23%Product mix 1%Digital channelsTechnologyResponsible business practice23%8%10%41%10%Customer experience11%Local manufacturingSustainability38%3%Government support (exportgrants, trade policy, d as the biggest opportunityIdentified as one of the top five biggest opportunitiesBased on responses in the EY Australian fashionand textile industry survey 2021.Page 21Copyright 2021 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation
Future business models, skills and jobsElle RosebyProf. Robyn HealyCraig GordonCEOCountry RoadDeanSchool of Fashion & TextilesRMITGeneral ManagerHard Yakka & King Gee,Workwear Group (Wesfarmers)How do you see the fashion/textile industry evolving over thecoming years and what sort of new business models willemerge?One emerging consumer trend is micro influencers producingtheir own product and selling, through social commerce, with‘pre-order’ models — this could be a positive disruption fortraditional retail supply chain models driving inventoryefficiency and sustainability. The evolution of ‘non ownership’ isalso shifting, with rental, swap and resale emerging andevolving, these business models solve for circularity. There isalso a need for waste recycling of materials, that can be brokendown and reused back into fabrics. The industry is sourcingthese materials overseas. We have no commercial wastemanagement system in this country for materials.What sort of skills should we be training for now in order tomeet the needs of the future industry?The roles we are hiring for today are different to a decade ago —we need people with expertise in digital, data, sustainability,responsible sourcing, materials traceability, circular design —the capability in market is not keeping up with demand. Anothergap is the manufacturing skills we lost 30 years ago whenproduction moved offshore — it’s critical that governmentinvests in the skills and infrastructure to enable more localmanufacturing, whether that be robotic or through skilledworkers.What are the biggest opportunities in terms of job creation forthe fashion/textile industry?The biggest opportunity is in local manufacturing andsupporting smart on-shoring. 80% of our customers want tosupport Australian-made. We send cotton and wool to Vietnamand China to be spun and woven when it could be done here. Weall talk about reducing emissions but the current raw materialmodel conflicts with this, we must support the onshoring cycle.For the industry to flourish, and be more sustainable, we needto invest in creating jobs in local manufacturing, as well as intechnology and sustainability. We must treat it like a seriousindustry if we really want to attract the brightest minds anddrive real innovation.How do you see the fashion/textile industry evolving over thecoming years and what sort of new business models willemerge?We will see change to more agile models, small scalemanufacturing with rapid prototyping, manufacturing ondemand, near-shoring, and circular systems that reducesurplus, minimising waste. We should also expect an increaseduse of automation, robotics, AI, and this will create change inworkforce, as part of Industry 4.0. And we will also havemandated transparent business models.What sort of skills should we be training for now in order tomeet the needs of the future industry?The key skills we should be training for are in the fields ofAdvanced Technology, Digital, Sustainability, and Legal andHuman Rights responsibilities.What are the biggest opportunities in terms of job creation forthe fashion/textile industry?Anything regarding the circular economy and product lifecycle,so designers of materials and products that minimise waste, anddeliver a reduction of carbon footprint through innovation.Also, in the areas of application of smart manufacturingsystems, digital prototyping, 3D digital design and advancedcomputer aided design. And ecommerce will continue to createjobs, in the fields of design of new platforms and creation ofonline environments for customers.How do you see the fashion/textile industry evolving over thecoming years and what sort of new business models willemerge?Sustainability is an evolving theme, it’s about more than ecofibres and sustainable materials. It will extend into the CircularEconomy looking at the full end-to-end lifecycle of a garment.More sustainable buying patterns from consumers show thatthat they’re focusing on quality garments that last longer andtranscend just one aspect of their lives. We’ve seen this with therise of athleisure and now also with workwear where you’re justas likely to see someone wearing Hard Yakka at a café on theweekend instead of just on the job site. Other future industrytrends include technology that can increase speed to marketand reduce waste, advanced materials delivering light-weightstrength or thermo-regulation, and body-scanning.What sort of skills should we be training for now in order tomeet the needs of the future industry?Apparel design and innovation skills will remain high in demandto support local trends and unique demands to our region. Wealso have an opportunity to bring some manufacturing back toAustralia, so we need to look at creating the skills to do this. Wehave lost a lot of these skills to overseas, but we can do it in asmarter way using more tech. More automation, marketplacesand social selling platforms will see a continued drive for digitalskills, to craft experiences across the entire customer journey.Brand and marketing skills will remain important as Gen Z’s andMillennials expect authentic and transparent connection withbrands.What are the biggest opportunities in terms of job creation forthe fashion/textile industry?Jobs with more technical skills, thinking about the machinery ofthe future for production and how to skill up workers for theseroles. Retail may move to a lot more automation like self-checkout, so we can look at creating other positions where humaninteraction makes a difference in creating better customerexperiences. Other job creation areas include supply chain, asthe need for faster, leaner and greener delivery options grow,and also marketing and ecommerce roles, for all aspects ofonline trading.Page 22Copyright 2021 Ernst & Young Australia. All Rights Reserved. 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Technology, innovation and advanced manufacturingJane McNallyAnthony EisenErica BerchtoldCEOCamillaCo-Founder & Co-CEOAfterpayCEOThe IconicHow do you see the fashion industry evolving over the comingyears and what sort of new business models will emerge?As the future consumer becomes increasingly interested insustainable practices, investing in environmentally friendlyfabric innovation is key. We’ve seen the creation of groundbreaking fabrications such as mushroom leather, recycledsynthetic materials and regenerated ocean plastics. Australiahas a distinct advantage if we could commercialise spider silk.We also need a tighter control of our design IP using inbuiltblockchain techniques. This will not only protect creative jobs,but help further stimulate the circular economy (rental, resaleand swap markets) due to a higher degree of consumer trust.Do you think Australia can leapfrog other markets as a leaderin global fashion if we are smart in the way we applytechnology, and if so what will it take?The digital space has given the Australian fashion industry theplatform to play on a global stage without the historic barrier ofdistance. We need investment into state-of-the-art ecommercefunctionality, such as hyper search speed, frictionless one clickshopping and invisible payment methods. For fashion we needthe ability to interact, excite and entertain, through such thingsas live shop fashion shows, social discovery and interaction, anddigitally-accompanied shopping. We have a major opportunity toupskill Australians in this digital innovation space so that we canbecome cutting edge and showcase our local talentinternationally.What role can Advanced Manufacturing play in the future ofthe Australian fashion industry?CAMILLA is a digital print house which means complicated cardbased layering of prints onto different shapes and sizes to makethem fit. Utilising 3D print rendering and pattern making, sharedin real time with our factory would significantly simplify andspeed up the design process, enabling faster prototypes,reducing raw materials use, and allowing our designers moretime for creativity. Innovative robotic sewing technology wouldlower production costs here in Australia and make it possible forlocal clothing manufacturing to be resurrected, reducing bothdelivery lead times and the carbon footprint for local retailing.How do you see the fashion industry evolving over the comingyears and what sort of new business models will emerge?Technology and innovation can enable the fashion indus
Australia's fashion and textile industry is large, diverse and globally connected The industry is much more than high-end designer fashion. Indeed, it encompasses a complex ecosystem of design, textile, manufacturing, retailing and education activities. Helping drive our national economy In 2020-21, Australia's fashion and textile
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