Fashion Industry Pestel Analysis & Porter'S 5 Forces Model

FASHION INDUSTRY PESTEL ANALYSIS & PORTER’S 5
FORCES MODEL:
NAME: TEJAS JAIN

ENROLLMENT NO: 207050592080
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PESTEL Analysis of the Fashion Industry:
Political factors: Fashion icons in the White House

The government has the ability to encourage companies to buy fabrics locally, especially if
the taxation on imports from other countries increases. Many more people are buying from
companies who create their clothing in the United States, as opposed to those who ship their
fabrics to be sewn overseas. Additionally, certain groups like PETA boycott against
companies who use real animal furs and skins.
But we also can’t forget about the political influence on fashion trends. The first ladies have
all found themselves in the limelight for their clothing choices. It began with the idolization
of Jackie Kennedy in the 1960s and continued more recently with Michelle Obama and
Melania Trump. It also occurs in other countries, like in the United Kingdom, with Prime
Minister Theresa May.
People expect only actresses, social media celebs, and musicians to affect trends in
fashion. But the women in the White House are openly discussed and used as muses for
fashion inspiration.
Economic factors: a new way to stay fashionable without breaking the

bank
The economy is still recovering from the impact of the 2008 recession, but more people are
finding extra money to put towards fashion and accessories. People who are low-income or
live in an area with a high unemployment rate, need their income to go to survival staples like
food and rent.
We’re seeing an expansion of rentable clothing, both formal and casual. The service is cost-
effective and most of the options are fashionable, depending on the person’s tastes. Whether
you need to rent a suit, a dress, or jewellery, you can easily find shops offering this service
with a quick Google search.
Social factors: the impact of musicians and everyday life

Music has always had a massive impact on fashion. Music videos are where musicians show
off the clothes their viewers will want to buy ASAP. It’s common to mention brands in songs.
“Anaconda” by Nicki Minaj and “Fashion” sung by Lady GaGa both mention expensive
brand names in the lyrics. It’s usually just a shameless plug that fans will eat up.
You’ll also find iconic looks from musicians too. Tupac would wear sagging jeans and gold
chains. M.C Hammer is known for his massive pants while he moved from side to side on
stage. And who could forget Michael Jackson’s iconic one gloved hand? The clothes famous
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musicians wear can have a massive impact on the industry and fans. On the other hand,
fashion also dictates events.
For job interviews, people put on their best dress pants and even don a suit when necessary.
An office worker typically wears dress shoes and semi-casual attire. And retail workers are
often confined to a dress code or uniform. Sure, this doesn’t exactly scream fashion in the
way people imagine. But it’s a segment of the industry. People decide to wear attire
depending on the occasion and that’s set by pre-defined customs in a country.
Technology: anyone can be a fashion designer

Online shopping is a dream for so many people. Instead of visiting busy shops and manually
looking for clothes you might like, you can surf through an online category, pick the size you
want, and have it delivered in days.
The internet has sparked the ability to open up your own shop and sell your clothes. Girl Boss
Sophia Amoruso started buying vintage clothes and selling them for a nice profit on eBay
several years ago. Now her net worth is nearly $300 million. Flipping clothes isn’t as simple
as it once when she started in the early 2000s, but it only takes a few moments to set up an
Etsy shop and sell custom, homemade attire or jewellery.
We also have shown on television that contribute to the love, discussion, and growth of
fashion. Project Runway (and its counterpart, Project Runway: All Stars) has been the leading
fashion show for the last decade. It’s even spread worldwide. It’s a reality show where
talented (but basically no-name) fashion designers join the show to become a household
name. Another show, Fashion Start-up, features people who are developing fashion products
and need investors to help them get to the next level.
Technology is helping consumers get the fashion they want, but also encouraging designers
to mark up the world with clever designs.
Environmental factors: fashion isn’t safe for the planet

Fashion has an impact on the environment, and it’s not a good one.
Many clothes are made from cotton, but first, it must be picked then shipped all over to be
sewn as denim. Chemicals easily make their way into the cotton, meaning those jeans you’re
wearing could be soaked in hazardous compounds. Not to mention how cars, jets, trains, and
other methods of transportation releases gases and smoke into the environment. It’s a massive
amount just to get the jeans from the factory to the store. Then the clothes are typically put
into plastic bags that are later tossed into landfills. Shipping products only worsen the
problem since it adds additional traveling to get clothes. And unfortunately, efforts to reduce
the impact on the environment are few and far between.
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Legal factors: companies still having their clothes sewn in foreign countries
to cut costs
The fashion industry must follow similar legal rules and regulations like any other business.
To stay legal, they follow tax restrictions, export restrictions, and inflation costs. They must
also maintain workers’ rights, but this becomes iffy when companies have their products
made in foreign countries. It’s known many fashion retailers have Asian workers sew their
clothing for ridiculously cheap, but many consumers are boycotting these brands.
Porter’s 5 Forces model in Fashion industry:
1. Industry Competition:
It is one of the major determinant of the competitiveness within the industry. As the number
of players in the market are rising and there is availability of affordable clothing brands as
well as well established brands, the competition from industry is very high. As a result,
Blackberry’s has to focus and expend more on the advertising as well as delivering a
differentiated product to its niche segment.
2. Bargaining Power of Customers:
It is defined as the power that the buyers hold over the market depending upon the
availability of options that the customer holds. In our case, due to the large set of players in
the market, customers have a wide range of brands to choose from. A customer has the option
to choose Blackberry’s or Van Heusen, Louis Philippe etc. As a result, the customers have
the power to influence the price that these brands charge, hence the bargaining power of
customers is high.
3. Bargaining Power of Suppliers:
This is the power that the market holds over its suppliers depending upon the number of
suppliers available within the industry. Clothing industry is a saturated industry, hence the
number of suppliers available are immense. Instead, many brands have followed a backward
integration and started their own back end work. Moreover, the brands have tie ups with their
own set of suppliers, hence the bargaining power of suppliers is low.
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4. Barriers to Entry:
It refers to as how easily a new company or an already established company can enter into a
particular industry, in our case, the clothing industry. If we analyse the industry, there are no
major barriers that are faced while entering, except the fact that this industry is a capital-
intensive one. There is a requirement of funds to establish the machinery to produce clothes,
and this industry runs on high levels of debt and trade receivables. As a result, Barriers to
Entry are Medium.
5. Threat of Substitutes:
Availability of the substitutes and the threat that it poses over the clothing industry is rare.
There are continuous changes in the trends of the fashion industry and the availability of
cheap clothing from unorganised sector, but the threat that they pose is very less. Hence the
threat from substitutes is low.

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FASHION INDUSTRY PESTEL ANALYSIS & PORTER’S 5

NAME: TEJAS JAIN

Political factors: Fashion icons in the White House

Economic factors: a new way to stay fashionable without breaking the

Social factors: the impact of musicians and everyday life

Technology: anyone can be a fashion designer

Environmental factors: fashion isn’t safe for the planet

Porter’s 5 Forces model in Fashion industry:

2. Bargaining Power of Customers:

3. Bargaining Power of Suppliers:

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