The COVID-19 pandemic certainly highlighted one thing, for sure: the industry simply makes too much stuff. And while we talk about supply chain shocks, the demand chain shock-of-all-shocks highlighted just how much “too much” really is.
Sometime in the next nine-to-twelve months, this issue is going to come back into sharp relief. Why? Because more product is coming in anticipation of a strong holiday season, and there’s still the matter of disposing of last year’s “stuff” which never went anywhere.
Be prepared: Pressure will rise as soon as the Pandemic starts to unwind, for all brands, but especially for fashion brands at all price points.
Fast fashion may suffer at the hands of recycled higher-end merchandise. Earlier this year we heard about China’s horrifying treatment of the Uighurs, including forced labor and potentially pure genocide. Brands promised to avoid cotton picked in their region (XUAR), but it became apparent that it was too hard to separate the cotton produced in XUAR from all other cotton.
The region produces a fifth of the world’s cotton and if you’re producing product with cotton grown in China, there’s no real way to tell where exactly it came from. A reckoning will come soon. H&M has already been tarred with the Uyghur brush. More companies will follow.
There is no doubt this warning will cause many eye-rolls. A year of almost no business and now you want us to worry about a different existential threat?
Yes, I do. Why? Because the consumers do. Furthermore, you can expect that as Generation Z starts to take its place in the world of consumption, they’re going to care even more!
The Center for Strategic & International Studies suggests that finding alternative sourcing opportunities is imperative. The Business Of Fashion just introduced The BoF Sustainability Index, which involves “measuring fashion’s progress towards avoiding catastrophic climate change and achieving broader social imperatives by 2030.”
Boy, that’s a mouthful. But it’s also an imperative. In a podcast available on the site, the BoF evaluates how 15 of fashion’s largest companies measure up.
Now, to be completely honest, when it comes to environmental challenges I was much more focused on technology throw-aways, but it turns out that fashion has a huge impact on our environment, from production through lack of consumption (or in the case of fast fashion, the rapid throw-away of purchased merchandise).
BoF editor Sarah Kent spent her pandemic lockdown time with her team developing the index that includes waste of both human and natural resources.
After 15 years of being enamored with cheap stuff, suddenly, the industry is talking about a very fancy term: Scaling circularity.
What does that mean? In simpler English, it means the increased sale of second-hand clothes. The resale market has been building for a decade, but really did pale compared to the crazy-fast supply chain of companies like H&M.
“Second-hand” is becoming cool, just as quality and timelessness is coming back into vogue. You can be pretty sure that a (for example) Gucci second-hand product will last longer and be of higher quality than a first-run H&M product.
So, why does this matter to a retail tech analyst like me?
First, I’m simply a student of retail. It feels like I never hit the bottom of issues in this deceptively simple industry.
Second, I do care about what happens to the world we leave behind for future generations.
Third, I’ve always thought that sourcing product halfway around the world from the point of demand was very short-sighted and had hidden costs that didn’t always show up on today’s P&L.
Finally, you can’t do a lot of what’s being proposed without technology. Technology is needed to measure a baseline for fashion retailers in emissions, water and air pollution. Then it’s needed to measure progress.
The industry is moving too slowly
Here we are, retailers and brand managers alike. We thought this was one of the most dynamic industries around. Now, from almost every angle, retail time just isn’t fast enough. It’s time to change.
So, along with your omnichannel initiatives, it really is imperative to think about sustainability initiatives.
A decade ago, partner Steve Rowen and I conducted a benchmark study on sustainability in retail, and we found that really, for retailers it was simply a proxy for cost savings. That was then. Whatever you thought then, and whatever you may think now, this is a BFD for today and tomorrow’s consumers.
Instead of waiting for disaster to strike, it behooves us to make process, sourcing and monitoring technology investments to ensure we can stay ahead of it.
When I had my knee replaced a couple of years ago, my surgeon strongly recommended that I “stay ahead of the pain” because it was easier to control it before it hit than after the agony struck. I didn’t love it. Four weeks of constant pain medication was actually not my idea of a good time.
Still, the one time I avoided “staying ahead,” I was in a world of hurt for hours until I got it back under control. I learned my lesson.
Long story short: fashion retailers and brand managers must stay ahead of the pain. Even as you’re working your way out of the pandemic blues, you have to act to improve the sustainability and simple humanity of your supply chain now.
As they said in the BoF podcast, you must start to make your plans now. It’s not going to be cheap. It’s not going to be easy. But it must be done.
Put together a cross-functional team to work on the problem. Maybe consider hiring a “VP of Sustainability” whose job it is to focus on the issue and lead this team. Work with suppliers and other retailers and brand managers to create improvements. Think about your sourcing strategies.
Ultimately, a more sustainable enterprise with less excess product will be a money-maker. Getting there won’t be easy, but if you can stay ahead of the pain, you’ll find yourself in a much better position.
Paula Rosenblum is a Managing Partner and co-founder of Retail Systems Research. She is well known for her pragmatic approach to retail and combines thought leadership with her practical experience in her writing, speaking, and advisory engagements.
Prior to co-founding RSR, Paula worked at AMR Research and started the retail research practices at RSAG and Aberdeen Group. Previous to that, she spent over 20 years as a retail technology executive and was a CIO for several companies on the east coast of the US. She is a member of the editorial advisory boards of several B2B media publications, including RETHINK Retail, and is a go-to source for financial analysts and major mainstream publications around the world.