By Robyn Lockyer, former Senior Analyst at Sancroft.
As we move away from brands’ initial responses to the coronavirus pandemic into longer term strategies, it is clear that putting sustainability front and centre of recovery efforts will be critical.
For too long the fashion industry has been built on a mismatch of supply and demand, mass overproduction, with an uneven distribution of profits across the value chain. There is a clear opportunity for fashion brands and retailers to ‘build back’ a better name for the industry, to rethink more sustainable operating models, and to forge new and strengthened relationships with customers and employees across the supply chain.
Three trends that demonstrate early movements to this new trajectory for the industry are discussed below.
Renewed focus on people
The pandemic has brought into sharp focus the vulnerability of workers and labour practices along the supply chain. Consumers have been fast to criticise those brands and retailers that have reduced or cancelled orders, delayed or refused payment for stock already produced. Non-payment has significantly impacted cash flow for clothing manufacturers, putting them at risk of being unable to pay staff wages, typically in countries that are already vulnerable to the impacts of the crisis. As the second largest exporter of garments in the world, Bangladeshi manufacturers have seen $1.4 billion of orders cancelled and another $1.8 billion put on hold as of the beginning of April. While some brands such as M&S have stood by their workers – offering additional vendor finance and letters of credit to those needing it – it has unfortunately been the exception, not the norm.
We can expect to see increased scrutiny of exploitative labour practices, not only from consumers, but investors too. Companies with robust ESG management practices have been outperforming their traditional counterparts amidst the crisis, better equipped to govern during times of uncertainty from an enhanced understanding of managing risk and stakeholder expectations over time. For an industry reliant on global textile supply chains and offering a lifeline for millions of garment workers, fashion brands must ensure long-term protections are put in place to serve the most vulnerable workers, or expect reputational damage far beyond the crisis.
Digitalisation and tech-enhanced fashion
The most obvious symptom of the crisis for fashion retail has been the lockdown of traditional bricks-and-mortar stores. Even before the crisis, we witnessed an ongoing decline of the high street with many fashion brands falling victim, such as Karen Millen and Coast, and more recently, Laura Ashley, Oasis and Warehouse. Covid has caused yet another blow to the high street, while online brands such as Asos and Boohoo have continued to outperform many of their high street competitors throughout the pandemic. For traditional retail to survive, many brands will need renewed efforts in customer experience, building unique relationships with customers in innovative ways – all whilst ensuring the health and safety of staff and customers are front-of-mind.
For other omni-channel brands that had sought to increase their online offering prior to the pandemic, e-commerce technology has enabled these brands to continue some form of operation, if not accelerate the move towards digital. Amidst the height of the pandemic, for example, H&M launched online in nine new countries as part of its “ongoing digitalisation”.
The crisis has also accelerated the adoption of technologies that could go some way in improving the industry’s sustainability credentials. From design and manufacturing stage, to warehousing and distribution, innovative technologies have a key role to play. The use of digital sampling and 3D technology are making substantial reductions in fabric waste at the design stage. Consumer facing applications promoting ‘virtual try-ons’, such as Asos’ See My Fit, are helping to tackle the inefficiencies and high environmental costs of returns.
The application of big data to better understand supply chains has also kept pace despite the pandemic. Earlier this month, Google announced a partnership with WWF Sweden to use Cloud technology, integrating big-data analysis and machine learning, to inform a more rigorous assessment and decision-making of raw material use in the manufacturing of clothes. This builds on recent momentum behind the potential of blockchain technology to increase transparency of raw materials across the supply chain, with increased use of applications such as Provenance, that enable brands to verify supply chain traceability and communicate with customers in an honest and transparent way.
Brands that carefully navigate this shift towards tech-enhanced fashion are likely to be those most successful at building a more resilient business going forward.
Fashion’s waste problem back in the spotlight
While acceleration of online offerings has alleviated pressures on some retailers in managing excess inventories, the Covid crisis has put a spotlight on the huge volumes of stock that have been sat in warehouses over the last few months. Many brands are considering innovative ways to recover unsold stock – both in terms of its financial value and in minimising the inevitable environmental cost.
With fashion’s overall reliance on seasonal trends, some global brands are considering creative ways to redistribute collections across hemispheres that take advantage of seasonal shopping patterns. Others are assessing which collections and lines can be repurposed at different points in the retail calendar. While many fashion retailers have turned to heavy discounting to reduce excess stock, it is clear that this offers only a short-term solution.
This begs a more fundamental question around the industry’s mismatch of supply and demand, ultimately, the overproduction that has exacerbated the existence of excess stock in the first place. Last month, an industry coalition of leading designers, called for reductions in “unnecessary product, and less waste in fabrics and inventory” by readjusting the retail calendar. The open letter to the fashion industry proposed that clothes should be sold in alignment with the seasons, with discounting occurring only at the end of the season. This model creates a more even spread of product drops throughout the season, providing customers with their desire for novelty, while not overproducing on lines that fall short.
Even before the crisis, there had been increased scrutiny of damaging environmental practices within the fashion industry, particularly of so-called ‘fast fashion’, whereby products are often cheaply made, hardly worn and quickly disposed of. While many have felt the need during lockdown to ‘slow down’ on a personal level, fashion brands should reassess their need to always be looking for the next new thing. As consumer habits start to adjust and with many facing a reduction in disposable income, consumers will be looking to make more conscious purchases that are investments in the future.
With the pandemic still front of mind, fashion brands must use this unique opportunity to reimagine their role in a more agile, resilient society – that puts people and the environment at the centre of bold recovery efforts.