What is the current state of the fashion industry in regards to their outlook on sustainability and how important is it to them to embrace it? There is an unprecedented backlash from consumers that the fashion industry has more of a negative impact on the environment than shipping and aeronautical industries combined. A worrying statistic suggests that the fashion industry could contribute a quarter of the world’s carbon budget by 2050 due to the high production and wastage from fast fashion. Incorporating sustainability into retailers’ long-term strategic vision is necessary to thrive in a difficult retail environment. Analysing every element of the value chain is essential, from transparent sourcing and supplier collaboration to packaging and product wastage.
Why should retailers invest in sustainability?
Because it’s what consumers want.
Issues like climate change, excess waste and unethical labour practices are high on consumers’ radar. This has a knock-on effect when it comes to purchasing habits. The fastest-growing brands are all sustainability-conscious, with a third of consumers buying from brands based on their social and environmental impact. According to the ‘State of Fashion 2018 report’ by McKinsey, 66% of global millennial’s are willing to spend more on sustainable brands.
Increasing legislation in the industry.
The G7 pact in Biarritz last month highlighted a series of science-based targets to be adopted by 20% of the global fashion industry, including reaching 100% renewable energy in their operations by 2030. Inditex (owns brands such as Zara and Bershka), Adidas, H&M and Gap are just some of the big players who have signed up to the initiative. This initiative will likely put pressure on smaller retailers to follow suit.
Brands need to prove to consumers and governments that they are making credible efforts to be more sustainable. How have the industry leaders achieved this?
1) Creating a transparent supplier base.
Sustainability conscious H&M work closely with their suppliers to improve working conditions within supplier factories – the greater visibility achieved through these closer relationships allows for greater control over sourcing goods. Inditex is expanding their supplier management significantly beyond auditing and monitoring – they are investing in training, with incentives for the top performers. Collaboration is important, as suppliers recognise that they play an important role in achieving retailer’s sustainability goals and their customer needs.
2) Optimising secondary packaging.
Packaging plays a large role in overall wastage due to clothes getting delivered to warehouses having been re-wrapped in single-use plastic multiple times when being transported. Although this type of secondary packaging is not visible to consumers, Amazon is one of many retailers who are thinking about reducing this unnecessary waste. In 2017, the e-commerce giant started to utilise algorithms and machine learning for more streamlined packaging to make improvements in efficiency and sustainability. In meetings with suppliers, the company asked suppliers to rethink packaging efforts for supply chain reform.
3) Reducing product wastage.
Globally, a truckload of textiles is dumped in landfill every second. Creating a circular economy is an aspiration for many retailers to reduce the amount of waste that they produce. Investing in technology which aids optimal stock replenishment is key to avoid over-forecasting slow-moving lines. Having an abundance of stock results in huge clearance sales at the end of the season, with consumers overbuying clothes which are discarded after a few uses. To avoid unwanted clothes ending up in landfill, retailers can encourage sustainable disposal. All H&M stores contain a garment collecting box for consumers to bring their unwanted clothes, with the business collecting 20,000 tonnes of textiles in 2018. Other retailers are using similar initiatives, with Primark introducing an in-store take-back scheme later this year.
Retailer strategies that incorporate the full end-to-end value chain, are key to achieving sustainability. Retailers need to align resources, structures and processes across the whole organisation. A fully transparent and ethical supplier base can easily be offset by inefficient packaging and over-forecasting if the whole business is misaligned. Whilst all retailers need to start with small initiatives, without addressing the whole value chain they will struggle to be successful in the long-term.