How Cool is Sustainability in Fashion

In a conversation with investors, retailers, and suppliers last week, I was asked whether fast fashion is really sustainable. This question could also include luxury and other business segments. Fashion sustainability has become mainstream. However, some brands still destroy products to maintain exclusivity.

Fashion sustainability: the new cool

In a conversation with investors, retailers, and suppliers last week, I was asked whether fast fashion is really sustainable. This question could also include luxury and other business segments. Fashion sustainability has become mainstream. However, some brands still destroy products to maintain exclusivity. More and more companies include sustainability statements in their annual reports. Greenwashing?

Fashion is how you present yourself to others. Fashion is a form of aesthetic expression, a factor in segmentation, and a cause of discrimination. Fashion consumers’ motivations range from physiological (i.e., As described in the fashion pyramid, clothes can be used to protect against cold and hot weather conditions. The urgency of replacing “old” clothing will vary depending on your needs. Serotonin is released when people shop for clothes.

Fast fashion sustainability, in my opinion, and as described by Fashion Goes Tech, is an oxymoron. How can companies who base their business models on product freshness, inventory turnover, and sell thousands of garments worldwide (Inditex, for example, placed 545.036 tonnes of garments on the market in 2019, call themselves sustainable? Fashion isn’t about renewing your closet every season. It is more about launching new collections regularly (e.g., every season).

Fashion is not a short-term business. Luxury “icons,” such as iconic bags or basic items (such as a white shirt), have a long-lasting life. Luxury icons do not lose their appeal, and the neutral styles of basics don’t become outdated. There are several factors to consider when it comes to sustainability in fashion. Patagonia, for example, is more focused on sustainability in terms of “business model/fashion offering” than Zara. (The reasons include usability as well as quality).

Outdoor and sportswear brands do not sell fashion. This is a widely held belief. I’m not sure I agree because many brands (e.g., The North Face, Adidas, Nike) launch limited editions or capsules aimed at streetwear fans. The streetwear cult follows the same principles as modern art, which are innovation and experimentation. The VF Group, which includes Napapijri (Jansport), Eastpak (Timberland, Dickies), Vans, The North Face, and Timberland, acquired Supreme… Most apparel, luxury, and accessories brands today are trying to increase product freshness through the release of more styles/colors or by increasing their assortment via capsules or collaborative efforts. The seasonal collections and runways are adapting to the volatile times, including weather uncertainty. Climate change is not the only factor that affects the seasons.

Fashion and water

What about denim? This is the “most discriminated” product in the fashion industry. According to a United Nations Sustainability Report, 10,000 liters are required to make one pair of jeans. Levi’s launched its Better Cotton Initiative in 2010, which teaches farmers how to grow cotton using less water, pesticides, and insecticides. Everlane, Warp Weft, and Frank And Oak are other brands that produce sustainable jeans with eco-friendly production methods and materials. Did you know that it takes 2,400 liters (or 5,000 liters for a Big Mac) to make one burger? How many burgers do you eat each week or every month? How many jeans “eat” you every month? On the demand side, we need to be consistent with our core values. Sustainability is closely linked to wellness and health (e.g., Sugar-free products are preferred, as is vegan food, mindfulness, or yoga.

The RBC Capital Markets Report “ESG in General Retail: Who’s Faring Well in a Changing Climate?” states that retailers are making changes in their production and sourcing of garments to reduce the negative impact on the planet. The report highlights three initiatives in relation to water use:

H&M has adopted a 5-step strategy to help reduce the negative impacts of water. This includes improving water use in stores and warehouses and requiring that suppliers adhere to its commitment to sustainability. It has also begun using new water-recycling solutions for textiles and apparel production and aims to recycle 15% of wastewater by the year 2022.

Inditex’s Global Water Management Strategy aims to use water sustainably by following the guidelines set out in the UN Global Compact CEO Water Mandate. Inditex partnered up with water.org for a four-year partnership in 2015 to provide clean water, better sanitation, and improved hygiene in communities in Bangladesh and Cambodia.

* Primark is partnering with Solidaridad, the IFC, and Better Mills in China to invest in water-saving technologies.

Consumers are changing their purchasing habits as well. Sustainability can be analyzed from the perspective of your closet: how sustainable is it?

The report states that fast fashion will not decrease its “closet-share.” Instead, it will increase from 7 to 9% while other segments like department stores (categories and distribution channels …)) will reduce from 22% to 9%. Thred Up’s latest report shows that consumers looking for bargains at home and secondhand online will grow by 69 percent between 2019 and 2021. The broader retail industry is expected to shrink by 15 percent. The secondary market is expected to reach $64 billion within the next five years. Only Amazon and secondhand are expected to grow in popularity, while Gen Z will be driving the growth of resale.

A second point that I’d like to bring up is the reduction of the “Mid Priced Specialty” component. I believe that companies at the bottom of the fashion pyramid are going to struggle. If they do not have product categories or sub-brands that cover other price points, such as premium (e.g.), then this is even more of a problem. Armani has, for instance, a portfolio of sub-brands or brands that are positioned at many levels of the pyramid, from premium to luxury (e.g., Armani Privee – high-luxury) to Armani Exchange – affordable luxury. Amazon’s private-label clothing or supermarket essentials like Carrefour and Lidl will compete with brands at the base of the pyramid. Uniqlo, for example, sells essentials at low prices but of high quality. If you’re a brand that is just in the middle or low segment with no clear positioning and few loyal customers, the competition will be fierce. Be sure that customers will remember your brand.

Report: “ESG in General Retail- Who’s Faring Well in a Changing Climate” (RBC Capital Markets. Equity Research. According to June 2020), secondhand clothing is becoming increasingly popular and a threat to Fast Fashion. This report, which surveyed 750 UK, Spanish, and German consumers, shows that there is a move away from fast fashion. Over 60% of respondents said they were ‘likely to’ or ‘ very to’ buy better quality garments at lower quantities in the coming year rather than large volumes of cheap clothing. Primark will suffer as more consumers turn away from mass-produced, more affordable items in favor of clothing that is durable and made with more sustainable materials. Style is the third most important factor that consumers look at when purchasing clothing. Price and quality are still the top two factors. Brands in the low and mid-segment are facing many threats, as I have said previously.

Sustainability is less important to consumers in Spain, but it’s still a big deal. The report stated that the consumers’ focus on quality indicates a shift in consumer priorities to value-for-money items. This is not good for the fast fashion industry. Less is More. Less is More.

More quality, more durability, more sustainability (but less fashion? )

In the UK, Marks & Spencer is perceived as being most committed to climate awareness and sustainability. Over 30% of respondents in Spain rate Zara, Bershka, and H&M as ‘Very Committed’ to climate awareness. C&A, a German-owned brand, is viewed as the climate-conscious retailer in Germany. However, H&M (also a German-owned brand) and Zalando also scored well, with more than 30% of respondents describing them as “Committed” or “Very Committed.” Brand perception varies depending on nationality. Why? Brands sell the same quality products and brands worldwide… Brands’ market presence (origination and made-in) may explain the correlation between nationalist sentiments and preference for local brands. As shown above, there are also differences in how people perceive sustainability based on country (e.g., Spanish consumers care more about sustainability). Is sustainability then a subjective concept?

Advertising is one of the most important factors in influencing customer perception. This is neither exhaustive nor objective. Understanding sustainability is more than just a marketing campaign. In order to support circularity, pressure groups, academics, regulators (e.g., teach sustainability to children), celebrities, and influencers are all important stakeholders. A marketing campaign shouldn’t determine sustainability and perception of it. Images are easier to remember, and only a small number of people verify the validity of sources.

Many brands greenwash or mention how sustainable a part of their business is. Sustainability is often shown on the front end of a business. This is the side that is visible to the customers (e.g., marketing strategy: recycled packaging). Fashion companies are responsible for the back-end (things that are hidden from customers’ eyes, like supply chain and logistics). Design, sourcing and planning, supply chain logistics, retailing, etc., should all be focused on sustainability. Are we able to accurately analyze sustainability or determine whether a statement is true?

Sadly, today, sustainability is cooler than it really is. Some interesting start-ups define eco-friendly measures and explain sustainability performance in retail products.