The Status Of Fashion’s Redesign

By Dawn McGregor 17 August, 2017

CWR's McGregor sees exciting times ahead in the fashion industry with its pro-environment & circular redesign

Climate change & environment are now drivers in some brands’ strategies & circular economy action is ramping up
But financial backing can be an issue plus online shops e.g. Amazon Prime are making fast fashion even faster
China's textile sector is cleaning up - 'if China can help build the fast fashion business, it can facilitate its change'

Fashion, an industry not often associated with climate change and technological innovation has been redesigning itself over the last several years to change just that and move to a more modern business model aligned with future consumption means and resource limits. Over the last year in particular, brands from luxury to fast fashion have been ramping up their actions on these two areas. Given this, it seems a good time to check in on the status of fashion’s redesign; what’s been done, being done and what is on the cards. To do this, we look at five areas:

  1. Climate change & environment;
  2. Circular economy;
  3. Money for innovation;
  4. E-retailers & online shops; and
  5. China’s role.

1.  Climate change & environment: now drivers in some brands’ strategies

The environmental impact of the fashion industry is not new, many have written about it (including us here & here) but it is receiving increasing media coverage and scrutiny. Just in June this year there was wide-spread global media coverage on mega fashion brands including Zara, H&M and Marks & Spencer sourcing from polluting viscose factories across Asia. Also this year, “River Blue”, a documentary highlighting the rampant water pollution from the jeans industry was released. This increasing scrutiny comes as the world turns more focus to the environment and climate change. Indeed, last year the Paris Climate Agreement was ratified, which means change for business the world over, including fashion.
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However, it wasn’t until June this year when US President Trump announced that the US was withdrawing from the Paris Agreement that business loudly spoke out on the need for the Paris Agreement. Many American business leaders made statements and over 1,000 businesses and investors, as well as politicians and universities signed a letter to this point, including many from the fashion industry.

Tiffany & Co. released an Instagram post saying “We’re still in for bold climate action. Please keep the US in the Paris Climate Agreement. The disaster of climate change is too real, and the threat to our planet and to our children is too great.”

Kering chief executive Francois-Henri Pinault tweeted, “Mr. President, in the ‘60s, America was walking on the moon. The new frontier is sustainability.”

Clearly many fashion brands are “still in” on climate action…
…the question here then is if brands will deliver on their public announcements & stand behind their strategies

Clearly many fashion brands are “still in” on climate action as Tiffany & Co. said and positively, this is being reflected in their strategies. H&M in April 2017 announced that it aims to use only 100% recycled or other sustainably sourced materials in its apparel garments by 2030. Also in April 2017, Target announced that it will use its “power and scale” to advance the idea that all packaging will be recycled in the future. It is one of the company’s five new sustainable packaging goals. The question here then is if brands will deliver on their public announcements and stand behind their strategies.

Meanwhile, luxury brands like Kering and LVMH have been continuing their acquisitions of raw material suppliers from python farms to flower fields. These acquisitions strengthen their vertical integration strategies, which mitigate growing uncertainty around future raw materials supply and quality – uncertainty that is largely being caused by climate change and environmental constraints. Fashion raw materials are particularly at risk as the world realigns its resource priorities and cultivation methods. In addition to increasing their control over supply chains, these acquisitions also sometimes play into their sustainability strategies and promote transparency. We are liking these moves.

2.  Circular economy action is ramping up

The fashion industry is pursuing a circular apparel economy in a big way. A major reason for this is that, while not a silver bullet, it should help the fashion industry reduce its environmental impact and wasteful ways, shore-up future resource supply and help it advance to the more modern business model.

There was much circular action at this year’s Copenhagen Fashion Summit where two initiatives were launched

Indeed, there was much circular action at this year’s Copenhagen Fashion Summit. The Global Fashion Agenda made a Call to Action for a Circular Fashion System at the summit. The commitment involves: 1) defining a circular business strategy by the end of the year, 2) creating targets for 2020, and 3) publishing their progress of implementing these commitments. As of July, 143 fashion retailers, 64 companies including Adidas, Hugo Boss, Inditex, H&M and others have signed up to the scheme. Calls to actions have been heard before so what makes this one different? According to Eva Kruse (president of Global Fashion Agenda) this call is different because, “It’s just more tangible and it’s more of a toolbox of elements; it’s something that every company can commit to and start doing… We’re accelerating everything; since we have the backing of some of the largest companies in the world, it also gives it momentum to move forward.”

Also launched at the Copenhagen Summit is the Circular Fibres Initiative. Launched by the Ellen MacArthur Foundation the initiative aims to: create a vision for a new global textiles system that will replace the linear, take-make-dispose model dominating the industry, starting with clothing companies. H&M and Nike have announced their engagement in the initiative.

Another circular model initiative launched this year is Fashion For Good. Launched by the C&A Foundation and William McDonough, the initiative aims to promote the five “Goods” of a new, transformed fashion industry: Good Materials, Good Economy, Good Energy, Good Water, and Good Lives. As McDonough said, “The Five Goods represent an aspirational framework we can all use to work towards a world in which we do not take, make, dispose, but rather take, make, remake.”

C&A has launched a Cradle to Cradle gold certified t-shirt

Putting circular words into action, C&A in June launched its Cradle to Cradle (C2C) gold certified t-shirts. The t-shirts are made of 100% organic cotton and produced using only chemicals designed for safe cycling as biological nutrients. More of this please! And consumers, think wisely how you are spending your purchasing power with options like this C2C t-shirt becoming available!

3.  Money for sustainability innovation 

The fashion industry knows it needs to become more sustainable. Various foundations are working to achieve just this by supporting innovation. These include the H&M Foundation with their Global Change Awards and C&A Foundation’s Fashion For Good (introduced earlier in this article). However, while positive the amount of financial backing can sometimes be an issue. A €1 million fund doesn’t go a long way and is a drop in the bucket compared to annual gross profits of over €13 trillion.

Encouragingly, there seems to be a new kid on the block who is upping the ante. Miroslava Duma has launched a new venture, Fashion Tech Lab (FTL), which is part investment fund, accelerator and laboratory but has $50 million to invest. FTL is a privately-owned company that generates funding from private and institutional investors. We are excited to see what comes out of FTL and hope to see more of this type of company.

4.  E-retailers & online shops: making fast fashion even faster & tapping booming online markets

E-retailers and online shops can use their force for good or bad. The bad, perpetuating fast fashion and actually making it faster as we look at below. And as for online shops, shipping clothes around the world to and fro is definitely not a plus in the sustainable fashion column, even if the item is made from organic cotton or recycled PET. These issues, while clear considerations for companies should also be on the minds of consumers.

Zara and H&M have been the front runners of fast fashion with reports of four week turnaround from design to shop floor delivery but their crown is being challenged by e-retailers ASOS and Boohoo who are able to do this quicker than them, according to a research note by Goldman Sachs. The research note commented that e-retailers benefit from not having brick-and-mortar stores, which allows them to respond quicker to the market thus more quickly adjusting their inventory and reducing  stock surplus.

Another e-disruptor is Amazon, which allows customers to try clothes at home for 7 days with its new Prime Wardrobe service

Another e-disruptor to the fashion business is Amazon, which in June this year launched its new Prime Wardrobe service. A Wells Fargo analyst referred to the wardrobe service as another nail into the department store coffin.” The service allows customers to select 3 – 15 items of clothing and then try it on at home over a period of seven days for free before purchasing or returning them. Choice is little issue with over 1 million items on offer. And to overcome consumer dissatisfaction around printing labels and finding boxes for returns, the Prime Wardrobe service comes with a reusable box with its own return label that can be picked up from the consumer’s home. Further increasing its e-commerce presence, in July this year it launched Amazon Spark, which is a stoppable stream of stories and image aimed at its Prime members.

Millennials buy more clothes on Amazon than any other website

Signs are pointing to Amazon Prime becoming even more of an e-retailer giant with this year’s Amazon Prime Day (its third annual event) being its biggest day of sales ever, even more so than Black Friday and Cyber Monday. This is also looking like the case for fashion as research finds that millennials buy more clothes on Amazon than any other website. In 2016 Amazon accounted for nearly 17% of all online clothing sales to this demographic, more than double of the No.2 ranked Nordstrom.  Moreover, Nike announced that it has partnered with Amazon and will sell its products directly through the site.

Traditional retailers are increasing their online presence to tap booming online markets…

Meanwhile, traditional retailers are increasing their online presence to tap booming online markets. This also includes luxury names like Louis Vuitton and Gucci which launched e-commerce websites in China this year.

However, while e-retailers and online sales seem to be more and more becoming the way of future fashion consumption not all brands are jumping on board. Some still see the need and strength in brick-and-mortar shops. Primark in April this year announced it aims to open 29 news shops in this fiscal year. The announcement comes after the business tripled its floor-space over the last decade.

The future may actually be brick-and-mortar shops that are fully automated with no checkouts

Interestingly, the future may actually be a happy medium between the two shopping approaches – brick-and-mortar shops that are fully automated with no checkouts, no cash and no staff. Amazon, again, may be one of the leaders on this front with the first Amazon Go shop launched this year. Customers use the Amazon Go app to select the products they purchase in the physical shop, pay for them in the digital shopping cart and then walk out of the shop. These automated shops are also popping up in Beijing and Shanghai, where they are powered by Wechat and QR codes.

5.  Changing times in China

Fashion in China is changing both for the good and the not so good. For the good, news that China’s textile mills continue to improve their sustainability as 23 mills save USD8.4 million in water, energy and chemicals operating costs. This was done through the Green Textile Initiative operated by the International Finance Corporation and the Natural Resources Defense Council. Indeed, manufacturers are making significant efforts to clean-up, which they have been instructed to do through national directives from the Chinese government.

We believe with China’s clean-up, its high production levels of fashion raw materials and the global fashion industry’s wants to go clean and circular that there is an opportunity now for the industry to do just that in China. The goals of Chinese textile manufacturers and leading fashion brands are converging. However, while China’s textile manufacturers are improving their sustainability they still face challenges and need assistance from industry actors as we identified in our survey of 85 of them. Hear more from manufacturers on their challenges, views and what help they need from industry actors to move to a clean and circular model in our sneak preview article here (the full report will be launched at our event at World Water Week on August 30th 2017).

Meanwhile, the country continues to modernise textiles with news of China’s securities regulator approving the launch of cotton yarn futures on the Zhengzhou Commodity Exchange. The date for commencement was not given.

“If China can help build the fast fashion business, it can facilitate its change.”

On the not so good front, a report by Greenpeace in May 2017 suggests that the addiction to fast fashion has emerged in China and other Asian countries. “In many ways, China is currently leading this trend,” the report states. Adding that, “Almost half of Chinese consumers buy more than they can afford—and more than makes them happy, and around 40 percent qualify as excessive shoppers, shopping compulsively more than once a week.”

As we say in the foreword of our soon to be released Chinese textile manufacturers insights report, “If China can help build the fast fashion business, it can facilitate its change.”

It is early days still but this redesign signals exciting times ahead

The conclusion from all the above: starts have been made on redesigning fashion, the direction is positive and there are actors beyond the fashion industry that are and need to be involved. It is early days still but this redesign signals exciting times ahead.

Further Reading

  • 85 Voices: Insights From Chinese Textile Manufacturers – Hear from China’s textile manufacturers on their challenges and what help they need to transition to a clean and circular model. This is an opportunity for the global fashion industry. China Water Risk’s Dawn McGregor shares key takeaways from our new survey report
  • Toward Better Industrial Water Management – The HSBC Water Programme for Industrial Water Management is now complete. We sat down again with Hong Kong Productivity Council’s Dr Anthony Ma to get key takeaways from the programme and find out what textile factories in China can do to reduce their water exposure
  • Circular Economy: From Theory To Action – As we move outside the ‘safe operating space of our planetary boundaries’, Ellen MacArthur Foundation’s Nick Jeffries explores what is a circular economy & implications for water
  • A Decade Of Dedication – As Redress turns 10 years old, its founder Dr Christina Dean reflects on the victories achieved in driving circular thinking in fashion including the EcoChic Design Award and TV show Frontline Fashion. Plus, check out their initiatives going forward
  • Fashion’s New Cycle – With 12,000 garments entering landfills every hour, the USD3 trillion fashion industry is ripe for a disruptive overhaul. FINCH Designs’s co-founder Heather Kaye shares how this Chinese brand is doing this through their swimwear made from recycled PET
  • Circular Fashion Today – Closing the loop in the fashion is not new. But perhaps now that China,  the world’s largest manufacturer of garments, wants to go circular, it might become a reality. Get on top of the latest trends with leading circular fashion innovators
  • Future Fashion & ‘Beautiful China’ – Together Forever? – With fast changing regulatory landscape moving against pollution from the textile industry, is there really room for fast fashion in a ‘Beautiful China’? China Water Risk’s McGregor on why it’s time for fashion to become beautiful inside and out
  • Fast Fashion: Sucking Aquifers Dry? – Groundwater is over-extracted to grow cotton. As the world’s largest importer of cotton, is it China’s fault? Or is fast fashion to blame? China Water Risk’s Tan explores trends in the growth across major brands, China’s imports & global cotton production
  • Fashion to Solve China’s Plastic Problem – With most PET made for fibres and not bottles, fashion is a big contributor to the plastic problem but it can also be part of the solution as Sondra Kim from Waste2Wear tells us. The company turns plastic waste into sustainable & high quality clothes
  • 1 Year On: Where Are The Top Fashion Brands? – It’s one year on but have brands upped their sustainability actions? We take a closer look at who’s not going circular and who’s leading the pack with more initiatives and engagement with NGOs
Dawn McGregor
Author: Dawn McGregor
Dawn leads CWR’s work to help corporates navigate increasingly disruptive & material risks from water & climate threats, as well as transitional risks in the supply chain arising from new regulations in China. Here, Dawn engages extensively with the global fashion industry delivering on-ground workshops in China to keynotes and strategic input at European HQs. She has written at length on the end of dirty and thirsty fast fashion and her report to overcome gaps between brands and manufacturers for a clean and circular future inspired the industry to create a new wastewater tool. Dawn also works closely with the property and tourism sectors where she not only conducts strategic assessments of their exposure but builds collective action toward resilience via closed door working groups and invite-only events. Having helped build CWR, Dawn is a frequent keynote, panellist & moderator at events, including being twice selected as the lead-rapporteur at World Water Week. Her articles are cited in various industry publications including the UN’s ‘World Without Water’. Dawn previously worked in a global investment bank assessing geo-political risk, crisis management and business resiliency. She was born and bred in Hong Kong and has lived in France, England, Singapore and Beijing.
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