Omnichannel

Fashion Retailers: Environmental and Business Sustainability Are Possible


Retail has always been an industry of constant fluctuation. With customer expectations changing, the rise of Amazon, and ever-higher rent prices, retailers have needed to find new, creative means of survival in the 21st century. But, many retailers are failing to transform fast enough. This is made apparent by all the bankruptcies that rocked the industry in 2019: Barney’s, Forever21, Beauty Brands, Gymboree, and several others have also filed Chapter 11 this year, with many of these companies being entirely liquidated.

The message is clear: the current model of retail as we know it is not sustainable. From fast fashion to high priced luxury goods, no one is immune to bankruptcy. As we look ahead to the next decade in retail, we can’t help but think about sustainability.

When we talk about sustainability in retail, we’re looking at it twofold: Business Sustainability and Environmental Sustainability. On the business side, retailers must develop a business model that has longevity and is able to change with the times. This means adjusting to consumer needs and changing landscapes in product production. Retailers must be smarter in how they produce their products and work to keep inventory at an optimal level.

Environmental sustainability is a social movement that is becoming extremely important to the next generation of consumers: Nielsen found that “81% of global respondents feel strongly that companies should help improve the environment.” In apparel, sustainable fashion is a movement and process of fostering change in the fashion ecosystem towards greater ecological integrity and social justice. Large fashion retailers are taking note with some touting the use of recycled materials in their products like Frame denim and others taking action such as Prada and Estée Lauder.

4 Steps to a More Sustainable Fashion Business

What can you do to make your company more sustainable? Here are four ways to start.

1. Set an Environmentally Friendly Goal and Execute to It

Prada recently became the first luxury brand to obtain a loan from French banking group Crédit Agricole with stringent sustainability-related conditions attached to it. The first condition of the £42.9 loan relates to the brand’s physical stores where they must be certified by the green building rating system. The third goal reinforces the luxury brand’s pledge to reduce and phase out the use of virgin nylon by 2021, instead of moving to Econyl, a recyclable yarn made from upcycled plastic waste.

The Estée Lauder Companies have signed its largest renewable energy contract globally, an agreement that will enable the US beauty group to advance its goal of net-zero carbon emissions by 2020.

Both of these companies are future-proofing their models by thinking ahead when many of these goals could become a legal requirement.

2. Reduce Returns

Another big part of sustainability—both environmental and business sustainability—is returns. Each year, 5 billion pounds of returned goods end up in landfill. Within retail, fashion and apparel has both the highest return rates and highest environmental impact. In fact, apparel and footwear together account for more than 8% of global climate impact—a larger percentage than all airline flights and maritime shipping trips combined. Many retailers consider returns to be the cost of doing business. But what happens to products once they are returned? Many of them are discarded as they’re not “perfect” enough to resell. If retailers were given better visibility into what happens to these products once they are returned, they would be better equipped to reduce, reuse, and recycle these items, which would help them reach their sustainability goals.

How much are you scrapping and how much can be sold at full retail or discount?  How can retailers understand the impacts of returns? This is where Chief Returns Officer comes in to play. Understanding returns trends enables retailers to make better buys and acquire only inventory that is needed. Furthermore, retailers should offer more sustainable options for returns, like BORIS (buy-online-return-in-store), which decreases the number of emissions from trucks returning unwanted product.

Reducing returns through data-driven insights is critical for sustainability in Retail.

Here’s why:

  • Less returns mean a decreased need for returns handling (and decreased carbon emissions)
  • More accurate inventory projections and management means better buys (less overstock and landfill)
  • More accurate return fraud protection means fewer people buying products to use and return (like that dress for a New Years Eve party that can’t be resold, and ends up in landfill, or the TVs people buy for the Superbowl and subsequently return with a damaged box that need to be sent to the secondary market)

3. Optimize On-Hand Inventory

Currently, retailers produce over 150 billion garments each year: 30% of those garments are never sold, and of those that are sold online, retailers can expect anywhere between 8-40% return rates, meaning there is a disconnect between what’s being produced and put on shelves and what customers want. Customers also keep clothing half as long as they used to. This means fashion and sustainability have a complex relationship.

By limiting on-hand inventory, you reduce the impact your company has on the environment by producing less. An added bonus: you lose less money on markdowns. If sustainability is going to be achievable it must be adopted at every level.

4. Design Products Consciously and with Longevity

Not all apparel is created equal, nor does it break down equally in a landfill. While cotton can start decomposing in a matter of months, according to biodegradability studies published in 2010 by Cornell University and Cotton Incorporated, synthetic fibers can take more than 200 years to break down. 35% of the global total of microfibers in the oceans comes from clothing and textiles, and by 2050 it is anticipated that the fashion industry will use up to a quarter of the world’s carbon budget.

Products must be created with materials that are recycled, biodegradable, or both. And, in the age of fast fashion, both customers and retailers are learning that products should also be built to last. Could we enter an era of post-fast fashion, where consumers do not need or want to buy the same thing multiple times? Products can be made fashionable enough to stand the test of time and made with quality materials that will last.

It’s clear that the old model is out and a more sustainable model must be adopted. As we look ahead, retailers should start to base their buys on what will be kept rather than just what they will sell. This and other considerations will help a retailer remain open and sustainable for the long run.

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