A Sustainable Disruption of Fashion

Just as the retailers of “basics” were fundamentally ill-equipped to deal with fast fashion, fast-fashion is fundamentally ill-equipped to respond to sustainable initiatives.  This leaves an opportunity for the legacy brands to regain relevance.

After a year of struggling sales and a forecast of challenged margins in the next quarter, H&M outlined its strategies for a return to growth at its Investor Presentation Day on February 15th.  The company focused on three items:

1. Investments in technology and its online business
2. Slowing its store growth
3. An aggressive sustainability strategy

Its sustainability goals are aggressive, particularly for a fast fashion brand.  CEO Erling Persson was quoted as saying “I want to sleep well at night knowing we have done the right thing.”  The company has set a goal of collecting 25,000 tons of used garments at its stores by 2020 – up from 17,000 in 2017.  By 2030, the company wants to use only 100% sustainably sourced raw materials – up from 35% today.  And H&M is striving to achieve a 100% climate neutral supply chain by 2030.

For over a decade, styles and trends have swayed from skinny jeans to athleisure and Louboutins to Adidas.  The evolving fashion has its normal impact on retailers and brands.  Staying the “hottest” has never been easy, and the adoption and then discarding of style seems to have accelerated.

The rapid turnover in look has been enabled by fast fashion retailers like H&M and Zara.  A trend can be set on store floors in four weeks rather than eighteen months.  And the ability to offer fast fashion at a low price has made the customer’s adoption of a new trend affordable.  H&M and Zara, perhaps the ultimate retailers in inexpensive,  disposable fashion have grown rapidly in the United States since they entered the market. Remember the mall in 2000?  There were 10 H&M stores in the US.  Today, there are 536 stores generating approximately $3.4 billion in US sales.

The result? Clothes are cheap.  The Fed’s consumer price index for a piece of apparel has dropped 1% since 2000.  The same measure for coffee has increased 38%.  And we do mean discarded; the EPA estimates that 10.5 million tons of clothes and other textiles went to the landfill in 2016

Cue the macro-trend that is just gaining speed and will drive the consumer’s buying patterns in the next five years – and has fast fashion worried.   Younger consumers are re-thinking their purchase behavior.  Sustainability and traceability are on the rise.  The loop-to-loop evaluation of apparel is gaining speed.

Consumers are asking:

• What resources are used – and wasted –  by the pieces of clothing I buy?
• What environmental impact does the production and distribution of my purchase have?

This is an opportunity for new retail disrupters – the brands that were born considering their impact from the cradle to the grave.  It challenges the basic premise of fast fashion.  But perhaps even more intriguingly, there is an opportunity for an oxymoron – a disrupter emerging from the staid legacy brands.

Smaller brands and retailers have embraced the idea of re-use for years, partially as a result of the focus on quality that these brands were born with.  Think of APC collecting, displaying, and reselling its own jeans from its consumers.  Eileen Fisher, known for its high-quality yet simple and eternally stylish pieces, has taken this idea many steps further when it opened its RENEW stores and announced the Vision2020 initiative.  Vision2020 creates goals for the company to pursue as they evaluate the product lifecycle from creation to reuse.   These include using the most sustainable fibers possible, using only organic cotton and linen, monitoring and reducing the amount of chemicals used in dyeing, insuring that wool comes from sheep that are humanely raised, that US Operations will be carbon positive, and that the company will take back old clothes and reuse their fabrics.

Yet the small brands are not alone, and bigger brands have adopted some of the principles.

Gap is ‘upcycling’ denim to create new pieces and created a capsule shop in New York City as part of their “Gap for Good” campaign, focusing on increasing the sustainability of its products.  Gap announced this past April that by 2021 it will obtain “100% of its cotton from more sustainable sources.” In addition, Gap states that by 2020, “80% of the brand’s apparel materials will be produced with sustainable fibers.” Gap is partnering with Better Cotton Initiative to help achieve and monitor their goals.  Within the Gap corporate umbrella, the namesake brand is not alone.  Athleta also announced that they will also make a push for more sustainable resources and materials in their products. They promise that 80% of their materials to be made with sustainable fibers.

But the true opportunity to embrace and own the mantle of sustainable, quality products has yet to be tapped by a large classics retailer like Gap.  That opportunity may one day be as large and ubiquitous as the opportunity fast fashion captured fifteen years ago.  Just as the retailers of “basics” were fundamentally ill-equipped to deal with fast fashion, fast-fashion is fundamentally ill-equipped to respond to sustainable initiatives.

Yes, H&M has its sustainability strategy, and Zara has recycling programs in place.  Both provide containers in their stores for clothes you no longer wear.   But those efforts will be challenged to mask the idea of buy cheap, wear, dispose.

To take advantage of this opportunity, a classics-heavy brand – like Gap –  could do more than quietly launch a Gap for Good campaign.  The brand must own a position as offering high quality and green goods.  That principle must echo through every effort the brand makes, from the shipment of the goods to the product on the shelves, to the lighting in the stores and resonate in its marketing.  Imagine that pivot, and you can see Gap as a relevant brand.