Business, brands, supply-chain

You are what you buy! Four lessons from fashion.

The fashion industry has 30-years’ experience of being in the spotlight for its social and environmental impacts; and there have been some casualties.  Having worked with global brands for more than 10 years, Proxima’s Brian Johnston highlights the questions consumer focused businesses should be asking themselves to avoid the pain and focus on maximising the gain.

That you are what you eat, is a scientific truth.  That you are what you wear or, indeed, whatever you buy, is increasingly a social truth.  As companies in the fashion industry know all too well, building powerful consumer facing brands attracts attention from all sides – your customers, NGOs and even Governments; making it critical to act quickly before brand value is eroded by accusations that your company is doing more harm than good.

With more than 10-years’ experience helping global brands like Sara Lee and ASICS build reputations as responsible and caring businesses; and as consumers increasingly reflect their values in how they spend money; I’ve been thinking about what local brands can learn from sustainability pioneers in the fashion industry, and how they can avoid some of the mistakes.

Are fashion brands so different from your industry?

The fashion industry is characterised by outsourced manufacturing; complex supply chains; and heavy branding investment.  And it’s big – fashion is a US$2.4 trillion industry, employing over 60 million people; 26 million of which are manufacturing workers, predominantly women in developing countries. The speed of product design and manufacture is rapidly increasing to meet consumer desires; resulting in people owning more clothes but wearing them less.

At the same time, the internet and social media have given consumers increasing visibility of negative social and environmental impacts associated with the fashion industry.  To compound the challenge, NGOs have launched numerous campaigns and reports since 2011 to raise awareness, such as Fashion Revolution’s #whomademyclothes and Greenpeace’s Detox campaigns.

As consumers ourselves, we know that people like to feel good about what they buy – a trend that is accelerating with millennials wanting to express their values when they spend their money.  And so, here’s the trap – as consumer expectations continue to move ahead of legal compliance levels in supply chains and in markets, brands are exposed to the risk of disappointing their biggest fans and losing trust – damage which is very hard to repair (just ask Nike).

But it’s not all bad news.  Some businesses have navigated a path that not only reduces their risks, but actually enables them to build more value.  This is where the best lessons lie.

Tip #1 – Sharing is caring (or, what are you hiding?)

These days, a business that is not sharing information on its social and environmental performance is perceived as under-performing or, even worse, being ignorant.  Icebreaker is a recent example.  In 2017, Icebreaker scored poorly in the annual Australasian Ethical Fashion Report due to a lack of transparency and engagement with the report authors.  In the information vacuum, consumers and media were immediately critical. This year, Icebreaker responded with a radical new approach to transparency and engagement and was rewarded with an A+ rating as well as positive media; whilst others, like Trelise Cooper, copped a lot of media flack for not joining in.

There’s been a significant shift and maturing in the fashion sector. 34% of Australasian fashion brands now publishing their Direct Supplier Lists online which, only a few years ago, would have seemed unimaginable.  That sort of information was sensitive, protected and fundamental to maintaining a competitive advantage.  Five years on from the Rana Plaza disaster, which laid bare the human cost of outsourced manufacturing practices, hiding supply chain information of this sort is really a bad look; leaving obvious questions about whether the business is being run in an ethical way.

And, it’s not all about avoiding risk; there’s real upside to be gained from being more open.  Proactively sharing environmental and social data can actually help brands position themselves as leaders.  A great example is Everlane which adopts a Radical Transparency approach.  By openly communicating the cost price of garments as well as the brand mark-up; not only do Everlane’s customers feel they’re getting more value, the brand also achieves a clear point of difference in a busy market.

What can your business do to improve transparency that showcases the strength of your customer offer?  Is there information you can share about supplier relationships, diversity of the workforce, or even your product recall rate? You’ll likely be surprised by just how much impact these sorts of disclosures can have to build stronger relationships with your customers.

Tip #2 – Get the right data (or, what don’t you know?)

When I worked at ASICS, a sportswear business, ‘life cycle’ thinking was integral to how we framed sustainability issues. The use of product life cycle analysis (LCA) for footwear and apparel helped to identify exactly where impact hotspots existed across the value chain: which could be anywhere from the raw materials to the product’s end of life disposal.  Having this information was critical for meaningful discussions with product developers, material suppliers, the marketing team and, well, pretty much everyone. Equally powerful was the realisation for ASICS that you could indeed have it all – a product created more efficiently, with lower cost, and lower environmental impacts.

Adopting a value chain mindset helps you to see past some of the walls that we put up within industries. Take a brand which sells a typical t-shirt.  LCA highlights that growing and preparing the cotton and regular washing of the t-shirt by its future owner are the two major environmental hotspots.  Both hotspots are outside a brand’s traditional scope of control; one is far up the supply chain, and the other occurs after the product is sold – the point at which many brands cease to be concerned. Taking a life-cycle approach and really understanding where the material issues are is fundamental for knowing where to invest time and effort.

Consumers not only expect brand owners to know what these hotspot issues are, and where they are happening in the supply chain; they also expect the brand to be doing something about them.  Simply hoping that your supply chain partner is dealing with it, or that consumers are doing the right thing is not enough.  The response needs to be proactive, with accountability ensured.

Where are the sustainability hotspots in your value-chain?  Do your customers and other major stakeholders agree with your assessment?  What are your competitors doing?  After understanding the different perspectives, develop an action plan that will not only address the right issues but will create opportunities for adding brand value.

Tip #3 – Collaborate to win (or, what have you got to lose?)

Complex sustainability issues can be very hard to solve, which is why collaboration is so important.  A number of organisations have been created within the fashion industry in recent times to enable pre-competitive collaboration on big systemic issues such as hazardous chemical use (Zero Discharge of Hazardous Chemicals (ZDHC) in 2011), labour practices (Fair Labor Association (FLA) in 1999), and even the standardised measurement of impacts across the industry (Sustainable Apparel Coalition (SAC) in 2012). Part of the reason that such industry groups are so successful is that they recognise the complexity of interrelationships across supply chain tiers and industries. The ZDHC, for example, has a membership made up of brands, textile suppliers, chemical suppliers, and service providers – all of whom are needed to make progress on phasing out hazardous chemicals from the supply chain.

Consumers simply expect brands to be collaborating with supply chain partners to solve the thorny issues that are important to them.  They understand that complex supply chain issues cannot be solved quickly but they do expect to see the industry making progress.  Adidas’ efforts with Parley for the Oceans to raise awareness about ocean plastic waste, reduce virgin plastics use and to recycle the waste into new products is a good example of credible action to address a complex global issue.

What groups are already working on the big challenges in your industry?  How can you support or join in with those initiatives?  Which issues are not being tackled but would benefit from a collaborative approach; and how might a new initiative add value to your brand and customer offer?

Tip #4 – Be ready for 21st century regulation (or, why didn’t you see it coming?)

If your business relies on outsourced manufacturing you should know about extra-national regulation.  The United Kingdom’s Modern Slavery Act; The Netherlands’ due diligence law on child labour; France’s due diligence law for business; and the Supply Chains Act in California (slavery and human trafficking) have all been implemented in recent years.  Australia is considering similar legislation.

This increasingly popular approach is effectively requiring a new level of supply chain compliance in order to manage expectations in consumer markets. This means it’s no longer enough for a business to comply only with labour, social and environmental laws in supplier countries for outsourced operations.  It means being more aware of practices throughout the supply chain and actively managing them to maintain market access.

The upshot of this is likely to mean a disadvantage for smaller local brands in countries like New Zealand that don’t adapt to this type of regulation until later on.  As international brands selling into markets like the U.K. overhaul their supply chains to meet the new standard, they will do so uniformly at a global level.  Local businesses will likely be forced to play catch up as and when changes are made to local regulations in the future.

How well do you understand your potential supply chain when assessed against the most progressive global standards?  What can you do that’s valuable now which will anticipate future compliance requirements?  You may be surprised how much consumer good-will can come from being an early adopter of practices that will in future simply be regarded as just good business.

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