We all know that the fashion industry involves highly sensitive consumer behavior that has many meanings. There are many consumer journeys shared through different channels, and ever-evolving trends influence decision making in many ways, including styles. Running after this ever-changing game is the reality of the fashion business. Now, the effects of COVID-19 have made the process even more difficult and brands need to constantly adjust their offerings to produce products that have a chance to sell.
Why Is The Widely Used Global Business Model Not Working?
It's reasonable to assume that the role of consumer data in generating accurate perceptions and making predictions is perfect for a brand.
In addition to the lack of sufficient data in both offline and online sources regarding the fashion industry, there is also the problem of brands' accessibility to existing data.
The process of converting existing raw data into valuable analytics is expensive and makes this data inaccessible to small and midsize brands that lack the relevant technologies and know-how.
In this article, I want to focus on the costs that the fashion industry, and indeed all of us, pay for inaccurate estimates due to the factors outlined. I want to estimate the quantitative role of data in influencing overproduction. I also plan to compare existing sustainable concepts and their overall capacity to influence sustainability in fashion.
Are there any sustainable initiatives that can change a significant part of fashion for the better? The need for a big change in fashion has been discussed for a long time. But what really needs to be changed to make our industry more sustainable?
Is it circularity? Sustainable production? Or do we need to activate digital fashion to reduce actual consumption?
What do we get if we do all this at 100% capacity? Do you think fashion will be sustainable then? What would be the result of such a change? Is it naive to believe we can achieve this? Also, what else can we do to accelerate overall change?
The well-known, yet shocking fact:
Fashion is responsible for 10% of all carbon dioxide emissions. This makes fashion one of the most polluting industries in the world.
What else can we do to accelerate overall change?
I would like to start by explaining exactly which business model is responsible for this general situation. Many expect the answer here to be "fast fashion".
But I have a different idea.
This is the whole problem of pre-made fashion, where we can find examples of overproduction at any brand level, from small to large, affordable to luxury.
All pre-production brands are listed here. Therefore, I prefer to refer to and refer to this pervasive and global business model, where fashion products are pre-made, for future sales. In fact, with an estimated 100 billion products, we can attribute 95% of all fashion to this bespoke business model.
Exploring the Three Stages of Sustainability
All brands with the same process structure follow three stages. But the speed and frequency of cycles between processes can vary significantly.
At the very beginning of the fashion value chain, a decision is made about what should be produced and where it should be distributed. Let's call this the pre-production phase. The next stages will be the production and the third sales process. In general, the term sustainability can be found in all three phases, but with quite different concepts and approaches.
Let's start with circularity.
The circularity within this current and widely used business model of a pre-made fashion is part of the aftermarket product lifecycle. This means that the circular piece begins when the garment is sold to a consumer.
We need to separate this circularity from other business models such as on-demand manufacturing. In the world of manufactured fashion, circularity only happens when clothing is sold.
The question is, what part of the total amount of clothing produced is sold to the end consumer?
According to the Circular Textile Association of Australia (ACTA), excess inventory is estimated at €210 billion each year, about 30% of total global production. McKinsey reported that this year, excess product value from the Spring/Summer 2020 collections alone is estimated at between €140 billion and €160 billion worldwide. This increases the amount of excess product to almost 50%.
We're talking about more than 30% of unsold fashion items that go to landfill regularly, which is "normal" for the fashion industry, if not a crisis like the current one.
Knowing that fashion generates more than 10% of the world's CO₂ emissions means that 30-50% of production is just to fill the garbage!
Isn't it incredible?
As a result, if we go back to the point of circularity in the current business model, only 50% to 70% of all fashion products produced end up in the hands of buyers and could potentially fall into the circular model. I found it really interesting to read the 2020 fashion report prepared by the Circular Fashion Summit in partnership with PWC.
According to the report;
“Each expert has his own opinion on the subject. But even industry leaders cannot clearly understand and express all these terms in one voice and cannot integrate them into existing processes.”
It has been made very clear that there is no certainty about what the circular economy really is.
Therefore, here I am confident in expressing my thoughts, willing to apply my own way of thinking and reasoning, using available facts to understand everything I have learned by going into the literature and combining information in my own way.
Going further and taking into account the business model of pre-made fashion, the circular economy is about different, specific concepts and ideas that ultimately happen after the sales process. Some are linked to the attractiveness, resale, resale, or even refurbishment, remodeling of product information.
With a long lifetime and traceable future use, we need to remove clothes that were washed incorrectly or damaged in a shorter time than expected due to poor quality from the number of clothes that can be circulated.
There are no concrete figures on how many garments purchased by consumers are then processed in the circular economy, but we can't speak for more than 5-10% for now, which is an overly optimistic range and accounts for about 3-5% of the total fashion produced.
There are great initiatives in this area that include business ideas and technologies that allow to extend the life cycle of a garment.
All these processes of a circular model depend heavily on their digital capabilities to establish end-to-end connections of different products and create digital environments that allow users to find and use this idea in the most efficient way.
Can We See Clothing Sustainably Produced But Not Sold Sustainably?
Now let's go back to the current business model in fashion.
If we say that circularity can only happen after the sale, what is the role of this sustainable concept in the production cycle?
Simply put, we have sustainability in the manufacture of a particular product, given the quality of the garments, the working conditions, the wages of the workers, the chemicals used in the manufacture of the garments and, for example, the different materials and fabrics that can degrade and decompose. These and many other concepts are factors that affect sustainability while producing fashion.
According to Business Research Company, the value of the global ethical fashion market size enriched by almost $6.35 billion in 2019 and is predicted to grow to $8.25 billion by 2023. Considering the overall volume of the $1.8 trillion fashion market – ethical and sustainable The total amount of fashion produced in such a way remains very small. - of course, it costs fashion brands more to think rationally and economically while producing more expensive clothing, and they are already in a lot of trouble to figure out how to solve the situation with the general situation and the changes around COVID'19.
İmaj Kredisi: Shutterstock
And yet because it is sustainably produced, there is no guarantee that a garment will be sold to the final consumer.
Can we consider clothing that is not produced and sold sustainably sustainable?
I am not sure; In my personal opinion, such products have a lower environmental impact but do not fully fulfill the purpose of sustainability. By raising costs for sustainable production, it's a major economic rationale (up to 50% of products don't sell) and I think one of the main reasons for the slow pace of change towards sustainability in fashion.
Lots of Data, But Limited Improvement
Now we come to the last part of sustainability within the widely used fashion business model we mentioned at the beginning. This part actually ranks first in the value chain; It decides what will be produced and where it will be distributed.
Decisions made here, including distribution policies, affect sustainability in fashion much more than any other decision made in the production cycle or circular economy. But how are these decisions made and why is there still so much production? How does data affect these processes?
Again, how is it possible that even with so much data there is still limited progress towards reducing unsold stock? How can we fill the data gap and make it more accessible and cost-effective?
Why do we still need to produce four T-shirts to sell two?
Even If Brands Have Access to All Available Data, Does It Really Help Fashion?
What data is actually needed? How should we achieve this and make it directly available to brands to more efficiently impact sustainability in the current business model? I am confident that we can significantly reduce the dead stock level at this stage by predicting the demand trends in line with the needs and wants of the consumers.
İmaj Kredisi: Kaynak: Stitch Fix Yatırımcı Sunumu - Haziran 2019
At the moment, sustainability in the current business model is not bearing fruit fast and there is no real evidence that sustainable targets are being met in the industry, according to the BoF's very recent report. Every brand should have a way to achieve its sales target without overstocking. At the very least, this should be seen as the most important sustainable goal to achieve, which is the biggest challenge according to the aforementioned BoF report. Do we need to change the entire business model to make this possible? If yes, would it be realistic?
I don't think the fashion business model can be changed that quickly. But I truly believe we can make strong adjustments to the current model to allow businesses to evolve more quickly.
One of the most important things to achieve here is to ensure that brands have access to precise and relevant data through direct access, thus obtaining all the necessary details to improve processes. In my view, this data should reflect the tangible interactions between products and users, providing a space for users to express themselves through a product and interact with the product as a digital entity capable of different user journeys. There should also be enough space to understand the multiple decisions made by a consumer in the discovery and purchase process.
It's also about answering the question: Why didn't someone who was initially interested in a product buy it? This is a great source of information and data for fashion brands to improve their understanding of consumer behavior. It's not just about informing who is buying a product, but also about the many factors that distract the customer from a purchase despite having an initial interest, such as the concrete decision-making process and interruptions in a sale.
Segmenting and capturing consumer behavior is critical, and product-related data about user journeys through a direct customer approach will change the game; This format should also be presented directly to brands in a live order so that they can understand consumer behavior and current trends by linking this data to production forecasts. Capturing this data should be an integral part of the retail process, both online and in-store. There must also be room for digital product distribution and peer-to-peer communication so that community impacts can be observed and incorporated into analytics. However, this is a completely different dimension of analytics compared to the available data.
“Despite all the bad reputation surrounding the word data, I find it a challenge to allow users to consent and willingly participate in co-creating such data and information. “
To do this successfully, we need to meet several interconnected factors, starting with technology that will enable digital capture of all processes related to product-user interactions and also the ability to monitor data in-store. It will also require immediate understanding, agreement and approval from consumers to provide such systematic feedback. Despite all the notoriety surrounding the word "data", I consider it a challenge to allow users to consent to and willingly participate in co-creating such data and information. This should be the ultimate goal. And who should finance it? This is an additional study based on technology to engage users in such processes and explain their importance. It should be created transparently and with an understanding of exactly what needs to be collected.
Importance of Correct Positioning Solutions Based on Their Calculated Effects
The ultimate goal of sustainability in fashion should be the reduction or even elimination of unnecessary production and excess stocks, as well as improving production and cyclical use. Indeed, this will impact sustainability more quickly and more easily than any other existing initiative. Considering the outcome of sustainable production and the circular economy together, both would have to go up to 90% of all clothing sold to be able to bet on this outcome.
This is also the reason why there is still no objective positive change in reducing carbon dioxide emissions despite all existing products and proposed sustainable concepts.
Instead of drawing unrealistic expectations with concepts like sustainability and circularity, I'm wondering when we're going to implement real computations and the right understanding of logic and attributing facts to the real sources of problems, without having a global perspective and properly positioning these solutions as a basis.
Admittedly, it is not even possible for the moment to attribute new consumer data concepts to sustainable ones. With all these sustainable goals, but without a way to reshape the industry while also considering economic logic, there is great uncertainty in achieving them.
In my view, there is a false focus in the industry on what can enable this change, and we need creative and disruptive approaches. I see an urgent need to go beyond conventional concepts and also try new global concepts and technologies.
So I'm asking you;
What really needs to be changed to make the fashion industry more sustainable?
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