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Sustainable fashion: don’t burn the brand with the excess inventory

14 December 2018

By Ethan Morgan

Ethan is in the marketing team at Volo, and specialises in writing about retail trends and news for our blog, white papers and reports.

Fashion Retail Trends

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burberry storefront fashion sustainability

Fashion brands who aren't transparent and credible about efforts to be sustainable are at risk of losing market share and missing out on opportunities to target shoppers across demographics. Burberry burning $38 million worth of unsold inventory was an egregious but not particularly unusual example of wasteful practice, one which tarnished the brand as self-interested and careless.

With shoppers becoming ever more invested in the environmental and social consequences of their consumption, sustainable fashion needs to become the norm for major brands, rather than the exception. 66% of respondents told a Neilsen survey that they would spend more for a brand which is sustainable - that number rises to 73% amongst millennial consumers. 

Clearly then, there is a consumer demand for sustainability in fashion which is backed up by willingness to spend. So how can brands ensure they're making the most of this opportunity?

Materials and sourcing

Innovation in textiles and fabrics in recent years has caused a stir with consumer attitudes to materials such as leather changing fast. Major houses from Burberry to Gucci have announced that they will no longer be using animal furs in their designs, and fast fashion retailer H&M now claims to use 5 times as much synthetic leather as animal-derived leather.

New sources for textiles are also emerging, as awareness of the volumes of water required to produce a single item increases. Lyocell is a textile created from wood pulp which consumes far less resource in growing and manufacturing than cotton, though the production costs do increase. Still, brands such as Patagonia and Banana Republic have emphasised its use in their new lines.

sustainability in fashion

Aiming for a circular economy

Only 18% of clothing in the EU is currently reused or recycled, but as consumers continue to view secondhand clothing more positively and manufacturers realise the value of materials they're losing in production cycles, expect to see this figure change significantly. H&M announced in April 2017 that they are aiming to become 100% circular by 2030. While this date shows the scale of the challenge, the value in recycling materials and products is becoming clearer to all.

Even without recycling, fashion brands should take steps to understand how different demographics shop for their brand, whether direct from the latest line, through retail partners, or on marketplaces and smaller resellers for older lines or excess stock.

There are opportunities in these markets to serve these non-traditional customers. Burberry's desire to retain exclusivity is understandable, but it's not supported by the reality of how their products are available online. Secondhand or new, smaller online resellers and retail arbitragers are able to supply Burberry products - often, they aren't taking as much care as the brand would hope with its image and equity.

Certainly, flooding these secondary or outlet markets with excess product isn't the answer, but there is value for the business in recouping some of its sunk inventory cost in cases such as this. It also has the huge benefit of regaining control and visibility in these channels, which can help to preserve the image of the brand in the long term.

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Intelligent retail connects demand and supply

As artificial intelligence becomes more widely adopted, retailers needing to better understand the demand for their products will use technology to tune into customer desires. Predictive demand and intelligently mapped cross-channel data can help brands surface products in the right place at the right time, servicing more of the potential market than ever before.

On the other hand, they can also more accurately predict the required amount of inventory, and prevent over-manufacturing and liquidation (or, in extreme cases, burning).

Intelligence will also support a better understanding of the other options for getting rid of old or excess stock by pointing to opportunities internationally, on under-utilised channels or at certain seasonal peaks. 

There are plenty of ways for fashion brands to approach sustainability, and plenty of financial incentives for them to do so. Aligning ever more closely with their customers will be essential for survival, and customers have made it clear that they expect commitment to social causes, particularly sustainability, from their favourite brands.

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