Environmental concern is high on the
agenda for retailers of all sectors, shapes and sizes at present, and as we
look ahead to a new year the signs are that luxury fashion players are going to
need to prove their eco-credentials if they are to maintain their brand equity
in 2019.
Fast fashion is perhaps under most
scrutiny, with MPs on the UK’s Environmental Audit Committee calling on Amazon,
Asos, Missguided, and sister companies Boohoo and PrettyLittleThing to give
evidence in Parliament around the lifecycle of garments and steps they are
taking to reduce the environmental impact of their businesses.
But the luxury players are being closely monitored, too. Burberry had its fingers burnt earlier in 2018 when its annual report revealed it had put around £28 million worth of unsold stock in the furnace during the previous 12 months, including clothing and perfume.
To the company’s credit, following widespread public condemnation, it quickly announced that it would be stopping this practice. Marco Gobbetti, its CEO, said he wanted others in the industry to follow suit, and there’s arguably now a chance for the purveyor of the famous check pattern to gain a lead in driving environmental good practice.
Gobbetti said when announcing Burberry’s
change of policy: “Modern luxury means being socially and environmentally
responsible. This belief is core to us at Burberry and key to our long-term
success. We are committed to applying the same creativity to all parts of
Burberry as we do to our products.”
That sets the standard for luxury fashion
retail in 2019, and Burberry is clearly not the only business in the sector
that burns unsold goods. But it happens to be the first in the industry to
publicly commit to stopping the practice.
Others will have seen the fallout from the
Burberry situation and will be thinking ‘we can’t let that happen to us as
well’, so internal policies will surely be shaped accordingly.
In 2019, we can probably expect to see various
initiatives announced by some of the leading luxury organisations to gain some
positive publicity and to do what is right. Sir David Attenborough’s BBC
Blue Planet II series at the end of 2017, which highlighted the impact plastic
is having on marine life, triggered – in the UK at least – a huge increase in
awareness around the impact of man-made goods on the environment – and
consumers are now holding businesses to account.
Examples of other action being taken can be
seen at Burberry again, with the company launching a five-year partnership with
sustainable luxury company Elvis & Kresse to transform 120 tonnes of
leather offcuts into new products.
Elsewhere, French luxury house Louis Vuitton
was talking up its Butterfly Mark in October – an award which is distributed by
Positive Luxury, a group which celebrates brands that “act with a deep respect
for our world and generations to come”.
“Great design, sustainability and a great
business do go hand in hand,” Louis Vuitton CEO Michael Burke said at the time,
highlighting the growing trend for luxury fashion players to emphasise their
environmental goals and achievements. Given the current climate, there’ll
surely be more of this from the sector in the new year.
So much surrounding the sustainability drive in
retail comes under the auspices of those looking after the supply chain. If businesses
are going to be able to avoid wastage and prevent the need to throw away unsold
fashion items, it will be a result of good back-end operations management.
A report from analyst group McKinsey & Co
looking at apparel manufacturing in the modern age suggests there are some
significant changes businesses operating in the sector – not just at the luxury
end – have to make to their supply chains in order to be competitive.
The report, ‘Is apparel manufacturing coming
home? Nearshoring, automation, and sustainability: Establishing a
demand-focused apparel value chain’, offers a neat summary of the challenges
facing modern fashion retailers, with the pressure for sustainability at the
heart of it all.
It talks of a pressure on profitability due to what
it describes as decreasing full-price sell-through, as well as increasing
concerns regarding the environmental impact of overproduction. McKinsey &
Co calls for agile production in smaller batch sizes and for on-demand
replenishment, and this is just one way businesses can keep a firmer check on what
they are producing compared to what they sell.
There are many related supply chain issues
retailers in the luxury space will be grappling with in the new year, which we
will explore through our series of articles on the subject, but at the core of
it all is the need for businesses in the space to gain transparency of their
supply chains.
Transparency means establishing an end-to-end
view of where products sit in the supply chain, from the manufacturing facility
to the shop floor, owned warehouse, or third-party distribution centre – and
anywhere in between. Transparency in the supply chain means that luxury fashion
retailers will be able to act on issues in real time and ensure smooth running
operations.
But, increasingly importantly, transparency
means sustainability success – and that’s something the industry and the wider
public can get on board with. It will be a quick-fire way to building a
respected brand in 2019.
