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 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.
Luca Tonello, director at Dedagroup Stealth, which specialises in providing the back-end technology for high-end fashion brands, talks to us about how luxury fashion brands must gain transparency of their supply chains as we move into 2019.
What it all means for luxury fashion
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.
Increases importance of supply chain
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.
By Luca Tonello of Dedagroup Stealth