Go Sustainable or Go Home
18 March 2020
The global market of fashion is at an annual worth of approximately USD 406 billion. Currently, the entire fashion industry is transforming from in-store to omnichannel, and most importantly, it is rapidly increasing its e-commerce revenue. Due to endless mobility, fast deliveries, and on-demand service s as well as increasing sustainability awareness among consumers, the fashion industry, like many other industries, is facing new challenges.
In fact, as consumers today are more or less wearing their values on their sleeve, fashion retailers have over the last years tried to change their behaviour to become more sustainability-focused throughout the entire value chain thereby gaining consumer trust. Trends such as real fur becoming a fashion faux pas on the runway, to the new era of the luxury rental, recycling in-store solutions, and the resale market, we are entering 2020 with a marketplace eager to shape a more sustainable fashion landscape and to design with an awareness of the circular economy.
To stay relevant and to access the new generation of impact-driven consumers, fashion brands will need to approach this market segment. At this stage, the circular economy, recycling initiatives, and new technology solutions to support these processes have never been more important for earning consumers’ trust. As a result, innovative business models are evolving, including pre-owned, repaired, and rental clothing, providing consumers with more alternatives on prolonging the lifespan of each clothing item.
Google searches for the term “sustainable fashion brands” have increased by 61 per cent since 2016, increasing by 25 per cent from 2017 to 2018. Furthermore, the Business of Fashion’s report “the State of Fashion”, published in 2019, discusses the difficulties that the fashion industry is facing and highlights sustainability as one of the main challenges for retailers in achieving consumer trust.
Swedish retailers, such as Åhléns and H&M, have already come a long way in terms of their digital and sustainable journey. H&M launched its new renting service in autumn 2019. Through the service, H&M customers can rent the Conscious Exclusive collections, and the service offers the possibility for customers to repair and update their clothes on site in Stockholm and Gothenburg. According to H&M, the rental of clothes and the possibility to repair them in the retailer´s own sewing studio is an important step in the change towards a “circular fashion future”.
Similarly, the clothing brand Patagonia has started to encourage its customers to repair their old outdoor garments rather than buying new ones. For this purpose, Patagonia is offering free clothing repairs in order to extend the life of its garments. In the view of the CEO of Patagonia, doing so is the single most important thing they can do to lower their impact on the planet.
New technology also allows retailers to work towards sustainability in new creative ways. For instance, the brand Filippa K is using new technology to trace its products through the entire supply chain in order to meet the customers’ request for transparency regarding the origins of their products. Furthermore, the “etailer” giant Zalando is putting a lot of work into becoming more sustainable. For instance, they will offer clothing made from sustainable material and they are using AI solutions in order to decrease the amount of returns from customers.
As all these retailers are changing their business strategies for the good of the environment, we can see that there has been a significant shift from owning to renting, from fast fashion to reusing, repairing and recycling, and lastly, from the exclusive to the sustainable.
Is “Rental” the New “Black”?
Clothing rental services are an economical and environmentally friendly way to stay on trend, while still enjoying the convenience of getting the latest looks delivered right to your doorstep. Statistics already show that next-generation shoppers are changing their consumer behaviour due to environmental effects. To keep up with the growing awareness, retailers need to follow this trend in order to reach a broader demographic.
When it comes to the practice of renting, this trend has not only the potential to reduce the waste and increase the life span of garments. Renting could also be seen as a part of a larger cultural move towards a sharing economy in which ownership could potentially become an out-dated phenomenon. This systematic change in business practice and consumer behaviour is of course to a large part driven by the pressing need for a more sustainable fashion industry.
This systematic change from selling to renting also raises a series of questions from a legal perspective. For instance, the development of the terms of agreement for renting clothes. Swedish retailers have so far developed a concept where you can “rent” certain clothing items on similar terms as buying them (in Swedish: utökad rätt till öppet köp), however when returned used and washed, the customer still receives a refund. Questions concerning the duties of the renting consumers and the obligations of the retailers may arise. One may also consider if there will be a future need for legislation protecting the consumers when renting products with a short life cycle, such as clothing.
Here are a few ways brands can navigate the new fashion landscape and attract the new generation of customers:
- By offering sustainable options, such as buying clothing made of sustainable materials or renting clothes, retailers can get a competitive advantage as consumers are demanding more environmental friendly alternatives.
- Building consumer trust might require transparency when it comes to the origin of products. As an example, blockchain technology is being used to track the entire supply chain of products and its authenticity as well as origin. These new and improved tracking tools and techniques allows consumers to buy products that align with their personal values.
- Exploring new ways to lessen the environmental impact of their businesses and by adapting their business to the circular economy, for instance, by ensuring that products can me resold, reused, and recycled.
More articles from the first edition of Hannes Snellman Fashion Law Review are available here.