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LONDON — The fashion system has been forced to face some of its biggest systemic issues head-on and at speed due to the coronavirus crisis. Global Fashion Agenda, the sustainability forum behind the annual Copenhagen Fashion Summit, is urging fashion leaders to see those very problems in a positive light and turn them into the solutions that the industry needs.
In its latest CEO Agenda report, written in partnership with McKinsey & Co., the nonprofit organization has outlined six areas across the fashion ecosystem that have had to undergo rapid change and that could offer “opportunities for fashion executives to rebuild a resilient and sustainable industry.”
“I’m well aware of the battlefield fashion leaders have been on every day in these weeks and months, and how sheer survival is the top priority for many. However, this crisis presents an opportunity for us to reevaluate the lexicon of fashion and, by default, its entire system of operations. I urge fashion leaders to rethink and rebuild systems in a collective effort to ensure a just and resilient future, post-pandemic,” said Eve Kruse, chief executive officer at Global Fashion Agenda.
Technology, transparency and a shift toward leaner, circular business models emerge in the report as among the key pillars that will shape the industry’s sustainability agenda in the post-COVID-19 world.
Instead of looking at short-term economic solutions and putting sustainability commitments aside, the report urges industry executives to commit to making the necessary structural changes that will set the agenda in motion.
More than an act of goodwill, sustainable change will help to manage cash flows and respond to consumers’ newfound demands.
“The sustainability of the fashion industry is becoming significantly more, not less, important to consumers, investors and regulators as a result of this crisis. Fashion industry leaders should, therefore, renew their commitments and find ways to make use of the crisis as an opportunity to accelerate the transformation toward more sustainable business models,” says Karl Hendrik Magnus, senior partner and co-leader of apparel, fashion and luxury group at McKinsey.
The report goes on to suggest positive solutions for some of the biggest issues currently faced by brands and retailers, from the piling up of unsold stock to store closures and shifting consumer behavior.
When it comes to the looming “overstock crisis” — with unsold resort and spring 2020 stocks ballooning due to decreased demand, border restrictions, and store or warehouse closures — the opportunity lies in scaling new, circular business models and re-assessing the divisive issue of seasonality in fashion, to help shift the unsold stock.
Brands could shift current collections to future seasons; delay launches and, in the longer-term, work with suppliers to re-skill garment workers on how to remake products or expand factories’ capabilities to upcycle garments.
To facilitate these shifts, a collective effort is essential to “enable a better recycling infrastructure,” as well as a broader mind-set shift toward circularity.
On the design level, creatives have had to grapple with the limitations of working from home with less access to samples and fabric resources. But this new way of working digitally could spearhead plenty of positive change in the long term.
“End-to-end digitization,” or the use of virtual showrooms and AI, virtual prototyping, 3-D design collaborations, and made-to-order approaches, would create leaner, demand-driven businesses with healthier cash flows, the ability to predict demand better, as well as create less waste, as designers would be creating fewer samples and stock alike.
Technology can also help shape “robust and efficient e-commerce models of the future” — a key consideration, given that 35 to 40 percent of shopping is said to take place online between April and September. Physical shop floor space will continue to be reduced as customers shop more online.
To ensure that online businesses are future-proof and able to grow, retailers will need to consider digitizing logistics, improving their sizing algorithms to reduce the number of returns, as well as using more sustainable packaging and transportation methods.
The social and environmental impacts of fashion firms’ various sourcing decisions along the value chain is another area that needs to be revised post-crisis, according to the report.
To better manage those impacts, tracking and tracing where a product is made will become even more necessary for brands to assess production risks, both on a humanitarian and environmental level. According to the report, a brand’s social practices are now determining customers’ purchasing decisions, with 45 percent of shoppers putting more trust and value in brands that make charitable contributions and help garment workers in poor areas.
To that end, the study also urges a shift to transparent communication about a companies’ shortcomings, the impact of COVID-19, and its influence on all sustainability efforts in order to keep shoppers engaged and sustain loyalty.
The sixth opportunity highlighted in the report includes reevaluating the current supplier landscape, which has been disrupted across the globe, particularly in countries with weak social security systems.
The mass disruption offers a chance to consolidate and rebuild brand-supplier relations according to the report, moving from transactional toward long-term, strategic partnerships, with common sustainability goals and joint investments.
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