The pressure on brands to demonstrate sustainability has intensified during the Covid crisis and there may never be a return to the old normal. So, how can brands keep pace with their customers changing expectations?
Brands’ sustainability credentials are emerging
as a key competitive differentiator as a growing cohort of customers become
less loyal, particularly during 2020. According to McKinsey, over 75% of US consumers changed shopping behavior and switched
to new brands during the Covid-19 pandemic, and this was during the initial
global lockdowns. Many of whom were forced to switch allegiance when faced with
out of stocks or long delays for goods, while others took the opportunity to
explore outside of the brands they usually remain loyal to, meaning an ebb in
customer loyalty. Much of this behavior
may now become permanent, which will be a real threat to brands that have
relied on their shoppers’ repeat custom over many years.
McKinsey
also went on to say, "during these trying times, consumers have a
heightened awareness of how businesses interact with stakeholders, local
communities, and society more broadly. The actions that businesses take during
this pandemic are likely to be remembered long after Covid-19 has been
conquered.”
Add to this E.ON’s Renewable Returns report which shows that 72% of survey respondents said they pay attention to whether a business acts in a climate-friendly way, and 65% feel it’s important the products or services they buy do not harm the environment. And they are willing to pay a premium. The research shows more than a third (34%) of people have already knowingly paid more for ‘green’ products since the pandemic struck and more than half (51%) think the environmental credentials of a product or service are now just as important as the price they pay for it.
It is clear therefore that brands must both be sustainable and also show how they are sustainable, for both customers, who can now see into brands’ manufacturing and supply chains, and increasingly, for regulators who will make it harder for companies to comply by adding a raft of new rules and checklists. So, the world is watching because brands are in a position of trust.
Being
sustainable is not easy for many brands, even for those that have it in their
DNA. Fashion brands that are actively developing their businesses to be more
sustainable are often operating piecemeal or in silos, where they really need
the ability to look across the entire product lifecycle – from initial design,
sourcing and manufacture all the way through shipping, retail and wholesale to
disposal, repurposing or recycling.
This
will then enable them to adopt a strategy of circularity, which is the next
step beyond sustainability – how can we think and act from the very beginning
about avoiding waste at every single stage before it becomes a problem further
along the supply chain?
This
more advanced thinking has compelled some brands to embrace new business models
with less waste built-in, such as second hand or rental, which consumers are
increasingly demanding. eBay
notes that there has been a 404% year-on-year increase in pre-loved
sales since 2018, and in 2020 66 million items found a new home. And for rental, the global online market reached a value of US$ 1.26 Billion in 2019 according to Research & Markets, and is expected to reach a value of US$ 2.08 Billion by 2025, exhibiting a CAGR of 8.7% during 2020-2025.
They also need to be able to communicate their initiatives through a growing number of channels. Each with its own peculiarities – main website, marketplaces, and a raft of social media platforms. The range of audiences is also proliferating – customers direct, the media, influencers, partners, financial stakeholders and industry bodies and pressure groups.
Even
where brands are able to construct policies around sustainable activities and
communications, the horizon will shift continuously; sustainability has no end
point but is a continuous journey with many milestones and elements, so it's hard
to monitor and record progress, and then to demonstrate that progress to the
outside world.
Fortunately,
fashion brands in particular have significant support on their side. They are
being supported by the industry through initiatives such as the Transparency
Index from Fashion Revolution which has published a report that demonstrates
the importance of total transparency even in the most upstream areas of the
Supply Chain as the best way to ensure good relations with the various
stakeholders, resolve conflicts and guarantee a direct benefit to the brands
themselves.
In
addition, over 20% of the world fashion industry has now signed the Fashion
Pact and created a foundation that has published sustainable development goals
that will be necessary to offset the consequences of ignoring the damage the
industry was causing to the environment. Three main areas were identified where
protective action will be required: Climate, Biodiversity and Oceans.
A
third initiative, the Sustainable Apparel Coalition (SAC), founded in 2009 by
Walmart and Patagonia created a Higg Index, which enables fashion brands to
accurately measure and evaluate their sustainability performance. SAC today
counts more than 200 participants from 35 countries with a combined turnover from
fashion of $500 billion.
The
data and analysis burden attached to sustainability is immense and depends on
advanced technology that is able to gather data from multiple sources and
consolidate it in a meaningful way so that value can be extracted through
analysis. This will include measurement and documentation of new areas, such as
the source of raw materials, particularly challenging to retailers that buy
direct from manufactures and have no involvement in production.
Once sustainability performance is fully integrated into brands’ IT
systems, they can start to take precise and timely actions to deliver value to
customers, partners, stakeholders and the business itself with audit
capabilities built in.
Dedagroup Stealth helps brands to operate seamlessly across the extended supply chain and secure the data that will reveal this full sustainability picture and has published a report that investigates trends in fashion sustainability.
