A new report has warned companies that fail to demonstrate transparency and sustainable practices in their business operations will struggle to gain consumer trust in a post-Covid world.
The ‘Weaving a Better Future: Rebuilding a More Sustainable Fashion Industry After COVID-19‘ report from Boston Consulting Group (BCG), Sustainable Apparel Coalition (SAC), and technology company Higg Co, is a 12-page document outlining how the industry can rebuild itself in a way that elevates the role of social and environmental commitments within forward-looking business resiliency strategies.
It paints a bleak picture of what the fashion industry is facing in a post-crisis world, noting the unprecedented challenges that have arisen from the crisis, including that fashion and luxury together are the most negatively impacted of all consumer goods and services, after travel and tourism. From March to April, sales decreased by 60-70% in the worldwide fashion and luxury industry – with foot traffic in retail and recreation stores down by 44% in the US, 52% in Germany, 78% in India, and 59% in Brazil.
Further back in the global supply chain, a survey of over 500 manufacturing facilities across all main production regions conducted by the SAC and Higg Co in April, shows 86% of all facilities have been impacted by cancelled or suspended orders. As a direct consequence, 40% now struggle with paying employees, leading to layoffs and factory closures.
However, it also takes a more optimistic stance on the possibilities that exist to integrate sustainability efforts into core business strategy as the industry rebuilds following the pandemic, suggesting that those who maintain commitments to supply chain partners, proactively keep an open dialogue and collaborate on solutions will benefit from deeper trust from consumers and value chain partners alike.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSee Also:
The report offers four actions that must be taken to avoid backsliding on progress and to actively prepare for a changing industry:
- Protect critical assets to survive the economic crisis: Fashion companies must safeguard workers, employees, capital, value chain partnerships, channels, and the trust and support of their customers. This moment is an opportunity to remove unnecessary complexity and costs, in order to prepare for reinvestment.
- Solve immediate inventory challenges in partnership with suppliers: Leaders will recognise the importance of open dialogue and constructive partnership across the value chain in order to find shared solutions for protecting worker livelihood and sustaining trust. Cancellation of completed orders will be a measure of last resort, while cancellation without consultation or collaboration will be an unacceptable practice.
- Integrate sustainability throughout business recovery strategies: Sustainability will be an imperative for strong companies after the crisis. Leaders will make sustainability central to post-pandemic decision-making, while laggards will view sustainability as an effort to resume once convenient.
- Accelerate transparency while increasing sustainability ambitions: Companies must take advantage of digitalisation, innovative business models, and end-to-end solutions – with transparency playing a central role – in order to assess and demonstrate positive environmental and social impact to stakeholders.
Sanjeev Bahl, founder and CEO of sustainable denim manufacturer Saitex, says: “The pandemic has forced all of us to take a step back and reset our priorities. One key takeaway is that a new transparent model that showcases verified sustainable practices will have an edge over other traditional business models.”
Javier Seara, BCG managing director and partner, adds: “This is a moment of truth for fashion industry players. Companies will need to change and are already changing their businesses (every day) to adapt to the new reality. Relentlessly incorporating sustainability practices into these changes will be the critical factor that separates winners from idlers.”
Higg Co is a technology company spun out of the SAC in 2019 that hosts sustainability measurement tools, allowing companies to integrate measurable data directly into their internal systems. This, in turn, better enables sustainability decisions throughout the enterprise and presents an even bigger opportunity to unify measurement across the industry.
“This global crisis throughout the fashion industry has demonstrated the critical need for supply chain data to enable decision making and avoid fallout later,” says Jason Kibbey, CEO of Higg Co. “Manufacturers who have invested in sustainable facilities and processes are looking for new models to benefit from those investments and new ways to engage with their customers and their upstream suppliers on sustainability. Fashion needs digitalisation to accelerate sustainability and transparency, just as it has accelerated all other dimensions of business.”
Although the future remains unknown, the report observes that retailers and brands that are integrating their sustainability efforts more deeply into the business and not retreating from them are poised to come out of the crisis in a position of strength. The post-Covid consumer will make purchases in part based on trust and purpose, and companies will be judged on how they acted during the crisis, as well as how they prioritise sustainability and transparency after the storm has passed.
Amina Razvi, executive director of the SAC, says: “This crisis is showing us that anything is possible when you have individuals, communities, businesses and governments working hand in hand to solve a global threat. While this may not be how we wanted to realise this, we now know that collective action on a global scale is possible. Climate change is the next great challenge we need to address together, and this pandemic is forcing us to acknowledge that economic, environmental and human health are all deeply interconnected, and meaningful solutions will only be possible if integration, collaboration and transparency are at the forefront of a new industry paradigm.”
