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Trends11 October 2018

No waste vs. brands that “sit” on the tons of their own products – 3 scenarios for the future.

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According to the data from the BBC, the Burberry brand in 2017 destroyed unsold clothes, perfumes and accessories worth 28.6 million pounds. In total, over the last 5 years in this way products with a characteristic checkered pattern for 90 million pounds were utilized. The company swears and at the same time justifies itself by claiming that when burning the surplus of produced goods, the generated energy was captured, which made the whole process environmentally friendly. Richemont, Swiss holding, the owner of e.g. Cartier and Montblanc, in the last two years bought unsold exclusive watches for over $ 0.5 billion from their distributors. Only some of their components will be re-used as part of recycling. Most of these unique products will be destroyed. Reason? The need to protect the prestigious image of the brand and avoid any opportunities to sell products at lower or, even worse, discount prices. Undisputed leaders of the oversupply of production in the fashion industry are definitely brands from the fast fashion branch. The company Hennes & Mauritz (popular H&M) in its report for the first quarter of 2018 showed that its stores have unsold clothes and accessories for over 4.3 billion dollars, and compared to last year, this figure increased by 7%.

These are just a few recent, high-profile examples that are the tip of the iceberg of the dirty secrets of the luxury and fast fashion industries related to mass overproduction, which is also reported by Greenpeace. It is an open secret that in the Swedish city of Vasteras there is a power plant, which in the process of energy production is partly based on burning … unsold H&M clothing. In 2017, 15 tons of textiles from this popular brand were utilized. Of course, one could conclude that at least they are of such use if they have not been sold, but this assumption does not take into account the workload and consumption – or rather the wasting – of natural goods used for their production.

The case of H&M and having such large warehouse slopes also raises many questions about whether the brand lags behind competitors like the ASOS or Inditex, which perfectly adapt to the changing expectations of customers and respond to the requirements posed by the ongoing digital transformation. According to fashion market experts, H&M remains far behind, losing contact with its main customer group at the same time. The tangible effect of this was, among others the first quarterly decline in sales in the entire brand in two decades, recorded in 2017, and the aforementioned increase in clothing stored in stores. Much is also said about poor production planning prevailing in the fast fashion industry, which puts a huge oversupply on more careful creation of customers’ needs and an ecological production process.

Analyzing the topic in terms of possible consequences, unexpected drops and the problem of oversupply, which faced, e.g H&M and Burberry, may be the first, important manifestations of changes shaping in the area of consumer needs. It is worth considering possible scenarios for the future, based on the values and needs that will soon be followed by customers:

1. Luxury brands, wishing to avoid negative comments related to the destruction of full-fledged products, will begin to offer unsold collections from previous years in adjusted accordingly – but not discounted – prices, with the preserve of the prestige around the purchasing process. At the same time, the companies selling used luxury products (possible cooperation directly with the producer) and those dealing with the repair of damaged items, such as London’s The Restory or Re / Done, dealing with the reworking and personalization of second-hand Levis jeans, would gain in popularity.

2. There will be a decades-long change in the thinking of large corporations about production as well as customers about the purchase of new clothes. Transition from the overproduction model to clothing production in the predictive and on-demand model. The first signs of this change can be seen today. As usual, the pioneers of this type of solutions are not the brands from the front pages of newspapers, but rather small manufactures or start-ups like Choosy. This company deals with designing its clothing collections based on AI technology. The algorithm analyzes what people write in social media in the context of the clothes they want and on this basis dress lines are proposed. They will be produced only when ordered by a sufficiently large number of customers. The production of only what customers want is to be, in the opinion of Choosy’s founders, a way of stacking unsold clothes, as well as a response to the needs of conscious customers who more and more often require brands responsible for the ecological production process and clothing “for years”.

In the future AI can become a tool – also for fast fashion giants – that can significantly minimize the problem of a huge amount of stock. By analyzing on a large scale the needs of clients – frequently asked in the social media questions “Where can I buy it?” – brands will be able to better adapt the size of their production to the real market demand.

3. The growing presence of hyper-personalization in the clothing market. In this model, purchased products would be noticeably more expensive, but the client, adjusting clothes to their own needs and personal preferences, would buy them much more willingly than the clichéd patterns available in popular chains, also because of the need to stand out. Examples of brands corresponding today to this scenario include Elison Triple Thread, which introduced a tailor-made service based on the musical preference of the client, generated on the basis of its Spotify account or Levi’s, whose latest project F.L.X. allows the customer to personalize a pair of jeans on the tablet and receive it after 60 minutes. Thanks to the use of laser technology, this solution is also environmentally friendly, because it significantly limits the use of chemicals in the whole process.

Before hopefully one of the scenarios of the future described by me will come true, it is worth remembering that we, as clients, decide. With our money. Each purchase is a commitment to the brand, its approach to production and the ideology that the company confesses. Buy more and cheaper, or more expensive, but less often? Let us choose consciously.

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