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More than 1,000 industry executives and influential figures descended on Copenhagen this week to debate fashion’s thorniest social and environmental problems. There’s a lot still to be done.
The fashion industry is one of the world’s biggest polluters, and has struggled to find ways to tackle its environmental impact as clothes have got cheaper and more disposable. Moreover, it continues to rely on the labour of mostly young, female workers, including many who face abuse by their employers, and many more who are not paid enough to provide for themselves and their families.
Here are the key takeaways from the industry’s biggest annual sustainability gathering:
Fashion Isn’t Moving Fast Enough
While this week was marked by a flurry of new commitments by brands — including Kering SA, Tommy Hilfiger-owner PVH Corp and LVMH Moët Hennessy Louis Vuitton SE — stepping up their efforts to reduce their environmental and social impact, the pace of change is still not going fast enough to offset fashion’s negative impact on the planet — and we’re running out of time.
“The health of the planet is not only headed dramatically in the wrong direction, but it’s happening exponentially faster,” said Ryan Gellert, Patagonia’s general manager in Europe, the Middle East and Africa.
The summit was marked by an undertone of urgency, after new research showed fashion’s progress towards a more responsible way of operating is slowing. That’s a big problem for efforts to curb its climate impact. The industry accounted for 1.7 billion tons of carbon dioxide emissions in 2015, according to data from McKinsey & Company published in 2016. If it doesn’t change the way it operates, that level could increase by nearly 80 percent by 2025, assuming the majority of emerging markets achieve Western levels of consumption.
“We need to pick up pace,” Eva Kruse, the chief executive of summit host The Global Fashion Agenda said in her opening remarks. “The speed is not moving fast enough.”
Fashion Is Getting Political
The apparel industry’s impact on the environment is rising up governments’ agendas, and companies are looking to play a bigger role in influencing policy.
Fashion has historically flown under the radar of many politicians and, until recently, brands have avoided talking about politically-sensitive issues that could alienate some customers. But now a growing number of brands see taking a stand on certain issues as the key to getting younger customers. According to BoF and McKinsey’s latest State of Fashion report, nine out of ten Generation Z consumers believe companies have a responsibility to address environment and social issues.
The health of the planet is not only headed dramatically in the wrong direction, but it’s happening exponentially faster.
Kering’s Chief Executive Francois-Henri Pinault used the conference to announce that the French President has called on him to unite a broad coalition of industry players behind a set of long-term sustainability goals ahead of August’s G7 summit in Biarritz.
On Tuesday, five of the industry’s leading trade bodies banded together to launch a policy manifesto laying out ways to make fashion more circular — part of broader plans to step up government lobbying efforts. Meanwhile, the French government has said it is pursuing a ban to stop companies destroying unsold goods — a sign of the growing regulatory scrutiny on the industry.
Sustainability Is Good Business
Environmental and social initiatives have often been relegated to companies’ corporate responsibility arms, but progressive brands are increasingly seeing operating responsibly as simply good business. While upfront investments are needed to shift the industry’s way of operating, there’s a growing awareness that many of these have a significant pay off in the long term.
“There’s plenty of evidence to show sustainable companies enjoy better performance and sustainability is a business opportunity,” Kering’s Pinault told the conference.
Fashion Needs to Disrupt to Clean Up
Despite the many new initiatives announced during this week’s summit, the fashion industry still doesn’t have the tools it needs to move towards a more sustainable business model.
For instance, while Kering has previously set a target to reduce its environmental impact by 40 percent by 2025, at the moment it only has solutions to do half of that, Pinault said. Companies need to move towards new, more circular ways of operating and mobilise capital to invest more in the technologies that will be needed to achieve that.
“We should exert leadership to say this is what we’re trying to solve for,” said Michael Kobori, Levi Strauss & Co’s vice president for sustainability. “We as an industry should exercise that power.”
There are also opportunities to mobilise tech to help solve the industry’s problems. For instance, Stella McCartney and Google announced this week that they have teamed up to try and solve fashion’s environmental data gap.
The Consumer Is the “Elephant in the Room”
Even though there’s increasing demand from consumers for brands to operate more sustainably, that’s still not what’s driving their purchasing decisions. In fact, for the average consumer, the biggest considerations remain style and price, “everything else is way down on the scale,” said PVH Chief Executive Emanuel Chirico.
To move things forward, brands need to be more vocal in educating their customers on their initiatives, while continuing to push for change.
“It’s on us as an industry to drive this change,” the GFA’s Kruse said. “We cannot expect consumers to drive this forward.”
THE NEWS IN BRIEF
FASHION, BUSINESS AND THE ECONOMY
Source: BoF Design team
Kering tapped by French president to unite brands behind sustainability goals. French President Emmanuel Macron has called on the chief executive of luxury giant Kering SA to bring together a group of brands to set unified sustainability goals for the sector ahead of the G7 summit in Biarritz this August. Around fashion’s annual sustainability gathering in Copenhagen, Kering has announced a flurry of new initiatives including a new target to push for stricter animal welfare standards and an extended commitment to protect young models by pledging to only hire people who are over 18.
Richemont profit misses estimates on online investment costs. The luxury group reported full-year operating profit that missed analyst estimates as the company consolidated its acquisitions of online platforms YNAP and Watchfinder. Earnings climbed 5 percent to €1.94 billion ($2.2 billion) in the 12 months through March. Analysts expected €2.05 billion. The operating margin slipped to 13.9 percent, the lowest in more than a decade.
Burberry profit steady awaiting new collections in stores. The British fashion house reported broadly flat full-year revenue (down 1 percent to £2.72 billion, or $3.49 billion) and operating profit (consistent at £438 million, or $562 million). The brand said it expected similar this year as it sets the foundations for growth with more products by Riccardo Tisci in stores. Chief Executive Marco Gobbetti said customer reactions to Tisci’s first collection had been “very encouraging” since it hit stores in February.
Ralph Lauren turnaround sticks as profit beats highest estimate. The apparel maker’s profit and revenue exceeded expectations, a sign that Chief Executive Patrice Louvet’s efforts to boost profitability are paying off. As Ralph Lauren pushes away from off-price retail towards direct-to-consumer online sales, it has been partnering with social media influencers and celebrities in a bid to appeal to younger consumers. Still, its home market continues to face issues with North America’s same-store sales at brick-and-mortar stores falling 7 percent.
China’s retail sales growth falls to 16-year low. As the trade war with the United States escalates, China has reported weaker growth in retail sales and industrial output for April, adding pressure on Beijing to roll out more stimulus. Clothing sales fell for the first time since 2009, suggesting Chinese consumers were growing more worried about the economy even before a US tariff hike heightened stress on the country’s struggling exporters. Overall retail sales rose 7.2 percent in April from a year earlier, the slowest pace since May 2003.
Macy’s climbs after bouncing back strong from tough holiday. The department store surged after reporting sales improvements, including at its brick-and-mortar locations. Macy’s said its strategic turnaround plan is on track to deliver “long-term profit growth.” Same-store sales for owned and licensed stores gained 0.7 percent last quarter, the sixth consecutive gain and better than analyst projections. Macy’s also said it had another quarter of double-digit online sales growth.
Edie Parker expands into luxury cannabis accessories. The fashion boutiques of New York’s prim Madison Avenue now have a different kind of high-end neighbour: a head shop. Handbag label Edie Parker is expanding its business into cannabis with a new collection of smoking accessories called Flower by Edie Parker. Launched in 2010, the fashion brand is coveted for its vintage-inspired clutches and handbags and branched out into home goods in 2016. The new cannabis line will be an extension of homeware.
France seeks to stop fashion brands from destroying unsold goods. The French government is pursuing a plan to stop companies from destroying unsold items, French Deputy Ecology Minister Brune Poirson said at Copenhagen’s fashion and sustainability conference. While mass-market brands often mark down goods until shelves are cleared, luxury labels have long preferred to burn or bury unsold items in landfills rather than risk brand image damage from discounting. The pledge comes after Burberry said last year it would end the practice after it was revealed that the company destroyed almost £29 million worth of unsold goods in 2017.
THE BUSINESS OF BEAUTY
Source: @kylieskin via Instagram
Kylie Jenner’s skincare range could be her savviest business move yet. Jenner’s new skincare line, Kylie Skin, is set to launch online on May 22. The brand is an offshoot of the 21-year-old billionaire’s Kylie Cosmetics company (valued at $800 million in 2018) and will start by selling six products, all under $30. While colour cosmetics are still popular with young people, the category is facing stagnation, including at Kylie Cosmetics: sales of Jenner’s famed $29 lip kits dipped 35 percent in 2018. On the other hand, sales of skincare products in the US grew by 13 percent in 2018, hitting $5.6 billion. Jenner has also reportedly filed trademarks for Kylie Hair and Kylie Baby this week.
Coppertone has a new owner. Beiersdorf has bought Bayer’s Coppertone brand of sun-care products for $550 million, bolstering its line of skin creams that already includes the Nivea brand. The deal comes at a time when scrutiny of sunscreens is heating up. The US Food and Drug Administration has called for more testing of their ingredients given how much they’re absorbed through the skin, and last summer Hawaii banned some sunscreens with ingredients that could harm coral reefs.
Source: @jamescharles via Instagram
James Charles, from ‘coverboy’ to cancelled. The beauty internet sensation is at the centre of an internet storm and has lost over 3 million Youtube subscribers in a matter of days. Tati Westbrook, 37, a Youtube beauty vlogger and a former mentor to Charles, posted a video saying she no longer wants anything to do with him due to an Instagram ad that Charles posted for a rival vitamin company to her own. She went on to say that she was upset with Charles’s attempt to “trick a straight man into thinking he’s gay, yet again,” at her most recent birthday celebration.
LVMH appoints company veteran to lead Fenty label. Véronique Gébel has been appointed to lead Fenty, LVMH and Rihanna’s fashion venture, BoF has learned. She joined LVMH in 1997 and worked for several brands including Givenchy, Fendi and most recently Louis Vuitton. Since 2007, she was director of women’s and men’s ready-to-wear at the group’s flagship brand. The executive will run the new label spanning ready-to-wear and accessories, including shoes, sunglasses and jewellery, reporting to LVMH executive committee member Jean-Baptiste Voisin.
David Beckham appoints independent brand and commercial team. Brand Beckham has entered a new phase. The footballer turned international celebrity parted ways with former business partner XIX Entertainment to form a new independent brand and commercial management team. Occupying a new London-base, the team will work with Beckham’s current manager, David Gardner, who has held the role for the past decade and will head up the new venture as managing director.
MEDIA AND TECHNOLOGY
Condé Nast offloads two titles. The publisher of The New Yorker, Vanity Fair and Vogue has sold Golf Digest to Discovery Inc and Brides to Dotdash this week, as it sheds titles amid the decline of the print media business. The terms of either deal were not disclosed but Golf Digest reportedly went for $35 million. Brides had been on the market since last year as part of a cost-cutting campaign, and Dotdash was among the early suitors. The online brand plans to scrap the 85-year-old print magazine and redesign Brides.com.
Alibaba beats estimates as personalised recommendations boost sales. Alibaba Group Holding Ltd’s posted quarterly revenue and earnings that topped analyst estimates as personalised recommendations drive consumer spending across its shopping sites. Revenue at China’s biggest e-commerce company rose 51 percent to 93.5 billion yuan ($13.6 billion) in the three months ending in March, above the 91.7 billion-yuan average of analyst estimates.
460,000 Uniqlo online accounts accessed in Japan hack. Fast Retailing Co, Asia’s largest retailer, said hackers may have gained access to the personal information of about half a million users of its Uniqlo and GU brand e-commerce portals. Hackers accessed at least 460,000 accounts registered on Fast Retailing’s Japanese shopping websites, the company said Monday. Users’ personal information, purchase history and parts of credit card numbers may have been accessed. The hack occurred from April 23 to May 10, and the company is still investigating.
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