A sustainability report released Thursday from the Sustainable Apparel Coalition and Boston Consulting Group reaffirms the deepening bifurcation in industrywide sustainability progress.
The SAC is a group of more than 250 members including brands such as H&M, C&A and Patagonia, among others, with combined member annual revenue exceeding $500 billion. Its data has informed reports such as the recurring Pulse of the Fashion Industry.
According to the International Monetary Fund, 2020 is likely to be the worst year for the global economy since the Great Depression, expected to wipe out more than 30 percent of the fashion industry’s business, and with that sustainability goals will crumble.
“Sustainability has to be survival as well,” said Jason Kibbey, chief executive officer of Higg Co., the technology arm of the SAC, to WWD regarding the tone of the report aptly titled “Rebuilding a More Sustainable Fashion Industry After COVID-19.”
And for survival, it becomes a matter of resources.
According to the SAC’s membership survey, 30 percent of fashion brands, retailers and manufacturers cited feeling “extremely unprepared for the COVID-19 crisis.” Members cited “financial support to prevent or alleviate layoffs,” “economic stimulus from our country’s government” and “support in reopening our facilities” as key concerns in rebuilding.
Prior to the pandemic, Higg Index data revealed average scores from participating facilities demonstrated a year-over-year increase of 15 to 19 percent, regarding the value of their environmental, social and corporate governance efforts.
But the coronavirus reality is especially bleak if burdens are passed on upstream. Of the more than 500 facilities SAC surveyed across all main production regions, the majority, or 86 percent, were impacted by canceled or suspended orders. As a result, now 40 percent of those facilities struggle with paying employees, prompting layoffs and factory closures and retaliatory public campaigns from advocacy groups.
“Many of these decisions that have been made in the last few weeks are going to be held under a microscope in the coming months and years,” said Kibbey. “The customer will be seeking brands that they trust,” he reiterated.
According to Kibbey, the post-pandemic landscape is summarized as so: multicategory retailers — “the Amazons and the Targets of the world” — get bigger in clothing categories, while well-capitalized brands with many financial backers or that are family-held are “going to do OK.”
And as for the rest, “scale will be a determining factor,” but there is some hope.
“Companies with a forward-looking mind-set will still maintain key social and environmental programs, even while defending business and protecting core assets during this downturn,” as stated in the report.
Consumers are taking note of such optimism. In an April analysis by BCG across 6,000 consumers in the U.S., U.K., Germany, Italy and China, the approval nod went to brands that paid their furloughed employees, repurposed facilities to produce PPE or donated to their communities.
As the report urged, the priorities of fashion companies are to: “anchor trust into the brand and practices,” “invest in new business models and innovation,” “build advantage through technology, data and digitization,” and “rebuild sustainability programs for impact and resilience.”
Many in the industry agree the post-pandemic apparel industry will not look the same, marking the “move from an emphasis on lowest-cost to a focus on quality and agility.”
WWD asked how SAC views growth for its members, namely, can production continue as before?
Regarding high-volume production, Kibbey said: “Can a trade association or a government somehow change the consumer preferences? There’s going to be some subset of the market that is going to demand that no matter what. But maybe some of those demands are changing,” he reiterated.
Interestingly, the report does not evaluate resale and rental businesses like The RealReal or Rent the Runway, as Kibbey said the focus was on retailers adding their operations are “unique” and relevant to adopt.
How is the SAC faring through the crisis?
“Our primary goal is to serve our members during this difficult time by providing resources to support their teams and leveraging insights and best practices from across the membership and the industry to help them make better decisions,” said Amina Razvi, ceo of the SAC.
Razvi expects membership numbers to reflect the retail landscape as it changes in the months ahead. As she shared, the companies with sustainability embedded holistically throughout their operations are already faring better than those that siloed sustainable efforts or never started on the journey.
Ultimate transparency has long been the aim for the SAC, but not yet fully realized.
“Both SAC and Higg Co. are continuing to move ahead with transparency tests with a number of larger retailers. The challenge always is you only get one chance to get it right,” reiterated Kibbey.