Boosting circularity, recycling and responsible raw materials usage are all commendable practices, but one of the simplest ways to be a more sustainable fashion business is to get your inventory liability down. After all, a company can’t claim to be a sustainable enterprise if they’re dumping 20 to 30 percent of their products into landfills.
Mitigating unsold merchandise and reducing production waste involves a tricky dance of accurately predicting consumer demand, pivoting from physical to digital sampling, and increasing speed to market so supply accurately aligns with fleeting trends.
At the Fairchild Media Group Sustainability Summit, the “Reengineering Product Development” panel viewed sustainability through the glut of unsold merchandise. Panelists included Mou Nath, global innovation and sustainability strategist at global sourcing company ZXY International; Amanda Curtis, chief executive officer and cofounder of on-demand product management platform N.A.bld (pronounced “enabled”), and Dan Leahy, cofounder of product decision platform MakerSights..
Getting the merchandise level down with on-demand manufacturing is one way to reduce waste, producing literally just what a customer orders.
“We took the concept in the start-up business world of minimal viable product (MVP) and applied it to the retail sector, letting larger companies test product with as little as one sample,” Curtis said of the N.A.bld platform, which launched successful on-demand programs for the likes of Project Runway, Disney Fashion and Macy’s. Using the company’s proprietary software, brands create digital tech packs that are bid out to domestic manufacturers all across the U.S., specifically set up to produce small runs at a competitive price. Transparency into the entire process— which can be followed as the product is created in real time — builds consumer engagement, trust and loyalty, turning the few-week manufacturing wait into a “fashion experience” instead of a commodity purchase.
“We see this as ‘smart fashion’ not ‘fast fashion,’ even though it does let brands operate in an almost fast-fashion model,” Curtis said, but “without all the negative environmental and humanitarian issues.” In addition, made-to-order merchandise yields higher margins and lower returns.
Another way to reduce inventory waste and better forecast what the consumer will actually consume is with data and predictive analytics. After all, more money is lost on markdowns and lost sales by having the wrong product on the shelf at the wrong time than any tariff, return or sustainable fiber premium cost.
MakerSights builds a metaphorical crystal ball by looping customer voices into the equation, via behavioral purchase data or post-sale customer feedback. “You can analyze those responses and use that demand prediction to meaningfully reduce the investment that you make in products that don’t sell,” said Leahy.
And there’s no time to waste when it comes to wasted merchandise. As Leahy pointed out, markdowns as a percentage of real retail revenue were about 5 percent in 1980 but are now north of 40 percent.
But while fashion executives agree they want their businesses to be data-driven, they don’t always know how to get there. “Analytics are really helpful, as long as you’re putting yourself in a position to respond to them,” said Leahy. “What goes hand in hand are the process improvements that allow brands to be more responsive to the demand signals they’re seeing, as well as the measurement of the demand signals itself. Together you can create a much more responsible organization that’s going to create a lot less waste.”
On the global manufacturing side, ZXY’s Nath explained how investment in digital tools for 3D design and development during the pandemic proved itself to be an effective sample reduction method that should be adopted as table stakes going forward. “There are too many layers of approvals and sending samples back and forth from the manufacturing country to the brand companies where executives check and approve. We have minimized that,” Nath said. “It also shortens lead time so approvals are faster and you can save a lot of material, money and time.”
The challenge, she noted, is training the industry to better embrace it, and making sure that the entire chain adopts it. For their more hesitant customers, ZXY made both physical and digital samples to show how close the digital one was. “A very important thing we are trying to do internally is train our designers completely as a blank sheet so they’re starting from scratch to think, ‘How would a fabric look digitally which I have in my hand? How will the shapes change according to the end user?’”
Such efficient systems used during COVID-19 as a stop-gap measure need to be adopted in a permanent way, agreed the panelists. “How you bring solutions within your product proposals will be the key for brands and companies going forward,” said Nath. “You have to look at the post-COVID-19 period and ask, ‘Is it just a temporary shift or a long-term shift?’”