We Need to Rethink Fashion’s Current Growth Model

For the last half a century, the fashion industry has relied on a linear supply chain. With this model, growing profit through garment sales means brands must ramp up production. According to the Ellen MacArthur Foundation, clothing consumption doubled between 2000 and 2015, and wears per garment decreased by 40%

While fashion companies are trying to be more sustainable, they haven’t addressed the main issue: rampant growth in the production of new garments makes the current fashion model unsustainable.

To meet customer demand without increasing manufacturing, brands need to rethink their current growth model. Branded recommerce is the most brand-centric obvious solution. Brands that sell their products through resale programs can reduce new production and reintroduce pre-owned branded products into their supply. This shift benefits shoppers and brands as it allows growth in sales without an increase in carbon emissions. Simply put, brands should ask themselves- Why sell an item once when you can sell it multiple times?

Why Fashion Needs a New Growth Model

The impact the fashion industry has on the environment is huge. A 2019 report from the UNEP finds the fashion industry creates about 8-10% of global carbon emissions. A 2020 report from the Princeton Climate Initiative finds emissions attributed to the fashion industry are likely to increase by 50% if brands stick with the current growth model.  Fashion is expected to account for 20% of the 2040 CO2 budget. [McKinsey… need to find the source]

The solution to fashion’s sustainability issue lies in an overhaul of the entire growth model, which includes addressing overproduction and textile waste.

Textile Production Drinks Up Our Water Supply

According to the Ellen MacArthur Foundation, fashion textile production uses 93 billion cubic meters of water annually. The impact of this level of production is felt in the communities of dry regions where clothing is manufactured.

In addition to water consumption, 20% of global wastewater is caused by dyeing and finishing clothing. The harmful chemicals used in these processes tend to find their way into waterways. Due to the chemicals used in the process, the water supply often can’t be treated to become drinkable after it’s polluted.

If fashion brands stick to the current growth model, it would mean an ever-increasing need for textile manufacturing. This model is not sustainable as it simultaneously decreases the total amount of usable water while increasing the demand.

Fast Fashion Capitalizes on Novelty at the Expense of Quality

In the 1990s, fast fashion companies like Zara, H&M, and Forever 21 reshaped fashion seasons from four to 52-micro seasons. More fashion seasons required brands to design and manufacture new clothing lines faster, all while sacrificing quality for quantity.

Shoppers, ever driven by the dopamine rush of something affordable and novel, responded to this trend by buying more items of clothing, more frequently. Brands have continued to reinvest in low-quality, low-durability garments creating a vicious cycle of unsustainable supply and demand.

Brand Owned Resale Programs Is the Obvious Solution

While there may be no quick fixes, resale as a channel is an obvious solution for brands committed to meeting the climate change mitigation goals laid out in the 2015 Paris Accords.

Resale as a channel reintroduces pre-worn branded products into a brand’s supply chain.  By giving these pre-worn garments a new life, brands can continue to profit from their products over time. This more sustainable model allows for business growth without relying solely on an increase in production.

While retailers have expressed concerns that resale could cannibalize primary sales, new studies published disprove those fears. According to Women’s Wear Daily, 60% of shoppers have discovered a brand through secondhand shopping. The survey suggests that branded resale can introduce shoppers to a brand at a lower price point, which may then lead to primary sales.

The bottom line is, that resale as a channel pumps the brakes on shopper and shareholder demands for ever-increasing production while allowing a brand continued growth. Reducing production supports global efforts to reduce carbon emissions and water pollution. This creates an overall net positive from a corporate social responsibility perspective.

The future of customer closets looks more fluid as resale becomes a popular way to shop. The only roadblock for brands to create a circular shopping experience is architecture and logistics.

Companies such as Trove, have created end-to-end item intelligence technology that optimizes every step of the circular journey. Trove’s product transforms complex logistics into a joyful customer experience, adding to brand equity without increasing carbon emissions.

We believe creating a more inclusive, less wasteful business model is possible. Let us show you how we can help your brand enter a new era of conscious commerce. The seeds of a sustainable future must be planted today.

Why Branded Resale Should Be Your Growth Strategy

According to Global Data, brands with their own resale programs increased by 275% from 2020 to 2021. Brands like Arc’teryx and Eileen Fisher, early to adopt this strategy are seeing huge success with their branded resale programs. 

It’s hard to ignore a booming sales channel that offers both a positive impact on the planet and sustainable brand growth. 

At Trove, we’re committed to bringing sustainable solutions to the fashion industry. We understand the risks and objections executives might have when it comes to rolling out a branded resale shopping experience for their customers. Here we’ve outlined some of the statistics and case studies that prove branded resale is a strong play for brands committed to sustainability. 

Your Customers Are Already Shopping Secondhand

While much of the interest in resale has been driven by Generation Z’s concern for sustainability and affordability, research shows that shoppers across all generations are shifting to resale purchases.

According to research conducted by the Baker Retailing Center at the Wharton School of the University of Pennsylvania, shopping secondhand has surged by almost 30% across all generations in the last few years

It’s interesting to note that while shoppers have different options for shopping resale, such as peer-to-peer marketplaces and clothing swaps, 65% prefer brand-operated or third-party Recommerce. This preference clearly demonstrates an opportunity for fashion brands to capitalize on. 

First Insight x Wharton

The Stigma of Secondhand Has Shifted 

Sustainability has always been a large part of why shoppers purchase pre-owned items, but inflation and the pandemic accelerated the growth of the resale market.

With less disposable income, shoppers tightened their budgets during the pandemic and became more conscious of their spending. While some bought second-hand to save money, they also dipped into their own closets to find the clothing they could resell. And, as health restrictions shuttered stores, shoppers turned to digital shopping experiences to supply their fashion fix. 

The below chart illustrates a group of respondents from 2021. Across all generations, most have purchased secondhand online. 

First Insight x Wharton

These changes in habits, combined with an ongoing awareness of our environmental footprint, are inspiring more customers to buy and sell pre-owned apparel. Not only is there less of a stigma against buying used goods, but people are also proud to share their finds. 

Branded Recommerce Reduces Counterfeits

According to data from the OECD, fake products are a $4.5 trillion market, with fake luxury goods accounting for 60-70% of that. As more shoppers go online for their favorite brands, counterfeiters are seizing new opportunities to sell through third-party marketplaces and peer-to-peer platforms.

Recent publications raise concerns regarding the in-house authentication processes of resellers like The RealReal, eBay, and ThredUp. According to an investigation by The Capitol Forum in 2019, hourly workers with the title of “copywriter” were responsible for authenticating luxury brand items. The report further explains that copywriters were pressured to meet authentication quotes of 130-155 items a day or risk being fired. 

While counterfeit items have always been a challenge for the fashion industry, luxury brands suffer more when third-party resale platforms sell counterfeit products as authenticated branded apparel. 

This poses a threat to brand reputation and could result in a loss of revenue if enough low-quality counterfeits are introduced into the market as authenticated products. 

At Trove, we partner with brands to create a branded authentication process. This way, you and your customers can feel secure knowing the products purchased through your branded resale channel are genuine. 

Branded Resale Revitalizes Brick & Mortar Locations

Outdoor gear retailer, REI is a perfect example of how branded resale channels can work together to support brick-and-mortar locations. In 2018, the brand launched its online resale channel. Then in 2020, the brand launched its online trade-in program and also offered trade-in at select stores. Members were encouraged to trade in their gently used gear in exchange for an REI gift card. 

After implementing their resale strategy, REI reported their used gear revenue increased by 86% year over year and their total year-over-year sales growth by 36%. 

Today they’ve expanded resale trade-in to all their brick-and-mortar stores after seeing the impact branded resale as a channel has had on both online and in-store sales. 

By offering used goods in-store and incentives for in-store trade-ins, REI created an opportunity to connect with customers who may be new to the brand while also serving avid brand loyalists ready to trade in and upgrade their gear. 

Executives considering branded resale should be thinking about how their resale strategy can support both online and brick-and-mortar locations. Trove offers an end-to-end solution for branded resale. We power the technology, operations, and analytics to help you gain insights into shopper behavior online and in brick-and-mortar locations. 

Recommerce Supports Brand Growth, Even During Supply Chain Shortages

Brands require a steady inventory of products to generate sales and maintain market share. As the pandemic revealed, the supply chain can be disrupted at any time by a shortage of materials and equipment, shipping and transportation challenges, and labor shortages.

Customers who can’t purchase the products they want because of an interrupted supply chain often look for similar offerings from competitors. It takes only a few clicks to switch to another brand, and businesses risk losing the customer entirely when they’re satisfied with the competition and decide not to come back.

A resale channel can help a brand through supply chain shortages by providing another avenue for shoppers to find products, and generating continuing revenue to support operations. Resale as a channel also extends the customer lifecycle with a brand. 

Trove Makes Launching Your Branded Resale Channel Easy

Premium brands such as Lululemon, Levi’s, and Patagonia are among the many businesses taking ownership of their resale products by partnering with Trove. These brands continue to drive sales from the initial purchase of their products to capturing additional revenue from resales that might otherwise be lost to third-party sellers.

To learn more about tapping into this channel, schedule a demo with us today

How Circular Supply Chains Can Drive Sustainability & Profitability

Recently, customers have become more aware of the global impact unchecked consumerism has had on the planet. They’ve used their wallets to pressure businesses to adopt more eco-friendly business practices. In response, brands began replacing traditional business practices with more sustainable ones. 

Executives could benefit from investigating these solutions to learn how circular supply chains can increase sustainability without sacrificing profits. The future of a circular economy looks like products that can be reused or repaired. Brands can keep up with government sustainability regulations by making products that meet these demands.

Brands like Patagonia and REI are working towards a more sustainable model by opening a resale channel for pre-worn branded items.

What Is a Circular Supply Chain vs. Linear Supply Chain?

A linear supply chain is a directional flow of resources from manufacturer to distributor to customer. Everything always moves in A-to-B-to-C succession, aka “take, make, and waste” and rarely skips around or moves backward.

Circular supply chains connect every point of production to create more value for end customers. The circular model allows customers to supply manufacturers directly through recycling or by connecting with suppliers.

The key difference between circular and linear supply chains is how communication and synergy are used. In a linear system, each point only needs to track its supplies’ origins and destinations. The dairy farmer only needs to deal with who buys his cows and to who he sells the milk. The circular chain requires much more communication and cooperation.

Further down the dairy chain, there’s a perfect illustration of how the circular chain complicates communication: glass milk bottles. A new glass bottle is used for the first time by the customer. Now, it needs to be returned to the dairy supplier to get back into the supply chain for reuse. If the dairy supplier wants to reuse milk bottles, it needs to let the people who buy them know how and why they should return them.

How Circular Supply Chains Contribute to Sustainability

The main way circular supply chains support sustainability is through more efficient use of materials.. Keeping materials revolving means less need for new raw materials and reduces the number of used items that become waste.

There are many different ways that resources can move through the supply chain, not just through consumers using and then recycling a product. Clothing companies with lots of returned inventory are partnering with brands like Trove to clean, inventory, and resell apparel back to their customers. This creates a more sustainable system by getting more use out of what we produce.

Positive Social Impact on Brands

“Show don’t tell” has become a maxim to live by concerning brand activism. Developing and using circular supply chains promotes sustainability and demonstrates a willingness to lessen environmental impact regardless of the bottom line.

Working to find real solutions and compromises is more effective than simply posting on Instagram, and it can help protect your brand from being accused of virtue signaling. If your business relies heavily on its brand image for sales, as many fashion brands do, then creating a circular supply chain could help increase sales or prevent losses from negative publicity.

The Circular Economy

A circular economy uses practices such as circular supply chains to promote sustainability and regeneration. 

The holistic goals of a circular economy include: 

  • Reducing or eliminating waste
  • Extending a product’s lifespan
  • Rebalancing natural systems by reducing the use of raw materials 

There are five business models needed to create a circular economy. 

Circular Supply

Circular supply chains help reduce the number of single-use products by returning products to the supply chain. This helps reduce waste and unnecessary raw material use.

Resource Recovery

Most waste contains reusable resource materials. If the waste isn’t reusable there may be other ways it could be converted into energy. Resource recovery allows brands to gather and leverage these materials.

Product Life Extension

Product life extension models start from the product design stage. Brands should prioritize designing products for longer life that can be repaired or upgraded. By doing this, products can be recirculated into the economy extending and maximizing their use. 

Getting more use will lead to other changes- not happening in a vacuum- domino effect** Getting more use out of an item- is a good step- setting up the transformation of how we do things and how manufacturing-monetize second and third sale- In a truly circular model.

Sharing Platforms

A major part of sustainability is getting the most out of a product or resource. Sharing a product or resource increases its overall utilization. For example, carpooling reduces fuel usage. Sharing platforms connect people to make product sharing easier.

Products as a Service

The most common example of a product as a service is a Wi-Fi router supplied by your internet provider. You get a tangible product, but its use works more like service because you return it when you’re no longer a customer. This helps create sustainability by incentivizing service providers to create products with longer lifespans and repair or upgrade used products.

Help Companies Meet Environmental Regulations

One of the main incentives for companies to implement circular supply chains is to meet government regulations. It’s not hard to see more regulation is on the horizon by looking at recent EU and French laws around producer responsibility, more circular models, or current SEC regulations around GHG disclosures currently under review. Meeting these requirements could be difficult without using circular systems.

Are Circular Supply Chains the Future?

With increased environmental consciousness in customers and global initiatives to promote sustainability and lessen environmental impacts, circular supply chains are the future. Constantly buying, using, and trashing products is no longer a model customers are content with. Additionally, it’s not a model that can compete with supply demands. 

Here are some ways executives can start working on creating supply chain sustainability: 

  • Learn more about circular supply chains in your industry
  • Contact circular technology and solution companies
  • Inform others about the benefits and the need for circular supply chains

C-suite executives must consider how they can implement circular ideas and improve supply chain sustainability if they want their brand to survive in the circular economy. Start by learning more about what other brands are doing.