Fashion Needs a Sustainability Content Strategy
A publication of It's A Working Title LLC
This weekly publication focuses on how business and economics trends, technology, and the drive for sustainability impact the global luxury and fashion industries. Prepared by the staff of content strategy agency and think tank It’s a Working Title LLC, each week’s issue provides a summary of recent trends across the globe and a leader that conducts a deeper dive into content strategy.
This week’s contents:
Fashion Needs a Sustainability Content Strategy
Fashion has a sustainability content problem.
With the Northern Hemisphere literally burning due to record temperatures across Europe, the UK, and the US this week, climate change is top of mind for almost everyone. Fashion and retail brands, in particular, are under more and more pressure to be fully transparent about Environmental, Social, and Governance (ESG) initiatives, of which sustainability plays a major role.
As The Business of Fashion recently noted upon the release of its 2022 Sustainability Index, “At the moment, the industry lacks basic, credible data on fundamental issues like greenhouse gas emissions, production volumes, water pollution and labour conditions. That lack of transparency makes it difficult to drive change, measure progress or create accountability.”
At its core, the problem with sustainability for fashion, luxury, and retail comes down not to a lack of communications strategy but a lack of content strategy.
Most brands have their messaging together when it comes to sustainability vision statements, goals, and even success measures like quantitative targets and KPIs. What is less convincing is the follow through: what are brands actually doing to combat climate change; what progress are they making towards established sustainability goals; what methodology and data are being used to measure this progress; and how are they keeping the public informed about this progress.
In other words, there is a palpable lack of content strategy behind how brands are implementing sustainability initiatives according to established commitments. Telling authentic, consistent stories and providing updated data at a regular cadence and according to an established methodology are critical for brands to be transparent with both their own industry and the public at large.
Content strategy, as it turns out, is a critical tool for any brand looking to improve the impact, transparency, and depth of their work on sustainability across the board.
At a high level, content strategy comes to play in relation to sustainability across four main areas:
Sustainability Content Vision, Goals, and Target Audiences
Sustainability Storytelling and Value Propositions
Sustainability Content Success Measures
Sustainability Content Publishing Process, Cadence, and Governance
These four pillars of content strategy need to be tailored to the individual needs and audiences of each brand, respectively but collectively offer a more standardized methodology by which to approach building a sustainability content strategy that works and can be scaled.
Content strategy not only provides a way for brands to be transparent on sustainability; but it also provides consumers with insights into what brands are doing, written in a common language that anyone can understand.
Luxury Sales Continue to Boom Post-pandemic, but for How Much Longer. Burberry and Compagnie Financière Richemont outstripped market expectations with their first-quarter results, buoyed by a post-pandemic spending euphoria and a joyous return to shopping in physical stores, except in mainland China. In the first quarter, Richemont posted double-digit revenue gains across all product categories and regions, except for Asia-Pacific. At actual exchange rates, sales rose 20 percent to 5.26 billion euros, and at constant rates they were up 12 percent. Burberry’s retail revenue increased 5.4 percent to 505 million pounds, while at constant exchange, growth was flat. Burberry surprised the markets with a 1 percent uptick in comparable store sales after analysts had penciled in a 2 percent contraction, given the downturn in China. But it’s unclear how long the buzzy mood will last before rising inflation, the threat of recession, and China’s economic policies in the medium term begin to weigh on the luxury consumers’ minds, and wallets, as they already have done with shoppers lower down the price spectrum.
What’s in Store for Raw Material Costs, Demand and Supply? Apparel supply chains are feeling the pinch of rising prices. Increasing input costs mean more expensive yarns, textiles and garments. Across the board, the U.S. Bureau of Labor Statistics Producer Price Index (PPI)—which measures selling prices for U.S. producers’ materials—has been trending up over the last year. The price of cotton has risen almost 70 percent in past 12 months, per U.S. Department of Agriculture data. As of the end of May, spot cotton prices were $1.45 per pound on average, compared to 84.03 cents a year prior. The last time average weekly prices were this high was in June 2011. Per the PPI, prices for synthetic fibers grew 12 percent year-over-year in April, unadjusted. Synthetics are seeing strong demand, but input costs have been impacted by rising crude oil prices tied to the war in Ukraine. Also driving up material prices are supply chain challenges and heftier shipping costs. On average, manufacturers said they could pass only 40 percent of cost increases on to consumers. The pricing pain is also not being felt equally. Upstream suppliers like fiber producers and spinners are faring better than downstream manufacturers such as mills and cut and sew factories.
Labor disputes and congestion threaten US fashion supply chain. At the end of June, at the end of June when the deadline to conclude negotiations over the contracts of 22,000 dockworkers employed across 29 ports on the West Coast expired without an agreement. the ports remain operational for now. However, any industrial action could cause further delays in a stretched supply chain that has already been disrupted by two years of pandemic chaos. Fashion retailers may be particularly impacted in the short term as they are starting to stock on up A/W inventory and there is a risk that new collections may not arrive on time.
The euro is at near parity against the U.S. dollar, what this means for luxury fashion For the first time in 20 years, the U.S. dollar has achieved parity with the Euro. While for European consumers visiting the US or importing goods from the States will become very expensive, the news will not be bad for everyone, especially for the luxury goods sector and those exporting. Exports to the US will be cheaper and the world’s luxury houses, most of which are European, will see a boost on the bottom line, especially those that operate US retail. While most goods are sold at a dollar value that balances fluctuation and is set in advance, prices are rarely adjusted to be cheaper if the currency of origin falls. Travel retail may also see a boost as American spending in Europe will see customers able to buy more goods for their dollar, especially if these goods are cheaper than what they would cost back home. Tax free shopping will also see a boost as buying luxury goods in France and Italy could save American shoppers between 20 and 30 percent on items such as Louis Vuitton and Chanel handbags.
Net-A-Porter and luxury brand owner Richemont says 75% of first-quarter sales direct to customers. Growth has slowed online following a year of fast growth, but retail sales – through its shops – saw stronger growth. Across the Richemont business, 75% per cent of sales were direct to consumers following fast growth since the same period last year, equivalent to about 200 base points. Direct retail sales grew by 26% to €3.1bn (£2.6bn) while online sales grew by 12% to €910m (£773.6m), with sales by its ecommerce distributors 8% ahead at €691m (£587m). Wholesale and licensing income grew by 12% to €1.3bn (£1.1bn).
China COVID-19 Resurgence Hampers Luxury Consumption Growth As China’s major cities face another round of coronavirus outbreaks, the future of luxury consumption remains uncertain. According to the latest analysis from Barclays, reoccurring lockdown implies “a slightly negative to flattish growth in China.” For the second half of 2022, the bank expects sales for main luxury brands in the Asian market to gain 6 percent on average. The report expects sales at Hermès to rise 9 percent, Kering 8 percent, LVMH Moët Hennessy Louis Vuitton 4 percent, and Richemont Group 3 percent. Many brands have delayed scheduled events in the city. Prada postponed a summer film screening event at Rongzhai this week at the last minute. However, with hopes of lockdown measures easing in a few weeks, Acne Studios and Bottega Veneta are still planning on hosting press previews in Shanghai at the end of this month.
Why Billionaire Industrialists Are Snapping Up India’s Fashion Brands. Reliance Industries Limited chairman Mukesh Ambani spent nearly $1 billion in the first quarter of this year on companies in e-commerce, energy and other sectors, but it is the Indian magnate’s much smaller investments in fashion that have attracted a disproportionate amount of attention. Through its retail arm, the conglomerate has longstanding partnerships with many international luxury brands, including Bottega Veneta, Burberry, Canali and Jimmy Choo, for the India market. More recently, it started buying up stakes in Indian designer brands, triggering a frenzy of M&A activity as the ambitions of Ambani collided with those of billionaire rival Kumar Birla, chairman of Aditya Birla Group.For four years, Reliance Industries Limited and Aditya Birla Group have been locked in battle over some of the country’s most well-known designer brands. Companies owned or controlled by Reliance, including RBL, have invested in Rahul Mishra, Anamika Khanna, Raghavendra Rathore, Manish Malhotra, Abraham and Thakore, Abu Jani and Sandeep Khosla and Ritu Kumar.
Middle East & Africa
South African fashion retailers turn to domestic market for fabrics. After depending on cheaper Chinese imports that ruined South Africa’s farmers and producers, major fashion retailers in the country want to source fabrics from the domestic market. Mr Price, Truworths and Foschini are some such retailers that have committed to domestic procurement, which could resuscitate the country’s farmers and manufacturers. Farmers, producers, designers and retailers benefitted from a thriving cotton textile industry in South Africa, but that changed when South Africa opened to trade with China in the late 1990s. As retailers started importing cheaper fabric and clothing from China, the demand for local production reduced and the domestic manufacturing industry's capacity sharply dropped. From around 20 cotton spinning plants in the early 2000s, the country had just four in early 2010s. Cotton lint output had fallen by more than 90 per cent by 2012.
The industry’s biggest players still aren’t disclosing basic data about environmental and social impact, putting them in the firing line as regulators look to crack down on greenwashing. While growing concerns about sustainability have pushed brands to become much more vocal about their policies and targets to address environmental and social impact, seek out details on the outcomes of these efforts and public information evaporates, according to The Fashion Transparency Index, an annual analysis of big companies’ public disclosures by non-profit Fashion Revolution that published this week. (BoF’s Sustainability Index came to a similar conclusion.) This year, the average score for the 250 companies assessed in the Fashion Transparency Index was just 24 percent (brands are scored out of nearly 250 possible points, which are then converted to a percentage). Mass market retailers OVS, Kmart Australia and Target Australia topped the ranking with a score of 78 percent each, followed by H&M, the North Face and Timberland at 66 percent. Nearly a third of companies scored less than 10 percent. Even those with the highest scores aren’t disclosing key data points, the report found. Big companies’ focus on long-term targets without substantive data to back up any action is “frighteningly inadequate,” it said. It’s a position that’s increasingly untenable as time to meet climate goals runs short and regulators step up scrutiny of the industry, putting companies in the firing line for a crackdown on greenwashing.
The rise of "green" materials heralds a new era in fashion. Eco-fashion, also known as "sustainable fashion," is a fashion movement dedicated to reducing carbon emissions, promoting the health and safety of all species, and preventing climate change. The fashion industry is one of the world's largest polluters. Garments made of synthetic fibers contribute up to 35% of global micro-plastic pollution. It is not incorrect to believe that sustainable fashion should begin with fabrics. Sustainable fabrics are those made from natural, recycled, or eco-friendly materials that have a low environmental impact. Environmental concerns, combined with advances in science and technology, have prompted scientists, fashion houses, and designers to seek out more environmentally friendly materials. Here are some of the friendly eco-fashion fabrics, although some are friendlier than others: organic cotton, bamboo fabric, linen, corn, hemp, nettle, soy, wood pulp, recycled cotton, recycled polyester, pinatex, scoby leather, qmonos, brewed protein, apple eco leather, organic peel fabric and qmilk.
Marketplace Platforms Do Not Guarantee Market Share Growth For The Luxury Sector. As the second half of 2022 begins with the euro at an historic parity to the dollar and distressing financial news on a daily basis, luxury retailers and brands can take solace knowing that luxury goods sales often prove to be impervious to economic turmoil. Even without a major Russian presence, luxury has been estimated by Bain to grow 5% this year—not bad, but certainly significantly less robust than 2021’s approximately 15% increase in sales. Growing market share is trickier than it sounds in the luxury space, especially with e-commerce and direct-to-consumer channels. It’s not simply about creating a bigger funnel. Identifying the “right” extended, broader target audience and then creating authentic experiences for that audience is one way to do it. Owning the direct-to-consumer channel is an imperative in all sectors today, but even more so in the luxury world. An owned digital channel has the same value as a Bond Street flagship—they are two sides of the same coin. Physical and digital stores should complement each other. They can jointly cultivate the same intimate relationship with the consumer, while delivering powerful storytelling content that nourishes aspiration and desire. An owned DTC channel delivers far greater customer lifetime value and maintains margins, which in a constricting economy can be the single point of difference between profit and loss. Third-party platforms may be able to deliver millions of consumers, but luxury brands do not need millions—they just need to touch the right consumer.