Can mainstream fashion ever truly be sustainable? The short answer is no. Not when business models are centered around creating mountains of new goods, adding to the eye-popping 92mn tonnes of textile waste each year. However, by using EDITED data, brands can rewire their processes to reduce their environmental impact while maintaining profits.
Fast fashion retailers yet to address sustainability have certainly missed the mark, while those who have done so are often met with greenwashing claims. For these retailers to make real change, they'll need to transform their strategies with real-time data, to make more informed decisions and adjust assortments accordingly, investing in only the right products at the right price at the right time.
In this report, we put the power of EDITED data into action to dispel some of fashion's biggest myths and outline solutions for maximizing profits and minimizing the number of unsold goods adding to this global problem.
Less is more. As proved by the success of the circular fashion industry, brands don’t need to produce countless goods to generate sales. Instead, fast fashion retailers need a surgical approach to their ranges to better understand where to trim back and where to invest to avoid unsold merchandise's financial and environmental cost.
Aggressive reductions will end up damaging profit margins and a product’s perception, impacting its lifespan. Instead, understand the discount threshold that resonates with buyers and avoid replenishing similar products your competitors are marking down.
Products with sustainable components might not always be more expensive. However, pricing needs to be fair and inclusive of garment workers' wages to truly be sustainable. Retailers are responsible for educating their customers on their pricing breakdown and ensuring that a cheap garment doesn't mean that someone on their supply chain has suffered.
Fast fashion retailers can help slow overconsumption and haul culture by limiting the number of trend pieces produced compared to core lines and promoting rewearing. Meanwhile, trend cycles can be more controlled by recognizing the right time to drop new styles and in MOQs to reposition items as exclusive and avoid unnecessary markdowns.
Myth: More products mean more money
A recent study by Ellen MacArthur Foundation found circular business models create alternative sources of income, better product margins and competitiveness without relying on producing new clothes. Resale, rental, repair and remaking models are poised to grow from 3.5% of the global fashion market to 23% by 2030. That’s a $700bn opportunity, all while helping to reduce greenhouse gas emissions, pollution, and biodiversity impacts.
For fast fashion brands, newness is their bread and butter. They won’t be transforming all their brands into second-hand sites, though they are now experimenting with circular models like resell and takeback initiatives. Some brands are even trimming back the amount of products landing. Due to COVID’s disruption on supply chains, 2020 was an abnormal year with newness experiencing a market-wide slow down. However, comparing arrivals last quarter to pre-pandemic deliveries shows retailers have shaved off several styles without consequences.
At H&M and Monki, the number of new styles arriving in Q4 was down 6% and 9% vs. 2019 and 38% and 2% vs. 2018, respectively. Meanwhile, the brands' parent company reported that net sales were up 8% last year. Similarly, Inditex's Bershka cut the number of new styles arriving online in the UK by 3% vs. 2019 and 7% vs. 2018. Inditex recently reported sales between November 1st and December 10th, 2021 had increased 33% YoY and 10% vs. 2019. Uniqlo also noted a 36% decline vs. 2019, alongside a 15% rise in revenue internationally.
Trimming back the number of new styles you deliver won’t negatively impact your profits - though it's a start to positively impact the planet.
Though how do you know which products you need to pull back on? Using EDITED’s assortment tool, you can combine your own sales data on a category to what’s working - and what’s not - throughout the rest of the market and uncover areas of opportunity.
Say you manage women’s jersey categories. In EDITED, you'll have daily access to products in stock across your specified regions and within your competitors' ranges to understand what's currently available. Then, compare what’s recently sold out at full price to uncover unforeseen demand. Perhaps dresses have been a problem area for your business. Across the US and UK, this style makes up 32% of jersey products while contributing to only 14% of sell outs. Meanwhile, bottoms are 15% of products in stock, yet 19% of sell outs, showing this category is under indexed and has the potential to perform. You can take this information to your team to reduce your dress buy or put your money more confidently into bringing in biker shorts, stirrup leggings, or relaxed wide-leg trousers.
By identifying the right products to deliver using real-time data of what’s selling online, retailers can actually save and make money. The amount of unsold stock is not only detrimental to the environment but it’s expensive for businesses, costing US retailers $50 bn a year alone.
Myth: Deeper discounts equal higher sell outs
Much like newness, discounting is unavoidable within fast fashion. There’s an expectation from customers and retailers for the need to clear old products and make space for new stock. However, aggressive markdowns don’t always yield the best results and the wrong discount could spell disaster for your margins, eventually adding to the number of unsold goods already plaguing the industry.
Nailing your product assortment and launching at the right time will help minimize markdown percentage, as well as finding the sweet spot to avoid unnecessary reductions.
Consider last Black Friday. Some UK retailers demonstrated loss leader strategies, advertising up to 99-100% off, with selected items given away for free. Though over this sales period, the most successful discounts were between 30-40%, with 34% of sell outs occurring within that bracket. This defeats the purpose of running bullish promotions which can potentially tarnish the products' value in the consumers’ eyes.
Instead of blindly blanketing offers, data can help retailers drill down on the level of discounts required to move products from a broad and a granular level to help aid markdown and replenishment decisions.
For example, last year H&M launched sequin dresses at the same time in the US and the UK ahead of the party season (November & December) and saw very different results between the two.
In the US, to date, 47% of these styles were marked down to an average depth of 34%. In the UK, this was more drastic, with 79% of sequin dresses reduced at 49%. Both sites replenished four styles, though arguably, merchants in the UK especially could have saved some markdown spend. UK fast fashion retailers looking to H&M as a competitor could have used EDITED to follow this trend and held off on reordering any new sequin dresses. Then, reallocate their budget to a more successful area, thus avoiding unnecessarily bringing new products into the market, which would end up with a red sale tag and then in landfills.
Myth: Sustainable fashion is too expensive
Navigating sustainable pricing is challenging for retailers as there are negative perceptions on both ends of the scale. If sustainable goods are marketed as too affordable, customers suspect greenwashing and the exploitation of workers to produce cheap garments. If prices are too high, retailers risk alienating lower-income consumers' opportunity to buy into conscious products, reaffirming that sustainable fashion is only for elitists.
There are findings that consumers are willing to pay more for sustainability too. Looking at fast fashion’s primary demographic, Gen Zers, studies show 54% of this cohort in the US would pay over 10% for a sustainably-made product.
The retail industry is feeling the impact of inflation, with the prices for raw materials and freight rising. Also, tighter legislation around the protection of garment workers needs to be considered. 85% of workers do not earn a livable salary and retailers need to be accountable for wage theft. Fast fashion brands can improve their pricing strategies by understanding where there is room for adjustment.
As retailers transform their entire ranges to become more sustainable, instead of segmenting products, price gaps are starting to close. Additionally, as the price of materials like hemp, Lyocell, or Tencel™ are beginning to level out with conventional cotton, brands can’t rely on opting for cheaper, less sustainable fabrics to save on costs and the price for items like basic jeans and tees should start to become more aligned.
In some cases, the price for products described as made with more sustainable materials and processes can come in under the brand’s total average. Looking at ASOS’ private label in the UK, women’s dresses, t-shirts, outerwear, all-in-ones and swimwear with eco credentials all come in at a lower-than-average price point. For menswear, the total average price of jeans, t-shirts and swimwear is less than £1 more expensive than eco styles.
Myth: Gen Z needs the latest trends
This group cares passionately about the environment. However, the way they consume trends has been hijacked by hauls, new and revisited aesthetics emerging from TikTok at hyperspeed and online generational slang like “basic” and “cheugy” adding to wardrobe insecurity. Retailers have a responsibility to help rewire the trend cycle - which has currently exploded.
Despite fast fashion brands' quick product turnarounds and laser-focus on reacting to the next big thing, core lines are still crucial for driving sales. These are the bestselling styles that are never marked down and constantly replenished due to their evergreen appeal. Of the new products arriving at US and UK fast fashion retailers over the past six months, this equals less than half of the womenswear styles available, with the more flash-in-the-pan trends making up 59% of stock. For menswear, the proportion of core ranges is slightly higher at 45%, though trends still dominate at 54%. Retailers can tap Market Intelligence to analyze how their competitors are splitting up this mix and look to introduce more high-quality, classic, staple pieces with longevity to keep in customers' wardrobes longer, rather than disposable trends with a short lifespan.
Like newness and discounts, trends will remain embedded within retail. Yet for fast fashion brands to slow down, they will need to control their trend offering to help combat overconsumption.
For example, Gen Z called for skinny jeans to be put out to pasture, supporting the flood of relaxed silhouettes to enter the market. Any good retailer or forecaster knows products always weave in and out of fashion, with consumers unable to resist nostalgic trends for too long, as demonstrated in the tremendous return of Y2K dressing.
Sure enough, late last year, the Indie Sleaze subculture began trending on TikTok, educating Gen Zers on MySpace culture and the party scene of the mid-late aughts. With several parallels between then and now, such as the rise of hedonism and Emocore’s revival, skinny jeans could be poised for a comeback. But how do you know when the time is right?
Retailers can solve this by monitoring new arrivals and sell outs of products to understand when a trend is heating up or cooling down. Analyzing women’s skinny jeans reveals a recent influx of newness, while styles selling out of 100% of SKUs are at their highest since September and experiencing an upwards trajectory. They may not return to their former glory, though there is still demand.
With consumers cherry-picking the best of generational subcultures to interpret, retailers can dissect how micro trends are performing, using EDITED to nail the best time to launch in order to maximize sales and minimize discounts. By getting the timing right, brands can consider these riskier styles for MOQs to avoid feeding an already-saturated market and create exclusivity around launches.
Other areas to consider
This option is becoming more popular in the luxury space. Fast fashion brands can reposition their "coming soon" strategies and leverage their quick turnaround times to only make what's ordered and minimize waste. This is ideal for of-the-moment trends and retailers could even set a limit on how many items can be made to create exclusivity and manage overproduction.
Even once an item has been purchased, it is still the retailers' responsibility to ensure it's diverted from landfills. Fast fashion brands need to provide options for products at the end of their lifespan or if a consumer wants to retire it, whether through in-store collection or buy-back schemes.
Education & skill sharing
Mending clothes has become a lost art. Given the uptake of Gen Z on resale sites and their entrepreneurial skills, brands can communicate how products can be tailored, customized and upcycled. There’s also an opportunity for retailers to move away from cheap fabrics to ones that can be handed down and reworked across generations, while fast fashion brands can lean on their marketing strategy to promote rewearing their bestsellers instead of buying new.
For more examples of using EDITED to solve retail's biggest challenges, sign up for our weekly Insider Briefing emails.