Sustainability matters, but does it sell? A report commissioned by the governing body of the Italian fashion industry explored the question with buyers from over 80 department stores spanning 25 countries and the results indicate that the future looks bright.
Unveiled on Tuesday at the Camera Nazionale della Moda ItalianaÃ¢â‚¬â„¢s third International Roundtable on Sustainability in Milan, which was headed by chairman Carlo Capasa, the report overwhelmingly found that sustainability has become an essential consideration for stores when it comes to deciding the brands they stock.
Five of the brands consulted for the report, which was conducted in collaboration with McKinsey & Company, were revealed as Barneys and Saks in the USA, Hyundai in South Korea, Printemps in France and Takashimaya in Japan. The full 80 account for total purchases of over Ã¢â€šÂ¬50bn (Ã‚Â£43bn) annually worldwide.
Collectively, buyers expected to nearly double their total spending on sustainable products in the next five years, from 23% to 40%, while a quarter revealed that they have delisted at least one brand because of sustainability concerns. The key reasons given for delisting a brand include if a brand was related to social justice issues, if there were animal welfare concerns, or if a brandÃ¢â‚¬â„¢s image did not fit with the concept of sustainability.
In addition, of those asked about the importance they place on sustainability, an average of 68% said that they consider sustainability to be a concept linked to Ã¢â‚¬Å“hard coreÃ¢â‚¬Â issues including origin of fabrics, process, traceability, and working conditions, as opposed to Ã¢â‚¬Å“soft elementsÃ¢â‚¬Â including publicity, brand reputation and philanthropy. This is significant, said Antonio Achilles, senior partner and global head of luxury at McKinsey, as it demands extensive investment by brands to meet the required checks.
Achilles said that the results from the report Ã¢â‚¬â€œ which is the first to target fashion buyers on this scale Ã¢â‚¬â€œ were Ã¢â‚¬Å“a positive shockÃ¢â‚¬Â, noting that Ã¢â‚¬Å“people understand that the consumer is reacting seriouslyÃ¢â‚¬Â to sustainable issues. Ã¢â‚¬Å“I think itÃ¢â‚¬â„¢s a combination of brands finally recognising that the consumer is more important [than ever] and also that sustainability can help them differentiate from each other,Ã¢â‚¬Â he added.
From the consumer side, the buyers estimated that 70% of consumers would accept a price premium for a sustainable product. Ã¢â‚¬Å“Consumers are willing to pay a premium if they perceive production fully respects workersÃ¢â‚¬â„¢ welfare and has a clear Ã¢â‚¬Ëœmade inÃ¢â‚¬â„¢ connotation,Ã¢â‚¬Â a major European department store said.
In a breakdown by country of positive associations with sustainability, 20% of buyers cited Italy, something Achilles said was not surprising given the countryÃ¢â‚¬â„¢s long-standing reputation for craftsmanship. It was followed by Japan on 14%, Germany on 13% and France on 10%. China came out worst, with 25% of those asked saying they had negative associations, followed by India on 11%, Pakistan on 7% and Vietnam on 7%.
As well as the feedback from buyers, the conference also relayed some sobering statistics. Between 2015 and 2050 , 22m tonnes of microfibres will have been added to the ocean; currently 73% of clothing will end up in landfill or being incinerated; and less than 1% of the material used to produce clothes is recycled.
On the plus side, Achilles said that 80% of Generation Z and millennials are actively interested in sustainability: Ã¢â‚¬Å“When something becomes fashionable, it becomes powerful and they will be the guardians of this movement.Ã¢â‚¬Â During a panel discussion on securing investment for sustainable and conscious brands, Caroline Reyl, the head of premium brands of Pictet Asset Management, highlighted the importance of adopting sustainable practices throughout businesses as investors are increasingly looking to invest in brands that are providing consumers with what they are demanding.
Ã¢â‚¬Å“We think that for companies itÃ¢â‚¬â„¢s going to be more and more important to show investors they have the capability to have a sustainability programme in their strategy in order to attract more capital,Ã¢â‚¬Â agreed Raffaele Jerusalmi, chief executive of Borsa Italiana. Ã¢â‚¬Å“This is already becoming an important topic with a number of very large brands and I think itÃ¢â‚¬â„¢s going to be more and more so in the future.Ã¢â‚¬Â