Amidst Shifting Consumer Trends and Values, Fashion Industry Looks Towards Sustainable Future
Luxury Brands Cope with Market Turmoil
The coronavirus outbreak has dealt a severe blow to most industries. The high energy-consuming, labor-intensive fashion industry, however, bears the brunt.
Cancellations of fashion shows, a decline in demand for apparel and textiles, and dwindled sales of major luxury brands seem to render the future of this industry of eternal charm and vitality in doubt.
The leading luxury brand conglomerate, LVMH, revealed in its Q2 report that the total revenue from its fashion and leather goods summed €7.989 billion, a sharp decrease of 23% compared with the same period last year.
Jean-Marc Duplaix, CEO of Kering, a global luxury group that oversees a series of renowned brands including Gucci, Saint Laurent, Bottega Veneta, Balenciaga and others, said at the 2020 First-Half Results Conference that the company’s consolidated revenue totaled €5,378.3 million, down 29.6% compared with Kering’s reported revenue from the prior year. The company’s consolidated revenue reached €2,175.1 million in the second quarter, down by 43.5% due to store closures.
As the whole fashion industry awoke to the unprecedented sales crisis, many companies halted production, suspended factories, and dealt with quiet streets and sparsely frequented offline shops due to the pandemic, bringing the entire fashion world to a crashing halt. Some companies, however, saw an opportunity to reevaluate their environmental impact.
Often notorious for its wastefulness and devastating impacts on the environment, the fashion industry has become one of the world’s largest sources of pollution, marked by excessive carbon emissions, chemical runoff and landfill waste. According to a report from Quantis, the annual greenhouse gas emissions from the textile industry exceeds the total emissions of all international flights and shipping.
According to data from the Ellen Macarthur Foundation (EMF), about 73% of the world’s waste clothes and textiles are disposed of in landfills or incinerated, leaving less than 1% entering the circular economy. Circular economy is based on “the principles of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems,” by the Foundation.
In China, about 26 million tons of used clothes go to the dump every year, accounting for a reuse rate of less than 1%, according to Xinhua News.
Cai Jinqing, President of Kering Greater China, said at the Sustainability Innovation Summit in Wuxi, Jiangsu Province, that she believes the pandemic does not call into question the structural drivers of the luxury industry.
“The crisis is amplifying the sense of physical vulnerability and the interdependence between human beings and nature,” Cai said. “Even if the situation varies from one region to another in the world, I think it has made even clearer the need for environmental reforms. It is on the basis of such thinking that the ‘sustainable innovation’ we are talking about today is particularly important.”
Cai said, citing McKinsey’s 2020 Global Fashion Report, that in recent years, consumers have developed higher expectations for sustainability in the fashion industry, adding that the term “sustainability” is no longer just a concept consumers consider when making purchases, but a moral attribute of the particular brands they seek out.
Modern Luxury: Kering’s Role in Promoting Sustainable Innovation
Approximately 15 years ago, Kering placed sustainability at the core of the leading conglomerate’s business operating philosophy and have since been pursuing a path of eco-friendly development.
In 2014, Kering’s brands Gucci and Bottega Veneta have implemented a process to tan leather without the use of heavy metals, sharply reducing water and energy consumption during the leather-textured cloth-making process. That same year, the company founded the Materials Innovation Lab (the MIL) in Milan which holds in its library a collection of over 3,000 sustainable and high-quaility fabrics and textiles, Cai shared at the Summit.
The lab has also embarked in various global outreach projects, developing organic silk in China, sustainable cashmere in Mongolia, sustainable wool in New Zealand and others, not only empowering local communities but also ensuring animal welfare, Cai said.
Thanks to an innovative tool called “Environmental Profit & Loss” (EP&L) developed in 2013, Cai added that the company was able to understand the exact sectors that produced pollution, emitted greenhouse gases, or gave rise to soil exhaustion.
“Kering has achieved a 36% reduction in the level of greenhouse gas emissions between 2015 and 2018 as a result of its focus on becoming more energy efficient in the Group’s operations,” Cai said. “In 2019, Kering was named on CDP’s ‘A List’ for leading efforts against climate change for the third consecutive year. Kering was also the only luxury group to be included in this list for the second year in a row.”
She added that the company is wholly committed to fulfilling a 50% reduction in its greenhouse gas emissions by 2025.
In 2017 Kering reformulated its sustainability strategy to the following three pillars: caring for the planet, collaborating with society at large, and forging new innovations with the aim of crafting the luxury of tomorrow within the fashion industry.
At the Sustainability Innovation Summit held by Plug and Play, a leading global innovation platform, Cai shared Kering’s biodiversity strategies which involve a series of new targets to prevent biodiversity loss and soil contamination, and to protect a range of different ecosystems. The targets include achieving a “net positive” impact on biodiversity by 2025, deploying the Kering for Nature Fund to support the fashion industry’s transition to regenerative agriculture, and repairing and preserving an area around six times the total land footprint of Kering’s entire supply chain.
Cai said in a phone interview with Pandaily that she believes the biggest challenge facing the entire fashion industry is to produce high-quality and creative products that meet the needs of consumers, without also causing damage to the global environment or causing a scarcity of natural resources.
“It is very important to have a consistent attitude with all of our stakeholders to make sustainable development an industry trend, including our employees, our customers, all kinds of suppliers in all our supply chains, and of course all types of investors, resulting in a closed-loop eco-friendly system,” Cai said.
Cai also mentioned that Kering needs to seek new breakthroughs in order to overcome the complications in attempting to limit environmental degradation caused by the traditional textile industry.
“For us, sustainability is a great subject,” Cai said. “We, as a provider of luxury goods, rely on the environment to extract the basic raw materials and produce fabrics that are significantly depleting natural resource, but can we produce it without damaging the environment or jeopardizing biodiversity? This also forces us to find new solutions to solve this problem.”
Cai added that one of the company’s goals is to reduce their EP&L rate by 40%, after having reduced it by 14% over the past three years. In terms of carbon emissions, the goal for 2025 is to reduce carbon emissions by 50% with the completion of 13.5%. Furthermore, the company also pays special attention to achieving a 100% traceability rate for its raw materials. By 2018, the rate reached 88%.
Cai said there are still some unsolved issues on the way to hitting the 40% target, requiring the company to find solutions through innovative means, and sustainable innovation is the only path for Kering’s future development.
In December 2018, Kering and Plug and Play China jointly launched the K Generation Award to support domestic startups with disruptive technologies in alternative raw materials, green supply chain, retail efficiency, and the circular economy.
Melephant, a natural dye startup, won the K Generation Award for its holistic solutions to replace conventional chemical dye with plant-based dye. Feiliu Tech won the third place for its use of AI to link the upstream and downstream components of the apparel industry, assisting fashion companies to forecast market demand, reduce excessive inventory, among other uses.
Both companies attended the Summit in Wuxi to showcase their business models.
Melephant: Bamboo Waste, Coffee Grinds Transformed into Natural Dyes
Regina Zeng, a venture manager with the leading global innovation platform Plug and Play, said environmental degradation and resource waste penetrate the entire textile and garment industry chain, from front-end planting to intermediate production, including manufacturing, dyeing, material inspection, retailing and storage handling.
“I personally feel that the three most dire issues facing the fashion industry are the handling of waste clothes and textiles, the environmental cost of the selection and production of raw materials, and inventory backlogs caused by brands’ various interpretations of consumption trends,” Zeng said.
Liu Yuanyuan, founder and CEO of the Hangzhou-based startup Melephant, told Pandaily that the raw materials used to make chemical dyes are derived from petroleum, which is not a sustainably-extracted material. Throughout the manufacturing process, the high-risk solid waste generated by chemical dyes contain heavy metals, azo and other harmful materials that are slow to decompose, thereby polluting the living environment by contaminating soil and underground water, Liu said.
Melephant has developed a natural dye made from organic refuse such as bamboo waste and coffee grinds, and with much brighter colors and more durability than traditional dyeing methods of natural dyes.
(© Kering)
“There are many kinds of natural dyes, but most natural dyes come from only around 20 types of plants, but we are able to extract colors from almost all plants that contain pigments, and our raw materials are ecological dyes mostly made from agricultural and forestry waste material, so they are very easy to decompose and degrade,” Liu said.
Melephant extracts pigments from agricultural and forestry waste, and then adds other food-grade or pharmaceutical-grade biomass materials to ensure that all ingredients are natural, Liu said, adding that because the materials are carbon-neutral, the production process will not increase the total amount of carbon dioxide released into atmospheric circulation.
Melephant has managed to overcome the biggest issue for natural dyes: normally, they cannot be marketed effectively and therefore aren’t used widely due to poor color fixing ability, color richness and brightness.
Melephant is also highly competitive in the scope of application, Liu said. Melephant natural dyes can be applied to cotton, linen, silk, polyester, recycled fiber, cashmere, wool and other materials. It is also the only natural dye that can be used for dyeing vegetable-tanned leather among all natural dyes, according to Liu.
Liu said the core of the company’s technology is to imitate the process of natural pigment synthesis in plant cells when extracting and making dyes, adding that the research and development of Melephant’s ecological dyes have been completed and the entire technology has been standardized.
In addition to producing dye, Melephant’s solution also includes an environmentally friendly wastewater treatment procedure, designed specifically for water that has processed Melephant dyes. Because the natural substance composed by agricultural and forestry wastes has the characteristics of precipitation and separates below pH4, solid-liquid separation can be achieved easily. Therefore, the wastewater decomposition is significantly easier than chemically synthesized dyes with more complicated structures, Liu said.
The residual organic waste resulting from the process can also be used as a fertilizer, she added.
“Any waste generated during and after the production of the ecological dyes can be converted into organic fertilizer,” Liu commented. “After conversion, it can be released into the soil to do two things: ecological restoration of the soil, and achieving carbon storage.”
Liu said she was engaged in the production of infant products before establishing Melephant, so when making the top-level design of natural dyes, she insisted to keep natural dyes low-carbon, green and safe in every aspect. Therefore, Melephant’s natural dyes do not contain formaldehyde and meet the current international highest-level safety testing standards for infant clothing, Liu added.
Melephant’s current development strategy is aimed primarily at enterprises who have set carbon reduction goals, or prioritize environmentally friendly products and the path of sustainable development.
“In the medium term, we hope to target some mid to high-end brand customers, with the ultimate goal of replacing more chemical dyes,” Liu said.
Cai said Melephant’s business model is based on the concept of the circular economy, making it a pure sustainable innovation enterprise.
“First, the raw materials for the pigment come from nature or natural waste, and the process of use is also a process of recycling or regeneration. In addition, it can provide a full set of solutions to these traditional garment processing and manufacturing companies, encouraging these companies to use Melephant’s dyes, and save on water and electricity use,” Cai said.
Feiliu Tech: Small-lot, Multi-batch, Quick-response, and Cost-effective Supply Chain Service
“Inventory backlog and disposal were problems that many fashion brands could not solve, causing huge environmental damage and waste of resources in the process,” said Zeng, the venture manager with Plug and Play.
In 2018, the internationally renowned brand Burberry burned about 28.6 million pounds (about 260 million yuan) in inventory commodities, stirring up criticism over luxury brands’ environmental degradation.
Feiliu Technology, the third place winner of the K Generation Award, believes that the large backlog of inventory is a manifestation of the inefficiency and unbalanced management of the entire supply chain.
Yu Huang, marketing director of Feiliu, said in a phone interview with Pandaily that the mounting fast fashion brands have increased the demand for diversified and personalized clothing, so the demand for flexible supply chains of clothing production is rising as well.
However, she added, the production capacity of current domestic garment manufacturing is excessive in China.
“Many factory workers are idle, and the response speed of small factories is not efficient enough to catch up with the leading companies and suppliers,” Huang said. “Therefore, the current actual demand of the entire fashion industry poses a great challenge to the efficiency of supply chain management.”
According to Huang, Feiliu utilizes an AI platform to help directly manage the supply chain across all aspects of manufacturing, from the preparation of property rights, production planning, to the execution of production.
(© Kering)
Founded in 2016, the Shanghai-based Feiliu currently has three products, the first product is the DeepLINK system, which uses a smart supply chain collaboration system to link suppliers, brands and processing plants. The AIDO smart store ERP system, the second product, is optimized and customized for new retail businesses. The last one is the DeepFLOW system, which utilizes AI and big data technology to guide the production process, the company wrote on its website.
Through Feiliu’s supply chain platform AIDO, designers put their styles directly in the online showroom. If buyers are interested in the design style, they can directly fill in detailed clothing production requirements on AIDO, including specific crafts, the selection of fabrics, the specific requirements for redesigning, etc.
After filling out the information, the buyer can ask for the price by completing an inquiry form. Feiliu’s central board room will then make a sample according to the design draft and send it to the client. If the sample is approved by the buyer, it will become an invoice. AIDO will send requirements to DeepLINK, which will merge the order quantity if there are multiple buyers, or split a large order into smaller ones. Then, the system will allocate the orders to different factories based on their respective capacities.
Through Feliu’s DeepFLOW, the garment cutting, craft list, and dyeing processes will be packaged and split to each worker. The process of disassembly and production will be recorded by the AI system to gradually improve its accuracy.
“In the whole process, it not only saves the process of the repeated order confirmation and improves the scheduling efficiency of the entire production distribution,” Huang said, “but it also improves the proficiency of the production line workers.”
In October last year, Feiliu became the only designated production partner of Shanghai Fashion Week and connected designers, buyers and factory plants through its AI platforms. The process that would have previously taken 15 to 20 days for proofing, and mass production in one or two months, was completed in five days for proofing, seven days for mass production, and three days for repeated orders, according to Huang.
Huang said that in the future, Feiliu will deepen the development of AI to enhance factory speed, and will continue to expand cooperation with upstream and downstream enterprises on this basis, breaking through the technical barriers of AI in apparel manufacturing.
The company currently has over 800 cloud factories in the Yangtze River Delta, Pearl River Delta, Northeast China and other regions.
Cai said Feiliu‘s flexible supply chain is in line with future trends in the production of fashion goods.
“On the one hand, Feiliu provides a production solution for independent designers who need small batch production, and also finds customers for factories to consume the remaining capacity. In fact, whether it is an independent designer or a brand, the future trend is definitely toward more personalized products with a relatively short production cycle. In this process, how to arrange the supply chain and the links of the production chain in a more flexible and responsive way is a very important proposition in itself,” Cai said.
The need for regulatory compliance is the original driving force of the sustainability practice in the textile and apparel sectors, according to Zeng. However, in recent years, an increasing number of corporations have become aware of the benefits of sustainability beyond compliance.
“Many leading corporations come to Plug and Play wanting to connect with sustainability startups with disruptive technologies that can help drive portfolio growth, create brand values, cut operational costs, or reach new markets and consumers,” said Zeng.
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