5 MINS READ
The fashion industry is getting modern.
It is modernizing its entire value chain—from conceptualization to designing, to production and retailing—with innovation-led initiatives to achieve environmental, social, and governance (ESG) goals.
Before the 20th century, tailors handcrafted customized apparels. With time, industrial innovations paved the way for mass production, which, in turn, necessitated the creation and evolution of value chain. The various value chain components started spreading across the world when globalization started. Now, for example, a European fashion house sources fabric from China, manufactures clothes in Bangladesh, enhances aesthetics in Italy, and ships them to a warehouse in France for distribution to retail outlets internationally.
These changes spawned fast fashion, which fulfilled the ever-changing demands of customers with new trends and collections. It, however, jeopardized the environment.
Fashion houses are reviewing business objectives and strategies as they strive to cater to eco-conscious customers who demand responsible and sustainable fashion. They have also been nudged to adopt sustainability practices by the ESG developmental goals of the United Nations Framework Convention on Climate Change that has 154 nations as signatories. They are, thus, investing in cutting-edge innovations in materials (novel fabrics), wearable tech (chip-embedded apparels), circular economy, and resale commerce. The ultimate objective is to build a brand aligned with the objective of helping the society, the community, and the planet by adopting ESG practices as a key strategic differentiator, through innovation, sustainability initiatives, and eco-friendly raw materials, and thus paving the path for customer loyalty and brand stickiness.
Driven by innovation
For an inclusive ecosystem play to realize responsible fashion goals, industry incumbents are coming forward with innovative methods.
Renowned fashion houses and disruptive deep-tech start-ups are collaborating for radical experiments in material science innovation (Figure 1). They are working on fibre innovation using synthetic, re-engineered fibres, including bio-fabricated leather and e-textiles, to enable mainstream adoption. The pace of innovation has been so rapid that concepts once seen as esoteric—NFTs (non-fungible tokens), virtual fashion, metaverse, gamification, and AI Influencers—are expanding and edging closer towards being common.
Innovations in fashion value chain components are saving cost, enabling greater reach, and scaling up day-to-day operations. They include:
designing using 3D design and AI planning
merchandising and planning by leveraging virtual sampling and video signoffs
B2B sell-in utilizing digital selling and virtual showrooms
Remodeling sourcing and supply chain by nearshoring and vendor integration
Higher consumer engagement with virtual shows, social selling, and AI influencers
Sales and marketing leveraging in-app social commerce
All the innovations are digitally enabled and aligned to the business purpose of meeting ESG goals with profitability and becoming an inclusive ecosystem, thus ensuring benefits for all stakeholders—employees, investors, vendors, customers, and society.
ESG creating responsible fashion
The fashion industry has put sustainability at the center stage especially after being indicted as a major ESG violator across its value chain.
With growing consumer awareness, industry players have started aligning themselves with the greater purpose of supporting communities and their stakeholders. They are bringing in changes in the value chain to increase market share and customer loyalty by deepening their involvement with the community and catering to the demands of consumers conscious of the environment. It is not just the COP26 or the UN sustainability development goals (SDG) that is driving the industry’s sustainability push, it is also the changing consumer trends that hold brands accountable for environmental and social impacts (Figure 2).
Fashion brands have started steering their focus more towards circular business models, making their products easier to repair or reuse through platforms for re-commerce. They use greener materials to reduce environmental effects of production and make garments with new fibres and technologies like garment-to-garment recycling machine that shreds old garments and converts them into new ones. Blockchain (NFTs) is becoming the underlying technology for majority of sustainability-related initiatives that focus on traceability like digital ‘product passports’ that help tackle counterfeiting.
Brands are striving to provide healthy working conditions for underprivileged workers by committing to follow the Fair Wear Foundation’s Code of Labour Practices and also ensuring inclusivity by acknowledging their contribution and efforts as skilled artisans.