Within our brand new SUSTAINABLE ISSUE, several insiders and experts that are dealing with sustainability in fashion gave us their diffrent perspective on as many topics as possible. One of them is the increasing amount of waste or excess stock, which is becoming more and more of a serious problem for the fashion industry. Not just when an item of clothing reaches the end of its life cycle and needs to be disposed of. Clothing often becomes undesirable far sooner, namely, when consumers no longer want it. So the question remains: How is excess stock disposed of and, much more important, how can the waste of resources be avoided?
Fashion is depreciating in value more and more rapidly
Nobody knows exactly how much new stock can be sold. There’s no official data being collected. The topic is not exactly a popular one with the media and press representatives at companies. Nonetheless, there are a few statistics making the rounds. About 20% to 30% of all clothing that is produced is not sold through initial channels, insiders say–an enormous amount, bearing in mind the 62 million tons of clothing consumed globally each year. Fast fashion has further compounded the problem. Earlier a collection had six months in which to be sold. Then came the closeout sales, and only what was still left over had to be sold through different channels. However, when new stock is delivered to the stores every one to two weeks, whatever hasn’t been sold yet has to go. It becomes a particular problem when consumer interest in buying goes down or the weather does not cooperate. Then the pressure to move stock increases.
Online sales have created a further problem that had not previously existed to the same degree: returns. Less than half of all returns can be directly resold. The rest has to be processed with a great deal of effort. The Shopmacher e-commerce service estimates that this incurs average costs of €10.70 per returned item. In view of the return quota of up to 60% in Germany, these are enormous costs and are not always worth it.
We buy up the goods and sell them internationally to markets which do no harm to the manufacturers.
Exploiting remaining stock–from the outlet to clearance sales
So, what to do with unsellable goods? Chain stores can move intact goods among store locations, even though additional transportation reduces the profit margin. The rest lands in various shopping clubs, online marketplaces or, finally, residual stock buyers.
The companies dealing in surplus and unwanted stock are as much a part of the fashion sector as classical retailers. What happens there? “We buy up the goods and sell them internationally to markets which do no harm to the manufacturers,” says Andreas Meyer of Captiva GmbH in Neuss, Germany, which specializes in surplus and unwanted stock. To ensure that brand does not suffer any harm, labels are first removed and, if necessary, the goods are removed from their packaging and ironed. Meyer can store up to 500,000 items in his completely automated high-shelf storage facility until they are transported to their worldwide buyers (“from Canada to Mongolia”). Each year Captiva handles five million items. Anyone who makes use of its services likes the fast money and the certainty that the goods will disappear and never be seen again. “However, every item ultimately finds a buyer. We destroy nothing,” says Meyer. “Anything can be sold–it is only a question of the parameters, such as where the goods are going, whether the brand is popular, does the logo need to be removed? Everything can be settled by the price.” As a result, it is even harder to understand why some companies prefer to burn their residual goods rather than sell them, as recently became known about H&M and Bestseller. But the destruction of brand new goods is by no means restricted to cheap mass-market suppliers. Quite the opposite is true. Luxury brands such as Louis Vuitton or Hermès would rather shred or burn their leftover goods than sell them through shadowy channels where they are sold off at far less than the recommended retail price.
The chicken or the egg–who is too greedy?
But how can excess production of goods like this be prevented? It is easy to point to consumers, who are apparently insatiable and are bringing this madness down on themselves. Years ago, Patagonia advertised with “Don’t buy this jacket,” and impressed the whole industry. Other brands also have the courage to make waste a topic of discussion, however without openly calling on people to give up consumption. For example, the London department store Harrods, which, with the Vetements brand, piled old clothes up in its store windows. But at the same time, both industry and retailing are working on ever more refined methods of manipulating consumers by triggering impulse buying–through both marketing and discounts. This is true for many brands, including those which call themselves sustainable.
Strategies for avoiding overstocking: defensive planning
“As long as the quantities and styles have to be specified long in advance, as long as the weather cannot be predicted and the trends change more rapidly, there will always be goods that cannot be sold,” says Andreas Meyer of Captiva. The problem is the system. Of course, nothing can be done about the fickle moods of the weather. More adaptable clothing and less heavy winter clothing is the current strategy which often works well. Not, however with this year’s cold winter. Demand is higher than supply and can only be met by those who either rely on warehouse storage or are able to produce quickly. “We notice, in general, that retailers order less in advance and instead make larger follow-up orders in order to minimize their risk,” says Uwe Gottschalk, product manager at the outdoor label Vaude. Vaude has been committed to sustainable production for years, and has already won numerous prizes for its commitment. But Vaude is not prepared to produce simply based on optimism. As Gottschalk says: “It is neither economically nor ecologically good to have so much left over at the end of the season that it has to be sold off cheaply in the market.” Instead, Vaude tries to calculate more precisely in sales and to generate the right quantities through intensive planning. “If we have a winter like this one, it is, of course, a pity, because we cannot meet the high demand at all,” admits Gottschalk. But this risk must be accepted.
More independence from fashion
You won’t be out of fashion that quickly if you avoid fashion trends in the first place. That is another approach to avoiding overstocking. The most sustainable product is always the one which is used the longest. Long service life is, first of all, a question of quality and, secondly, of timeless design. In 2018 Fjällräven is celebrating the 50th birthday of its Greenland Jacket: the piece has been in its range of goods almost unchanged for half a century! For the Swedes, this kind of confidence is part of their success story. “On average, a product remains in production with us for 14 seasons,” explains Thomas Gröger, CEO for Germany for Fjällräven until January 2018 and now CEO of its sister brand Hanwag. “For us, that is also an aspect of sustainability.”
Instead of four to twelve collections a year, as has become customary in fashion, the Swedes insist on the classical two-season principle. There are no intermediate collections. “When you drive at this speed, you are short-lived. A piece that was sold in April is already old in May. We don’t want that.” Ultimately, it is a matter of gaining more independence from ever-changing fashion and acting independently. For this reason, Vaude is working on its own color system, which is expected to bring about this independence. H&M did the same with the new Arket label: “Every article in our product family was designed with the expectation that it would be a perfect version of itself,” was announced at the label launch. Arket invested a great deal of development time into achieving this.
A piece that was sold in April is already old in May. We don't want that.
More all-season items, adapting collection concepts
A brand which has also achieved this design independence is Maloja. Within its segment, the bike and streetwear label is clearly among the trendsetters and does not skimp on striking styles at all. “However, we consciously structure our new collections in such a way that they still harmonize with the old collection,” says Peter Räuber, CEO of Maloja. Natalie Prieger of the Mandala yoga label “offers precisely worked out color concepts, which remain combinable for several seasons.”
This stability delivers clear advantages for retail, because old goods can continue to be sold with the new collection. Vaude intends to rely more on well-planned all-season products and offer new looks in limited quantities. Vaude’s Gottschalk says: “But of course that is a balancing act. We have to continuously ask ourselves how far we want to step back, and how strongly we want to set accents.” Even fast-fashion specialist H&M is counting on more stability. In addition to sustainably derived materials and transparency in purchasing, Arket is deliberately procuring more all-season articles.
Digitization: Individualized production
Finally, digitization has also created opportunities for getting rid of excess stock more easily. Andreas Wördehoff, responsible for sales and marketing at the sustainable-oriented streetwear label Bleed, leaves residual items on the shop site until they are sold: “We also take products back from our retailers and sell them in our own webshop.” Shopping clubs and online platforms such as Ebay have also opened up new possibilities for industry and retail.
But the ideas go much farther than that: Whereas the motto used to be, “Sell what you create,” the goal of the future is now: “Create what can be sold.” “Rapidly available digital sales data help in developing the concept for a collection,” says Nathalie Prieger of Mandala. Predictive analytics on the basis of big data are expected to improve demand planning even more. A few small brands such as Twothirds do not produce until they have received sufficient orders. Amazon is planning an “on demand” factory which collects orders and coordinates them in the most efficient way by means of an algorithm. Thanks to digitization, the tempo is also increasing. Digital networking of the entire value chain is accelerating both the development and the manufacture of products. The less time passes between order and delivery, the closer the process is to the real needs of the market. The concept of “fast fashion” says nothing about the quality or the rhythm of collections. Technology suppliers such as Lectra, a specialist in industry-specific software and hardware for the textile industry, is working on an automated method for economically producing one-off batch sizes. Lectra’s vision: Tailor-made clothes but with an off-the-peg price tag.
Read and see more interesting stories and insights in our new Sustainable ISSUE here.