Rethinking the Fashion Growth Model – WWD - WWD

Fashion and apparel companies have been making a significant push into ESG in recent years, publicizing their sustainability commitments, appointing sustainability officers and marketing products as sustainably made. These moves are admirable and necessary, but most brands are tiptoeing around a simple truth: economic growth today is directly tied to growth in production—and that, by definition, is not sustainable.

Of course, production and consumption go hand in hand. If consumer demand weren’t sufficient to support clothing brands’ profitability, the brands wouldn’t produce as much. In fact, clothing consumption has been rising for a number of years. Between 2000 and 2015, global clothing production per capita doubled, according to the Ellen MacArthur Foundation.

To truly move the sustainability needle, the fashion industry needs growth models that are not directly tied to new production. The simplest, most obvious option available to the industry today is recommerce, or a brand’s ability to monetize the full use of an item through branded trade-in and resale as a channel.

That one, seemingly simple shift benefits consumers and enables brands to consistently grow their businesses without growing their carbon emissions.

Andy Ruben, chief executive officer of Trove. Courtesy image.

The Need for a New Growth Model

To reach the climate change mitigation goals laid out in the 2015 Paris Accords, McKinsey estimates the fashion industry will need to reduce its GHG emissions by 1.1 billion metric tons of CO2 equivalent by 2030. However, the industry is on a trajectory to instead produce nearly double that amount over the remainder of this decade. Overproduction is just one part of a highly complex problem in the fashion industry, but with the current system, overproduction of items is a feature, not a bug.

In decades past, most apparel labels produced clothing for five or six selling seasons—the calendar seasons, the holiday season and maybe a cruise or resort collection. Today, fast fashion companies produce for 50 “microseasons” a year, launching hundreds or even thousands of new products every single week.

Consumers get a fleeting but undeniable dopamine rush when they buy something new, but then cycle through trendy looks, and quickly discard clothing that has lost its novelty. Fast fashion brands meet this demand by manufacturing an ever-increasing amount of low-quality, low-durability garments that sell at low price points and then reinvest profits to drive more demand. It’s a vicious circle: consumers love new stuff and brands increase production to fulfill that need for newness…and then consumers buy even more.

Resale Is the Most Powerful—and Most Obvious—Lever We Have to Solve the Problem

There are no silver bullets, but getting more use out of what we make is an essential part of any solution to fashion’s sustainability crisis. Resale is the most obvious lever available, as it enables brands to grow their business without growing their carbon emissions. Resale as a channel allows brands to manufacture fewer new products that sell through at full price and then deliver additional margin over time. In this way, brands monetize the full value of the high-quality items they have designed, made and sold previously. Items traded in, authenticated, and resold replace lower quality new items never purchased and ideally never produced.

And the timing couldn’t be better for brands to build their recommerce offerings. The COVID-19 pandemic and recent climate crises across the globe have made sustainability a much bigger priority for many consumers. There’s certainly no longer a stigma associated with secondhand shopping. It’s now seen as legitimate, desirable and virtuous, driven by consumers’ increasing awareness of the effects of their consumption on the planet and its people. In fact, fashion resale is exploding in popularity and growing faster than traditional retail, with Coresight Research estimating it would grow at twice the rate of the U.S. fashion market overall in 2021.

In recent years, retailers have quietly expressed fear that resale would cannibalize their primary sales, but those concerns have proven to be greatly overblown. In fact, 65 percent of resale customers on branded resale storefronts are first-time customers. It makes sense for retailers to keep the resale experience within their own ecosystem to engage with existing customers and acquire new younger customers.

Resale provides the dopamine boost and novelty consumers look for when shopping. Preowned goods don’t require virgin materials, but for the purchaser, they check the “new to me” box and provide the same feeling purchasing a brand-new item does. In addition, resale provides a fun treasure hunt experience that gives consumers a way to discover and experience brands and products they might never purchase new. A recent Boston Consulting Group survey found that 66 percent of secondhand shoppers have discovered or bought a brand for the first time when shopping used.

In the future, the items in customers’ closets will cycle in and out more frequently, and more sustainably, thanks to resale. As wardrobes become more fluid, consumers will still be able to enjoy the thrill of purchasing clothes that are new to them, but not necessarily brand new.

It’s time for both consumers and the retail industry to stop giving credence to brand sustainability initiatives that don’t consider production. The recommerce growth model is a clear way for fashion and apparel brands to claim the sustainability high ground and benefit their bottom lines, their customers and their shareholders. Smart brands realize they can delight their customers and increase their revenue without commensurate growth in production if they can capture their preowned goods and control their own secondhand sales. Simply put, brands win in a future where they sell their quality items multiple times, and it only makes sense for them to accelerate that future’s arrival.

Andy Ruben is CEO of Trove, which provides white-label technology and end-to-end operations that power resale as a channel for premium brands, allowing them to take control of their resale marketplaces, deepen customer loyalty and generate new profits.

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