Welcome to The Merchant Life, for retailers and retail enthusiasts wanting the insider perspective of all things retail.
We’ve been compensating.
Last year’s stockouts due to customer shifts in buying behavior and looming supply chain disruptors are causing retailers to overbuy.
Overbuy and overproduce just in case we run out.
Pay to air goods and deal with who pays the price in the new year.
Put more trucks on the road and cope with the impact to the environment later.
The message is clear.
Shortages of today will become surplus of tomorrow, driving fashion’s excess mess towards a total catastrophe.
Landfills, liquidators, needless markdowns…
With promises of sustainability and better practices, how did we end up here?
I have some ideas.
Let’s dive in.
No doubt retailers are stockpiling to meet expected record holiday demand.
The Gap spent $350 million to air freight 35% of this year’s holiday product and Allbirds Q3 inventory rose to $99 million from $63 million.
The fear of empty shelves, port congestion, labour shortage and factory closures due to Covid-19 outbreaks have caused retailers from Urban Outfitters and Target to pull orders forward.
It’s no surprise that we could be in an inventory overload by the time Christmas trees get dismantled.
And this is only part of the problem.
According to BoF’s State of Fashion Report 2022 released last week,
“Digital and sustainability will offer fashion’s biggest opportunities for growth, while supply chain pressures will challenge the industry in 2022.”
The more retailers produce, order, and ship, the more supply chains will start to burst at the seams and completely breakdown.
Retailers must control what they can control, then they can stop doing business as usual with a blind eye.
And transparency is a big part of the problem.
Fun fact, many retailers don’t know what’s going on in their supply chain.
Glossing over the ‘how’ could mean retailers could be in denial or they just don’t know what’s happening at either the cotton mill or production floor.
The question we need to ask is HOW…
How are retailers able to increase production so drastically and close to market?
How are retailers able to pull forward orders if there is no capacity left on ships or planes?
How do we really know if factories are being pressured to produce more and workers are being treated and paid fairly?
The authorities in Bordeaux, France have asked HOW…
In fact, the Bordeaux City Council has blocked Inditex (Zara’s parent company) from expansion and it would not be allowed to “extend its French store due to concerns over sustainability and the alleged exploitation of Uyghurs in China’s Xinjiang region”.
Meanwhile, on the heels of COP26, 2021 United Nations Climate Change Conference, the fashion industry was on center stage.
A new version of the United Nations Environment Program's fashion charter was created with stronger commitments to halve carbon emissions by 2030.
That is less than 10 years away.
With fashion brands making positive commitments to reduce carbon emissions, it seems that many brands are supporting the exact opposite practices.
Overbuying, overproducing, pressuring the supply chain to deliver more and even faster can’t be good for the environment.
Fashion is failing.
They are stuck in the same old cycle.
So, how can retail really become ‘unstuck’ in their ways?
Long term impact starts with 3 things:
Making less product will have a tremendous impact on the environment. If brands make less, consumers will buy less. Excess disappears and needless markdowns go extinct.
Climate neutrality through innovative production (see Levi’s Water Less Campaign, H&M’s textile recycling initiatives and Ralph Lauren’s partnership with material science leader, Dow) is critical.
Specifically, Nike and Adidas are taking on circularity and recycling unwanted footwear into new sneakers. Materials are used and reused. My favorite part? Retail leaders are sharing their learnings so other brands can emulate.
Cutting out manual plus redundant processes while introducing automation is a game changer.
Driving efficiencies by enabling technology is how we can track and trace product, digitize parts of the supply chain like digital product creation, automate fulfillment and use machine learning for product planning is just scratching the surface of how we can change the way we retail.
Fashion’s future is inevitable… until it isn’t.
Many designers ARE making waves in textile innovation and pushing through barriers of fast and fuelled fashion.
There is HOPE and I’m here for it.
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Liza Amlani of Retail Strategy Group
Retail Dive - Inventory and The Supply Chain
CNN - Gap Supply Chain Impact
Just-Style - Zara in Bordeaux
Supply Chain Dive - Inventory Inflation
Scandinavian Mind - Fashion and COP26
New York Times - Fashion, Sustainability, and COP26
Sourcing Journal - Textile Innovation, H&M
BOF & McKinsey - The State of Fashion 2022
Sourcing Journal - Frame Denim and Innovation
Sourcing Journal - Textile Innovation and Technology