As a lifelong trend watcher and forecaster, I have often witnessed the influence of “trend convergence” when specific events and circumstances combine to create major attitudinal changes. These convergences have indelible results. The generation that lived through the Great Depression in the early part of the 20th century became very frugal, and mindful of waste throughout their lives having lived through a time of great economic turmoil and scarcity.
Trend Convergence 2022
In many ways, the events of the last two and a half years are likely to have a similar effect. Liberated from decades-old routines, we have had the unexpected time to reflect on priorities. Many left jobs and started new businesses. The pause from business and life as usual contributed to a mini migration of people moving from congested population centers, into suburbs, exurbs, and even small towns. As we know, this was influenced by corporations seizing on opportunities to make the virtual office a part of the new normal.
Disconnect: While two-thirds of consumers say that they would like to pay more for sustainable products, two-thirds of retailers believe consumers are not prepared to spend more for sustainable brands.
Other factors, unrelated to the pandemic are also feeding this change wave. Led by the power of Gen Z, the importance of sustainability has emerged as a key component of decision making for nearly every demographic. Certainly, the profound effects of global warming and climate change, along with near-annual “hundred-year” weather catastrophes and wildfires, have made it abundantly clear that past generations (mine included) have not been good stewards of our precious planet.
Data Validates Sustainable Commerce
Sustainability issues were brought home in a recent report from First Insight and Wharton Baker Retailing Center entitled The State of Consumer Spending. The results point to evidence of strong growth and demand for sustainable commerce by next gens, based on values, attitudes and lifestyles:
- Generation Z is influencing the older generations to focus on sustainable purchasing decisions.
- Most Gen Zs say sustainability is more important than brand name in purchase decisions.
- Gen Z’s influence over their Gen X parents has increased over the past two years, including the willingness to pay more for sustainable products.
- Most respondents across every generation expect brands to become more sustainable.
- There is a disconnect among Boomers, Gen X, millennials and Gen Zs on what sustainability means.
- Men, Gen X’s, millennials and Gen Zs are the most likely to make purchase decisions based on values.
- Every generation except for Boomers ranks quality over environmental concern regarding sustainable brands.
The Wharton/First insight report gets very granular in terms of slicing and dicing its data. It highlights profound attitude changes occurring between 2019 and 2021, corresponding to the pandemic period. A new “reality check” was revealed when Boomers, Gen Xers, millennials, and Gen Zs are asked about “their willingness to spend 10 percent more for sustainable products.” That willingness in 2019 ran from a boomer’s low of 23 percent, to a Gen Z high of 54 percent. By 2021 the acceptance of a “sustainable premium” shot up to a boomer’s high of 76 percent to a Gen Z high of 81 percent. The staggering two-year increases – 230 percent for Boomers, 159 percent for Gen X, 72 percent for millennials, and 54 percent for Gen Z — can only be viewed as a tectonic shift in attitudes toward sustainability.
Retailers and Brands in the Dark
More staggering than the overwhelming heightened awareness on all things sustainable is the disconnect between consumer opinions and that of retailers and brands themselves. The report states that retailers were surprised to find that consumers are willing to spend more for sustainable brands. While two-thirds of consumers say that they would like to pay more for sustainable products, two-thirds of retailers believe consumers are not prepared to spend more for sustainable brands.
Equally revealing was the discovery that nearly three-quarters of consumer respondents value product sustainability over brand name. Nearly all—94 percent – of the retailers believe the opposite, saying that brand name would be more important to consumers than sustainability; this according to Greg Petro, CEO of First Insight.
ESG Priority Blind Spot
Petro states, “This report clearly demonstrates that retailers are leaving money on the table. Brands and retailers must listen to the voice of the customer on issues as critical as sustainability. Consumers want more than performative measures from retailers and brands when it comes to ESG priorities, which will only become more important as Gen Z grows in influence.”
Wharton’s Professor Thomas Robertson adds, “It’s imperative for retailers to understand their customers’ values so that they can adapt for the future.” He notes that half of retail executives believe that re-commerce or retail resale is primarily driven by price, when, in fact only 27 percent of consumers agree that price is their motivation. The reality is that twice as many, 54 percent say that they shop resale because they care for the environment and prefer sustainable or circular shopping. Examples such as Vestiaire Collective and Farfetch Second Life understand the big future in resale, even at luxury price points.
Third-party Disruptors Emerge
With the proliferation of online retail resale sites catering to the mainstream growth and acceptance of resale as a complement to new sales, more luxury fashion brands are joining ranks. The growth and popularity of the upscale The RealReal, Fashionphile, FarFetch, and Poshmark, have been accused of “not properly managing brand value” which has opened the way to third-party players like Archive.
Archive allows brands to have ownership of the secondary market of their products without making the monumental investment in logistics and supply chain complexities. It also provides a customized marketplace where customers can shop for secondhand items on the brands’ websites, side-by-side of new inventory. This reflects the growing value parity that consumers feel between resale and “new sale.”
Since launching in February 2021, Archive has powered resale for brands like North Face (Renewed Marketplace), M.M. LaFleur (Second Act), Dagne Dover (Almost Vintage), and now Oscar de la Renta (Encore). Alexander Bolen, CEO of Oscar de la Renta was one of the A-list investors in Archive.
Some Glaring Contradictions
Despite all the data supporting Gen Z’s overwhelming interest in sustainability, as well as their enthusiastic support of resale and the circular fashion, they appear stuck on fast fashion, the arch enemy of sustainability.
According to a new CM Group consumer survey of Gen Z consumers, social product recommendation platform Gist, shows Shein as the number one apparel store, followed by Zara. Shein, known as the evil fast-fashion conglomerate, has surpassed H&M and Zara to become the largest fast-fashion retailer by sales, according to retail data analytics company Earnest.
Shein ticks all the boxes of being an environmental pariah. Its staggeringly high volume of designs, styles and collections mostly made of polyester and synthetics are nearly impossible to recycle. Additionally, the company has been the target of allegations of slave labor and hazardous working conditions. It consistently avoids mandatory disclosures and had until recently made false claims on its website that conditions in their factories were being certified by international labor standards bodies, according to Reuters.
Can Fast and Sustainable Co-exist?
In sharp contrast to Shein’s shoddy reputation, Fast Fashion, the parent company of Uniqlo has been on a 20-year mission toward sustainability progress, in concert with the United Nations Millennium Declaration in 2000.
Fast Retailing, by fiscal year 2030, is on a path to reduce greenhouse gas emissions from its own operations by 90 percent over 2019 levels. In the raw materials, fabric, and garment production it will target a 20 percent reduction of greenhouse gas emissions. Additionally, Fast Retailing continues to strengthen its transparency and traceability to raw material level across the whole supply chain. They continue to strengthen their human rights policies with their partnership with the Fair Labor Association (FLA) to pursue a living wage for workers in our supply chain. Additionally, Fast Retailing monitors working environments and confirms Code of Conduct (CoC) compliance status, established in 2004. The also work to solve global social issues, working with respected NPOs and industry groups, including UN Women and the International Labor Organization (ILO).
In December 2021, Fast Retailing reimagined its LifeWear concept, committing to a strong vision and action plan that will see its products evolve into a new type of circular industry. These many sustainability initiatives, along with Uniqlo’s more classic fashion offerings should become the more popular alternate to other non-sustainable fast fashion models.
From a pure customer experience standpoint, Fast Fashion’s Uniqlo brand and their on-trend retail outlets are a treat to shop. They take visual merchandising to a Utopian level, while tipping their hat to the popular culture icons of our time.
The Die Has Been Cast
While fast fashion is not going away, its growth is waning behind that of resale and “recommerce.” GlobalData predicts the retail resale industry will grow eleven times faster than the broader fashion retail sector through 2025, to an estimated value of $77 billion. And as I reported two years ago, resale is expected to eclipse fast fashion by 2028.
More specialty fashion manufacturers and retailers are getting into the act as well. Levi launched its “Levi’s Secondhand” thrift website in 2020, selling authenticated used denim, sourced mostly from its own customers. Madewell is doing the same thing in its stores.
In October 2021, in a trailblazing move to fold name brands into retail resale, Poshmark announced plans to bring “large scale brands to connect directly” with its 80 million users in their new “Brand Closet” venture. Its CEO, Manish Chandra stated that a “suite of merchandising tools and social selling features” will allow brands to engage with their prized Millennial and Generation Z fans.
Time is running out for retailers who are lagging behind customers. The circle is definitely closing around the circular economy.