Professor of the Practice @ The Fletcher School at Tufts University | Sustainable Business Dynamics
This is what losing looks like. Established brands that are trying to become more #sustainable are at several disadvantages. 1️⃣ Sustainability requires investment. Notwithstanding the consulting promises and conference presentations, green does not turn to gold. In fact, most #sustainability investment has long payback periods and often delivers hard to justify intangible wins. 2️⃣ Consumers (mostly) do not value or believe or care about sustainability claims by fashion brands. This is due to many factors including (a) greenwashing; (b) complexity; (c) lack of standards; (d) not functional benefits to a sustainable pair of pants. 3️⃣ Brand attention to sustainability differs wildly between brands. For example, HOKA, H&M and PUMA Group invest in sustainability teams, reports, commitments while Skechers does next to nothing. 4️⃣ A next generation of commerce has arrived …and it is far far less “sustainable.” C2M (customer to manufacturer) …direct to your doorstep at 50% less than fast fashion brands…and is disruptive and capturing massive market share (see: Temu, SHEIN, Cider, Trendyol, TikTok and now Amazon). See Joanna Williams superb work to better understand how this really works. 5️⃣ C2M brands use air freight (12X-50X more #carbon intensive as compared to sea), cheap inputs (see #fossilfuel based #plastics), often circumvent taxes (see the de minimus rule) and offer more disposable stuff. Because a SHEIN dress costs < 50% of one from H&M, a consumer can buy 2 and still come out ahead…and….a landfill gets twice as much waste. And…because anticipated #regulation (at least in the US) has yet to manifest... brands that don’t even try + C2M brands have yet another advantage. Worse yet, many in the fashion industry are living in yesterday’s mental models…and so…..they (public brands and their trade association) fight regulation (see the New York Fashion Act) instead of seeing that the absence of rules makes their competitive situation more perilous. Pinduoduo and Amazon shareholders and VC backers of instant fashion brands win. Meanwhile, "traditional" brands and citizens lose... as emissions, pollution ….expand, unabated and C2M takes share. Maxine Bédat Samantha Taylor Matt Powell Sucharita Kodali Sarah Kent Zofia Zwieglinska Joel Makower Heather Clancy Eric Liedtke Brett Mathews Cynthia Power Michael Schragger Ryan Gellert Andrew Winston John Elkington Leslie Johnston, M.Sc. Livia Giuggioli Firth Paul Foulkes-Arellano Crispin Argento 🌍🕊✌🏽Evan Wiener Daniel Stephens Devon Rufo Tricia Carey Noel Kinder https://lnkd.in/eiubyjEw
Ken Pucker, although you make some fair points, I have two issues with what you wrote: (1) The data doesn't back up your first point. Quite the opposite. (2) There's no "what do do" section to your post. On # 1: (a) Pretty much everything in business requires investment, not just sustainability, as Andrew Winston points out. And many sustainability improvements require different thinking but no more investment than the alternative. For example, MIT built a LEED Gold building for almost exactly *the same* cost to build as building to code would have been. (With much lower operational costs, of course.) (b) When you fix the problem of noisy ESG ratings, the premium for higher sustainability performance is apparent (in fact, it *doubles*). Here's evidence, from the same MIT group that quantified the ESG noise problem to begin with: https://t.ly/6F2A9 On # 2: C2M and other problems are real – so what should people who care about sustainability do? Without addressing that question, people may wonder what the practical utility of this post is. Sure, it's good to be clear-eyed about challenges, but we still have to address sustainability, climate change, etc. What do you suggest?
Ken Pucker For points 4 and 5, I believe that providing consumers with easy-to-understand data on the environmental impact of their purchase in real-time (a Moonshot idea right now but entirely doable with existing technologies) can and will have a big impact on purchase decisions. Why? because many of the most frequent shoppers at SHEIN, Temu, and other C2M businesses are also among the most environmentally conscious consumers out there. The data and information challenge in the climate space continues to be one of the biggest barriers to increased adoption both with corporations and the public in general.
On point 2️⃣, I would offer a more optimistic perspective based on this research of NYU Stern, other research available and my experience in advising businesses. Consumers DO care but there are many barriers (cost, performance, availability, etc...) blocking them from acting more sustainably. NYU's research, in particular, offers a great insight into sustainability's ability to amplify core benefits and drive preference. I think the report makes for an insightful read: https://www.stern.nyu.edu/experience-stern/about/departments-centers-initiatives/centers-of-research/center-sustainable-business/research/research-initiatives/effective-sustainability-communications-best-practice-guide-brands-marketers
Maiti Labs
2w
In developing large democracies of the likes of India, the cornucopia of C2M based businesses pose such a great risk in the light of this analysis. Every single startup is looking for a gap in the market to get their foot in the door, the sustainability magnifying glass has been on big corporates for so long yet no changes — can’t imagine the repercussions if not nipped at the bud.
Nailed it Ken Pucker! C2M is serious business. Certainly, insta fashion is terrible for the planet—yet it’s good for people. •Most manufacturers we talk to prefer working with these next gen digital commerce solutions. •They often pay a higher FOB price then traditional brands, despite selling to consumers for far less. Its a low margin, high volume game. • They require far less customer support, no sample process, not designers, no fashion—it’s dupes that rule the game. It’s a quantity over quality. Copy, buy, ship, repeat. •They also pay their bills on time. The orders are not as large, but they are frequent and inside a factory cash is king to keep sewers employed. For us at the The Sourcery cotton still takes 6 months to grow, 4 weeks to gin, 4 weeks to spin, 4 weeks to knit/weave regardless of how fast the sales are to consumers. On this side of the landfill, whether it’s slow fast or instant—the more merrier.
Watch out for Amazon in the C2M space; they own 62+ widebody cargo aircraft. With their vast US distribution network, they can no doubt afford to fill each of their owned planes with the <$20 product shipping from China and deliver with better profit margins than their competitors.
This reads like a strategic update in a fashion brands executive committee meeting. Now traditional brands will be trying to mimic C2M as well to keep up operating margins while cutting expenses on raw materials and production.
It is an invaluable snapshot of the current situation and one that sees only one actor able to change it in my view: Governments. The EU seem keen on taking action. I have some views on them acting now on Shein and Temu and not before on brands that have created the model that these two players have just refined and made more extreme (!), but as we say "It's no use crying over spilt milk!". Would the EU plan make a difference? If done well - I do not think the current plan would be that effective - it can be a way to limit their growth, certainly not stop them. As you said Ken Pucker the ones losing out are citizens - I would add health as a negative impact - and the planet. https://www.ft.com/content/1c4c0bee-f67e-404b-877d-e0cb38faf2d6
Kinsen Siu
2w
Brands can adopt the C2M model. But they’re too stuck in their ways to do so. C2M is a model, not a ethos. If you want to battle C2M brands as a sustained company then you need to adapt their model.
Co-Author, Net Positive. Adviser/Speaker on megatrends & sustainability; Ranked the #3 management thinker in the world (with @PaulPolman) by @Thinkers50; Board Trustee @Forum for Future
2wOk so you’re saying sustainability is losing in boardrooms. And sustainability is an investment (which describes everything in business). So what do you suggest companies, or more specifically clothing brands, do then? Give up?