TRANSPARENCY ACROSS THE VALUE CHAIN FOR FASHION AND APPAREL BRANDS

THEY SAY IT TAKES YEARS TO EARN TRUST BUT ONLY AN INSTANT TO LOSE IT. IN THE COMING YEARS SOME FASHION AND APPAREL BRANDS WILL CONTINUE TO EARN TRUST BY DEALING WITH TRANSPARENCY AND TRACEABILITY ACROSS THE VALUE CHAIN. OTHER BRANDS WILL CONTINUE DOWN THE “GREENWASHING LANE” AND ARE LIKELY TO LOSE TRUST IN AN INSTANT WHEN CONSUMERS DISCOVER THAT THEY HAVE SOMETHING TO HIDE.

BY HENRIK SPANDET

The pressure is increasing on brands to provide consumers with more information to back up claims of ethical and sustainable practices. The days of greenwashing might be over sooner than later. Greenwashing is what happens when a (fashion) brand gives a false impression of its sustainable endeavours. With the increasing demand for sustainability in the fashion industry, some brands are launching “sustainable” capsules such as a line of organic tees. Through a line like that, the brand hopes to convince consumers that small collection speaks for the brand’s production values as a whole, regardless of whether or not that’s actually the case.

Radical transparency undoubtedly will be coming soon across the supply chain with most fashion brands knowing that there is a demand from the consumers to provide full transparency. Unless fashion brands use best practices from outside the industry and improve measures from within, consumers will begin to wonder what they have to hide. In their recent February 2020 report McKinsey & Company states: “Fashion companies must come to terms with the fact that a more distrusting consumer expects full transparency across the value chain. Given the need to regain that trust, fashion players cannot afford not to examine long-standing practices across their businesses”.

The big question is to what extent this is possible . McKinsey & Company´s “State of Fashion 2019” includes “dealing with the trust deficit”. “An apparel company might think that they only have 1,000 to 2,000 suppliers, but the reality is they have 20,000 to 50,000 when you count all the sub-suppliers.”

Are the brands expected to know all their sub-suppliers as well? And to what extend should these be controlled? Tier 1 factories are either where a product’s production process is finished or where a product is prepared for distribution. They’re described as the most important part of the supply chain as often it is the Tier 1 factory that directly supplies the brand. Companies that share their factory information, names and address, help consumers understand more about where their products are coming from. Whereas it seems to be an easy task to make Tier 1 transparent, the big question is what to do about Tier 2, 3 and 4 factories?

“But beyond groceries, the question of precisely where our goods come from remains as pertinent as ever — and one that the fashion industry has not yet been able to solve at scale. “[What] only a few leading brands are doing is [offering] full traceability [of their supply chain]. That means that in theory, you can scan a barcode on a shirt and know the actual supply chain for that particular garment,” says Leonardo Bonanni, founder and chief executive of Sourcemap, which helps brands trace the journey of their products.

In their latest article “Business of Fashion” deals with the subject and brings a number of key “pain” points relating to transparency to our attention:

  • “Transparency doesn’t scale well. Operating transparently means brands have to have a really solid understanding of their own internal operations, and that gets increasingly difficult as brands scale up; bigger supply chains mean more complexity.
  • Transparency is a moving target. A decade ago, simply talking about where clothes were made was considered a new frontier of transparency, now this is just a hygiene factor. But providing better and more granular information creates new challenges. For instance, growing demand for clarity on clothes’ climate impact requires brands to not only understand their supply chains, but also master environmental accounting.
  • Getting transparent communications right is hard. From a sales and marketing perspective, how brands talk about transparency matters almost as much as actually doing the right thing. With call-out culture on the rise, it’s a delicate balance: promise too much and risk a backlash that undercuts any good work that might be underway. On the other hand, if brands fail to really educate consumers, rivals doing less may benefit from a halo of greenwashing from which it is difficult to stand out.
  • Transparency isn’t enough. Ultimately, most consumers still care more about price, quality and style than anything else when making purchasing decisions, which means many in the industry are choosing not to take on the additional burdens that come with more transparency” Business of Fashion concludes.

To What Extent will Transparency Be Possible and How Can Trust Be Built/Maintained?

It will be interesting to follow how many fashion and apparel brands will continue to earn trust by dealing with transparency and traceability across the value chain in the coming years and how many are likely to lose trust in an instant when consumers discover that they have something to hide.