The special edition of the CEO Global Fashion Agenda 2020 published last May in collaboration with McKinsey & Company is entirely dedicated to Covid-19 and aims to orient the fashion companies’ CEOs choices to recover profitability.
The way: greater resilience and concrete sustainability policies to support the business model transformation in a sustainable perspective.
Eva Kruse, CEO of Global Fashion Agenda, says she’s aware that the top priority for many companies is now to survive. “However – she adds – the crisis is also a chance to review the fashion language and its dynamics”. Hence the invitation to entrepreneurs and managers “to rebuild the system, in a collective effort capable of guaranteeing a fairer and more resilient future”.
Thinking and doing: consumers, investors, institutions
According to McKinsey, after the peak of the pandemic two thirds of consumers consider sustainability more crucial than ever to limit the effects on climate change. Many indicators also show a growing impact of sustainability on investment returns: in short, choosing sustainability ensures returns that are more appropriate to risk. At the regulatory level, the measures to support companies for upturn include increasing incentives for those who are committed to the environmental and social front.
The six opportunities of the GFA 2020
1- Mapping social and environmental impacts along the value chain: the ability to track where and how products are made is the first step in assessing the risks related to human rights, climate and biodiversity.
2- Building trust and brand loyalty: the more transparent and credible the brands are, the more consumers are willing to reward them in terms of purchase.
3- Set up relations with suppliers on equal basis: the crisis highlighted the opportunity to involve suppliers by collaborating, sharing financial incentives and investments in innovation.
4- Address unsold surplus stocks to new business models: it’s time to experiment with alternative ways to manage the growing unsold stocks in the warehouse, also encouraging reuse and recycling practices through internal training.
5- Accelerating the digitalization of business processes: the related benefits refer to cash flows, inventory management, waste reduction, etc.
6- Shaping more robust, efficient and low CO2 e-commerce models: between April and September 2020, the increase in online purchases is estimated at 35-40%, according to a trend that will not exhaust its effects once the crisis has passed.
Karl-Hendrik Magnus, Senior Partner at McKinsey & Company, has no doubts: “Covid-19 is undeniably the biggest challenge for the fashion industry we’ve ever seen, with an unprecedented impact on businesses and employees.
Fashion sustainability is becoming significantly more important to consumers, investors and regulators. Fashion industry leaders should therefore re-new their commitments and find ways to make use of the crisis as an opportunity to accelerate the transformation”.
And the designers?
Creatives and stylists feel the same way: fashion shows telling people what they will find in stores after a few weeks, instead of months; sales at the end of the season, instead of halfway and, above all, fewer collections. Dries Van Noten, designer from Antwerp at the helm of what seems to be a real global movement for change, is convinced of this.
“Many products are no use to anyone – he says – and it’s not true that a dress from the previous year is necessarily out of fashion. Times of fashion shows must change: the autumn-winter season between August and January and the spring-summer season between February and July. But beware, because if we proceed in random order, we’ll get into trouble”.
Experts agree
Francesca Rulli, creator of the 4sustainability® mark that certifies the adherence of fashion companies to the sustainability roadmap, fixes the engagement rules:Francesca Rulli, creator of the 4sustainability® mark that certifies the adherence of fashion companies to the sustainability roadmap, fixes the engagement rules:
1. face the change with harmonized and shared methods to focus investments on clear and realistic objectives;
2. guarantee the performance reported;
3. partner with the supply chain to make it shorter, efficient and innovative.
“Many studies – she explains – mostly express the position of the big market players. For this reason, we’ve decided to start a research in partnership with a major international University that involves all the links in the supply chain. Its ultimate goal is to develop useful solutions to ‘reset’ the system. We’ll hopefully present the results at the end of 2020 during the 4sustainability® Annual Event”.
