Sustainability in fashion retail is gradually becoming one of the industry’s top priorities. But what does this means for the industry, and how can RFID be leveraged to help with this, particularly to improve the traceability of products?
Sustainability in Fashion Retail
Sustainability in fashion retail is gradually becoming one of the industry’s top priorities. With apparel contributing to around 10% of all greenhouse gas emissions, consumer attitudes towards brands are increasingly being influenced by their efforts towards sustainability. This is in turn causing many retailers to look to improve their environmental records and explore new strategies to do so. In this article we’ll explore exactly what that looks like for the industry, and how RFID (Radio Frequency Identification) can be leveraged to help with this, particularly to improve traceability of items.
Sustainable retail is a priority for more and more consumers
Sustainability in Fashion has been a concern for some time but in recent years consumers, particularly younger generations, who are increasingly concerned with the sustainability of their clothes are forcing major change in the industry. According to the McKinsey apparel CPO survey, there has been a 500% increase in the number of sustainable fashion products launched over the past two years.
This proves that the industry is beginning to move in the right direction, but there is still a long way to go. A report by environmental agency Stand.earth claims that only two major brands are delivering on their commitments to reduce emissions, American Eagle and Levi Strauss, who came out on top of the recent report card.
What does sustainable retail mean for the fashion industry?
So, if most of the work is yet to be done to improve sustainability in fashion retail then which areas should retailers focus on? Whilst key areas like sustainable materials and practises will be crucial, retailers will need to make improvements in several different areas in order to improve the footprint of their businesses. Edwin Keh, CEO of the Hong Kong Research Institute of Textiles and Apparel argues that “There is no silver bullet; rather, there will be a combination of a lot of small innovations and a few radical changes.” In the figure below, from the McKinsey survey, we can see the truth in this, as brands are focusing on a variety of methods to reduce their environmental footprint.
RFID and Sustainable Fashion Retail
So, what part can RFID play in all this? There are three key ways retailers can improve sustainability with the help of RFID:
- Produce less through leaner inventories
- Consumer transparency with item-level traceability through supply chain
- Digitise the emerging ‘fashion rental’ market
The most obvious solution for fashion is to produce less merchandise and prevent wastage of resources. By implementing an RFID inventory system, retailers can have on average 10-15% less inventory in stores, due to the increased stock accuracy and the ability to leverage their stock more efficiently.
Another way brands can use RFID to improve sustainability is to utilise the item-level traceability that RFID tags can provide. As far as sustainability initiatives go, this is a fairly customer-facing use, as brands can leverage the additional data stored within RFID tags to provide transparency about where their products are sourced. Often this will be displayed through customer facing applications such as the brand app and/or NFC (Near Field Communication) initiatives.
This use case is already being implemented by some retailers, and the majority of RFID-enabled brands seem likely to employ it in the years to come. In the McKinsey survey, 65% of surveyed sourcing executives expect to achieve full traceability from fibre to store by 2025, and the majority of brands plan to use RFID to do so:
The other big impact RFID looks set to make on the fashion sector is in new markets that are only beginning to emerge on to the world stage:
The second-hand clothing market may not be second best for much longer
Due to the large increase in consumer interest in sustainability in fashion retail, something of a sub-industry has developed in the second-hand clothing market in recent years. This is no longer just traditional second-hand clothing outlets such as eBay and charity stores, but also brands that actively trade in used clothing. Chris Homer, CTO of online clothing marketplace ThredUp, says its research found the size of the second-hand clothing market has doubled to $24 billion in the US over the past 10 years, and he predicts the market will overtake fast fashion sales within the next 5-10 years. It isn’t just disruptor brands who are looking towards second-hand clothing, as British retail giant John Lewis recently launched a ‘buyback’ scheme with 20,000 customer to help combat clothing waste.
Could the growing rental-clothing industry be the green alternative to fast fashion?
The other subset of fashion retail that is growing out of sustainability concerns is the rental clothing market. This allows consumers to have access to the same variety and turn-over of clothing that they could have with fast-fashion, but without the waste of resources and impact on the environment. Much like the second-hand market bigger brands are also looking to get involved here, with the international apparel brand H&M having very recently announced a trial of a rental service in their flagship store in Stockholm.
New markets = New challenges
Both of these emerging sustainable apparel markets are yet to truly find their feet, and time will tell how sustainable they are as business models. One of the main challenges we see for such markets is the traceability of items and combating counterfeit returns and losses. In both second hand and rental fashion models, you will be dealing with far more individual and one-off items than in typical fashion retail. As such, keeping track of individual items will be vital, but more challenging than normal. In such models, items will be moving in and out of the store in both directions rather than predominately in one. Strong inventory management will therefore by imperative for these businesses to succeed.
Could RFID be the backbone of the emerging used clothing & rental fashion industries?
It seems RFID could be the perfect technology to build these new sub-industries around, as an RFID system would be able to deliver the perfect conditions for second hand and rental businesses to thrive. With each item having a completely unique ID, retailers would know exactly what they have available, and exactly what they have out with which customer (in the case of rental). As RFID tags are unique and can’t be forged or copied, retailers could offer these services with full confidence that the right product is being returned, eliminating the possibility of any new illicit markets forming.
Finally, using the real-time digital view of inventory created by an RFID system, second-hand and rental retailers would be able to show exactly what products they have available online making items available to click-and-collect or order online. Without such systems these new models might struggle to have a digital presence, which would limit their reach and ultimately their success.