Gen Z trends impacting supply chain technology from Fashion Veganism to Recommerce.
Gen-Z cares more about the environment than potentially any prior generation; as is suggested by their self-proclaimed icon of Greta Thunberg. However, will they be the generation to pledge buying waste-free fashion and deliver? Being a fashion vegan, defined as someone who does not purchase first-hand clothing, is a challenge to live out. Similar to single-use plastic-free life, fashion veganism is inefficient because our society and our supply chains are built for consumption, not resumption. And let’s be real, sometimes we want to treat ourselves to a sparkly, new item. Giving up first-hand shopping isn’t for everyone but consumers are begging retailers and the fashion industry to reconsider its impact on our planet. There will be critical supply chain advancements in the next five years which will enable consumers to be environmentally conscious in their shopping without having to sacrifice their style or pocketbook.
Prior to Defy, I managed a number of different technology products inside Gap Inc’s Global Supply Chain team. From returns to customer communication, the technology platforms I helped build interacted with customers post-purchase and aimed to ensure a seamless customer experience. I was given a front-row seat to Gap’s mighty supply chain which ranges from product inception through vendors in Hong Kong all the way to the distribution center in Columbus, Ohio. This experience taught me the inflection points in retailer’s and customer’s journeys of product development and product purchasing where technology innovation can make sustainable shopping simpler.
Living in a Material World
According to the Ellen MacArthur Foundation, the fashion industry globally produces roughly 53 million tons of fiber every year. Less than one percent will be reused to make new clothes. More than 70 percent of the 53 million will end up in landfills or burned. Synthetic fibers and plastics, such as polyester, are a key contributor to this waste because it is more challenging to upcycle. In Business of Fashion’s 2020 State of Fashion report, written in conjunction with McKinsey & Company, 67% of retailers surveyed think using innovative sustainable materials is important to their company. Materiality is a crucial link in the efforts to make a more sustainable supply chain.
Therefore, it will become incredibly more important for consumers to understand the materiality going into the products they own and wear. The aforementioned McKinsey report found that one-third of Generation Z are willing to pay more for sustainable products, compared to one in ten baby boomers. I believe it will be start-ups who can efficiently recycle polyester fabrics or build the customer muscle of paying more for higher, sustainable quality that will succeed for the health of their business and our planet. A few retailers built this in from day one such as Patagonia and Tom’s codified in their B Corp certification. Many direct to consumer brands backed by venture capitalists began leveraging reusable materials as their product differentiation. Early adopters of this were shoe brands, Rothy’s, and All Birds. This trend towards sustainable materials and marketing is now a requirement for emerging DTC brands. For Days, backed by Congruent Ventures and Closed Loop Partners, is a “zero waste” clothing retailer that indefinitely allows consumers to return their white t-shirts with a subscription model. Unsalvageable stains? No problem return with For Days who will recycle said shirt for you and send you a new shirt that week. Girlfriend Collective is a brand that uses 25 recycled water bottles to produce recycled polyester in their compression leggings which makes up 79% of the total product. A 2019 McKinsey survey of apparel company chief procurement officers found that using more recycled fibers is one of four innovation-led disruptions likely to occur in the next five years. These brands’ journeys towards making a material impact on the fashion industry bring this statistic and this movement to life.
Consumers are genuinely more comfortable with second hand, so what does this mean for retailers?
While material innovation helps us the future of our supply chain, what do we do about the billions of clothes already here? In ThredUp’s recent sustainability report, they found 70% of women in 2019 were comfortable shopping secondhand. This number goes up when you look specifically at the Gen Z cohort. 80% say there is no stigma in shopping pre-worn clothing. This video says it all. With wallets constricting due to the economic uncertainty surrounding COVID-19, consumers will likely become more conscious of where they put their precious dollars. Historically, downturns have inspired more economic and sustainable shopping options, as was true after the 2008 recession. The founding of ThredUp and Rent the Runway in 2009 and Poshmark and TheRealReal in early 2011 exemplify this.
An important differentiation in the rise of these sustainable and second shopping platforms is that they created trusted networks of authenticated sellers and buyers. They elevated the experience from Craigslist and Ebay to one of streamlined ecommerce often with verified quality as is the case with ThredUp and The RealReal. However, this evolution in online secondhand left out an important player, the retailer. Retailers have realized the revenue they are missing out on in the secondhand space. So did Trove. Andy Ruben and his team realized the importance of bringing retailers along for the journey in the consumer treasure hunt from pre-owned high-quality goods. A retailer can now partner with Trove to reclaim, restore, and resell their most popular items from past seasons, such as with Patagonia's Worn Wear. This white label service is a logistics blessing for many retailers who do not have the distribution center space or technology capacity to repatriate hundreds, if not thousands, of items over their decades of production.
Ultimately, I believe technology and logistics solutions that help legacy retailers evolve alongside their customer’s tastes for sustainable, pre-owned fashion will be winners.
Once your closet has value for retailers and fellow shoppers, how do you manage your own inventory?
Poshmark has proven people will buy clothes peer-to-peer online, Trove is proving retailers want a cut of this circular economy, but how will either of these sustainably scale? As a personal experiment, I spent around three hours one day photographing and uploading approx 25 items to Poshmark. Three items sold, and two were returned due to the buyer’s dissatisfaction with the product. After Poshmark took their cut, I made $6 for three-plus hours of effort. I have yet to try this again.
Now let’s imagine a world where everything I’ve ever purchased, in-store or online, is meticulously cataloged with purchase date, size, materiality, and estimated resale value in one clean, digital Madison closet. The next time I want to sell 25 items, it should take less than 25 minutes to click the list button through my chosen resale platform. In order for this seamless customer experience to be possible, a few key innovations need to occur.
Seamless image editing and item upload software: How do you digitize thousands of unique items? This question is a key reason why secondhand selling can struggle to scale or have successful sales. Image quality and data surround fit and material can cause headaches for uploaders and indecision for buyers. Ultimately, buyers want firsthand quality images at secondhand prices. Naturally, they like to know fit and feel. Without a comments section or trust size guide, this produces hesitancy in the consumer. This is crucial to the historical upload required for cataloging one’s closet.
Point of sale data collection: Every time a customer makes a new purchase the information should be downloaded and stored in their personal closet database. Therefore, once a customer has done the hard work of the historical upload, they never have to think about uploading their closet themselves again. This would likely take integration to POS systems such as Square or order management systems such as Demandware and their accompanying inventory management software which store data for millions of SKUs.
Personalization: Understanding every item in a customer’s closet unlocks personalization like never before. A key missing link in style algorithms today is the holistic view of the customer. Understanding everything they own from their trusty black wrap dress to that regrettable yellow tube top they wore in college is not possible today. Knowing what you own, when you bought it, and what its worth is the future of the circular economy made possible by technology innovation.
Thrilling, a recent Defy investment is beginning this journey for hundreds of vintage retailers across America. By helping to digitize vintage retailer’s massive collections, Thrilling is bringing online thousands of net-new pieces that consumers can shop conveniently from their couch. Their seamless marketplace offers free shipping and free returns (a consumer must!) while providing access to verified vintage from the men and women who have dedicated their lives to owning and operating their passion. While we’re likely at least five years away from an IRL Cher’s Clueless closet, Thrilling is proving you can digitize hundreds of unique items from people whose whole business is closet management.
As we look to the future, my hope rests in retailers and consumers partnering to diminish the impact this valuable industry has on our environment. Through mindful materials, a willingness to buy secondhand, and technology-enabled asset management, I believe consumers and our supply chain will evolve to holistically track and value items from inception to repurchase to recycle. If you or anyone you know is solving these problems along the supply chain, I’d love to learn more.