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To Survive the ‘Apocalypse’ Retail Must Think Global, Act Hyper-Local

If the spate of department store and mall closings across the country has taught retailers one thing, it’s that brick-and-mortar business cannot continue as usual.

Indeed the centralized, top-down approach that defines globalized trade and manufacturing is already beginning to cede ground to newer, more viable business models that better meet the needs of today’s shoppers, according to Lisa Morales-Hellebo, co-founder of the the Worldwide Supply Chain Federation, a New York-based coalition of innovation-focused organizations involved in the global supply chain.

If globalization is the old paradigm, she said at the Change Fashion conference at Donna Karan’s Urban Zen store in New York on Friday, then localization is the new one—but there’s more to it than tailoring assortments to fit store-location demographics.

“It’s actual on-demand production in a local distributed, collaborative apparel-manufacturing hub network,” Morales-Hellebo said. “Imagine, if you will, everything under one roof in every local mall. And if you think your supply chain is the boring part of your business, guess what, it’s now part of your consumer experience.”

Morales-Hellebo has been working to help establish micro-manufacturing hubs in Puerto Rico and New Jersey that combine the capabilities of end-to-end, quick-turnaround apparel manufacturing with a shared data platform that can grasp real-time resource allocation and capacity.

Far from a passive consumer, the customer of the future will be an integral cog in that machine. Someone could walk in off the street, digitally design a product and try it on virtually (using augmented reality, say) before manufacturing something on the spot.

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“Then you can either decide to either sit and watch or you can go to dinner and movie and decide to have your items brought to you via a bot wherever you are in the mall or drive-through pickup,” Morales-Hellebo said.  

Pipe dream? Not quite. Shima Seiki’s whole-garment knitting machines can already produce garments on demand and within an hour, she noted. Adidas’s state-of-the-art, robot-powered Speedfactories in Atlanta and Germany can adapt to individual shoe preferences without slowing their assembly-line rolls. And in 2017, Nike and Wieden+Kennedy offered an invite-only Nike Maker Experience that allowed guests to design, model using projection technology, and “print” a personalized pair of sneakers in under 90 minutes.

But customization, which has a “billion different forms,” doesn’t have to be constructed out of whole cloth, Morales-Hellebo said. It can be as simple as bedazzling a sweater or T-shirt in the manner of women’s wear startup Bow & Drape, which lets customers fashion their own slogans using sequins and embroidery, and typically ships products within five days. 

“The fashion supply chain is about to be refashioned as an entirely new paradigm,” she said. “And this really is all about the consumer being participatory in every single part of the process.”

By leveraging these micro hubs, consumers might eschew the idea of purchasing a product at a fixed time and place altogether. “If you’re shopping the U.K. and you buy a garment and you don’t want to pack it in your bag, you actually are just buying the digital asset,” Morales-Hellebo said. “And you can then have it produced last mile locally at whatever location is closest to your home.”

This localized manufacturing model could rehabilitate the concept of high-throughput “fast fashion,” too.

“Fast fashion has a bad name but it’s a matter of how it’s produced,” Morales-Hellebo explained. “If you produce fast fashion on-demand and locally, and you’re reducing the waste of shipping a T-shirt 10,000 miles before it gets to store, or you’re producing your textiles locally, circularly and regenerating them, it’s a whole new paradigm around fast fashion.”

A 30-30-30 formula

Kevin Moss, global director of the World Resources Institute’s Business Center, which helps the private sector develop strategies to drive sustainable growth, has another idea of how retail might evolve over the next decade, and it has everything to do with a planet “at its capacity at the moment to provide for what we need.”

Speaking at the same conference, Moss noted a bigger stressor for dwindling resources isn’t the soaring global population but rather the precipitous gains in gross domestic product (GDP).

“Population is going to grow about 50 percent between now and 2050,” he said. “But in the same time period, global GDP is going to grow about 450 percent. And as we bring people out of poverty and into the middle classes—which we want to do, because that’s how we’re going to develop society—they consume like we do.”

While the planet will have more than 9 billion people by 2050, the World Resources Institute estimates the middle class will swell by 3 billion by 2030.

“That leads to, by the source of estimates we’ve done and a number of other organizations, three times the resources extracted from the planet by 2050,” Moss added. “Because these resources then have to be processed, that reflects a three-fold consumption in water, in energy, in chemicals.”

Keeping resource levels even or depressing them slightly will become ever more critical, and one of the most effective ways to do this is to rein in consumption.

This is a difficult topic for even the most progressive companies—save, perhaps, the consumerism-averse Patagonia—to grapple with without bristling, Moss admitted.

“It’s fine for business to talk about resource efficiency, waste reduction or water risks because they generally reflect a cost reduction,” he said. “It’s very hard for businesses to talk about the topic of consumption because selling more new stuff to more people is built into the growth models of most if not all of them. At the same time we’re telling people to re-wear, reuse and recycle, we’re [still] asking them to come in every day and shop.”

Still, there’s no time like the present for change. “Millennials are telling us that they appreciate and value experiential purchases over buying new stuff,” Moss said. “So this is no longer just a sustainability challenge, it’s also a business challenge as well of what our customers want.”

To narrow the widening gap between GDP and resource use, Moss suggests big-box stores rethink the way they get customers to crack open their billfolds. Instead of raking 100 percent of their profits from hawking items that are entirely new, for instance, the Target or Walmart or H&M of 2030 could diversify its sales channels by dedicating only a third of its floor space—and therefore a third of its revenue—to fresh-from-the-factory goods.

“A third of it is going to be from reselling me something that somebody else has previously owned,” Moss said. “And a third of their money is going to be come from fixing something, repairing something, upgrading, redesigning something that I already own, so I leave the store with the same item I took in but the store makes some money out of me in a different way.”

Recycling alone, Moss observed, isn’t going to be enough to dig us out of this deepening resource deficit because taking materials apart and reforming them still requires a tremendous amount of energy, water and chemicals.

For the industry to shift from a one-to-one relationship between sales and resources to something more akin to three-to-one, he said, growth must stem from strategies other than “selling new stuff to people.”

Consumers versus “creativists”

And the demand for mending things is there, insists Sandra Goldmark, a professor of professional practice in theater at Barnard College and the founder of Fixup, a five-year-old social enterprise that employs local theater artists, makers and technicians to fix household items, including apparel, via pop-up shops and one-day events. Though she didn’t set out to do so, Goldmark even managed to make a modest profit.

She doesn’t even think people are repairing things because it helps the environment or saves them money.

“It’s very simple: People like their stuff, they want to keep it and they’re willing to pay to do so,” she said. “You would not believe the things that people bring in. There’s some stuff, like your mother’s wedding album that’s falling apart, that of course you’re emotionally attached to. But how about a black plastic window fan or a $5 T-shirt? We get a lot of stuff like that and it’s pure emotional attachment.”

For Olivia Sprinkel, head of the American arm of Salterbaxter, a sustainability consultancy firm, companies need to stop seeing people as consumers but as “creativists,” which she defines as individuals who are “creating and connecting and acting.”

Some companies, she said, get it, like MUD Jeans in Amsterdam, which allows customers to lease as many as three pairs of denim at the same time. Sweden’s Nudie Jeans offers free repairs for life, along with the option to buy gently used versions of its popular styles.

“I think that’s a real example of how you can create an experience for customers,” Sprinkle said. “That’s what consumers are looking for now. It seems to be a massive missed opportunity that companies are looking to reinvent retail, they’re looking to get consumers back into brick-and-mortar shops and they’re spending all this money creating experiences.”

But why can’t retailers create experiences around bringing your clothes back and mending them? Or imparting a new skill?

You can come to a class and learn how to mend your clothes or learn how to knit your items or just tapping into that creativity of people,” she said.

And that goes double for corporations as well. “They need to stop thinking in that consumer mindset and switch to that creativist mindset,” Sprinkel added.