If sustainability isn’t already table stakes for the fashion industry, it will soon be, according to McKinsey & Company analysts. Not only will consumers increasingly expect—and in fact, demand—better-for-the-planet behavior from the apparel brands they shop from, but circular business models will no longer be optional.
“One word to describe how younger generations will change the fashion business is ‘sustainability,’” said Miriam Lobis, a partner in the Berlin office, at a recent online panel. “They will have completely new demands as to what it means to be an end-to-end sustainable brand.”
Fashion is a distillation of emotional attachment and “excitement for brands,” said Karl-Hendrik Magnus, a senior partner at the Frankfurt office. In the future, brand love and loyalty will be “very much be dependent on the sustainability attributes that a brand enables or builds with its consumers,” he added.
There are two main routes brands can engage with sustainability, said Anna Granskog, a partner at the Helsinki office. They can create products that are made from lower-impact, more sustainable materials—say, organic cotton over regular cotton—or they can embrace circular business models such as resale, rental and repair and refurbishment.
What will “move the needle” on circular business models, Magnus said, is investment in the “circular consumer experience,” which creates a frictionless way for customers to buy into the scheme and become stakeholders in the process.
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“As soon as some brands enable great ways of returning your garments into a circular cycle—not having to carry them back to the store but having them picked up, without any hassle, at your doorstep—and with a brand actually knowing what you have in your wardrobe, bidding for that, and sending you reminders of what would be great to bring back into the circularity cycle, then the experience will become so pleasant that mass participation of consumers will happen,” he said.
Lobis imagines a scenario where a virtual style advisor might alert a user that she hasn’t worn a certain pair of shoes in a while and suggest that she think about reselling them.
“Then, instead of having to position them in a nice spot and having to take photos and think about the description, [an online platform] actually makes a perfect suggestion, saying, ‘Look, these are the shoes that you bought. These are some of the pictures of the original ones. Here’s the perfect description,’” Lobis said. “And it will just be 20 seconds, and your item is up on the platform.”
Once the wardrobes of millions of consumers are connected, the AI might go even further by finding a person who might like to buy those shoes, “so the reselling process will be done in a second,” she said. “And that’s the moment when end of ownership really will be big scale.”
CEOs need to start taking that “end-of-ownership thinking” seriously, communicating with consumers beyond the point of sale, Lobis added. Magnus said that brands should see circularity not only as a need but also a “huge opportunity” to reinvent the fashion industry and “create things that are exciting to the consumer.”
“It will be interesting to see whether it will be the established players that will eventually be the winners of the circular models, or whether we will see completely new players, ‘born circular,’” Granskog said. “But there’s not so much time to sit and watch. Rather, it is getting to be time to take action.”