Patrice Louvet believes business dragging their feet on sustainability will end up in hot water—in more ways than one.
“We have a responsibility to leave the world a better place,” the Ralph Lauren Corporation CEO told attendees at the National Retail Federation Big Show Monday. The nearly two years since the coronavirus pandemic first gripped the economy have unequivocally answered a question Louvet recalled debating with NRF president Matt Shay in the outbreak’s earliest days: will the crisis speed up or sideline the industry’s momentum toward sustainability and good corporate citizenship.
There’s simply no debate that consumer behavior over the past 22 months has “dramatically accelerated the opportunities in that space,” Louvet said. Now it’s up to businesses to ensure they’re baking sustainability into their core model instead of relegating it to a “parallel” endeavor decoupled from central operations. Doing so could very well be a matter of survival, he warned.
“The companies that do not put this as a priority on the agenda will have a problem with their consumers, their employees and their ability to recruit, [and] their investors,” Louvet said.
First Insight data published Monday underscores the problem Louvet is talking about, pinpointing a glaring mismatch in how consumers and the brands and retailers that serve them think about sustainability. Two-thirds of consumers would pay more for sustainable products, despite the same percentage of retailers harboring the belief that people wouldn’t spend more to get goods from sustainable brands, illustrating that “retailers are leaving money on the table,” said Greg Petro, CEO of the product decision company.
“It’s imperative for retailers to understand their customers’ values so that they can adapt for the future,” added Thomas Robertson, academic director of Wharton’s Baker Retailing Center at the University of Pennsylvania, which worked with First Insight on the “Sustainability Disconnect Between Consumers & Retail Executives” report.
Ralph Lauren is attacking sustainability from different angles. Its high-performance cotton polo shirt took center court at the Australian Open Monday, birthed from the company’s 2020 investment in Natural Fiber Welding and the material innovator’s technique of imbuing cotton (which accounts for 80 percent of the fashion giant’s raw material, Louvet said) with the moisture-wicking and breathable properties associated with synthetics. Color on Demand “dramatically reduces” water consumption during cotton dyeing, he added. Demand-based production also helps the New York firm sidestep wastage and size overproduction by “stripping all that stuff out of the system,” Jason Berns, senior vice president of product and manufacturing innovation, told Big Show attendees Sunday.
Insights gleaned from the custom product business can filter into the main line and give shoppers the design they really want, Berns said—resulting in something they’ll hold onto for the long haul. After a significant percentage of customers customizing a new jacket picked a “feature that we didn’t expect,” Ralph Lauren revamped the product’s next iteration with that particular attribute built right in. “That taught us something and we changed the main line to reflect what we were seeing with the customizer, because that feature was seen as not important,” he said. “But we’re seeing actually most people ordering the custom product feature. And so we used that customization feature…as a way to test and try some colors. You can do product features, patterns, all kinds of things. There’s a big learning piece to use that data for other decisions.”
Ralph Lauren’s transformation seems to be working, said Louvet, pointing to one little number as proof. “We have demonstrated pricing power now for 19 quarters in a row of average unit retail increase, which we are actually quite proud of…because it means the brand elevation strategy is working and consumers are responding to it,” he said.
Still, the company and the industry at large have a way to go in producing clothing and shoes responsibly. Fashion’s overreliance on plastics and fossil fuels “keeps me up at night,” Berns said, and poses “real challenges” for a sector is dire need of change. “Everyone has their piece in this,” he said. “There’s not a single solution or a simple solution.”