Security Matters CEO Haggai Alon discusses why Arcadia’s collapse proves its time for the fashion industry to take sustainability seriously.
Sir Philip Green’s fashion empire fell earlier this year as it was announced Arcadia was entering administration.
It didn’t come as a big surprise for people who had been following the struggles of Arcadia’s once jewel in the crown, Topshop, but it does put another nail in the coffin of traditional fashion businesses that aren’t in tune with their customers.
There is a range of reasons Arcadia collapsed.
Green is notoriously opposed to modernisation, Arcadia was slow to move online and ignored the threat of other retailers including Asos, Boohoo and Primark.
But perhaps the biggest crime of the Arcadia business was how removed it was from its consumer wants and needs.
In 2006, when Arcadia was at the height of its power, Boohoo launched.
The UK-based online retailer, which aims itself at 16-30-year-olds, the same demographic as Topshop, specialises in fast fashion.
Its clothing matches quickly changing trends, is often available under massive sales, and Boohoo keeps its costs low with no bricks and mortar presence.
Other businesses followed the model and the rise of Instagram drove the demand for fast fashion over the next few years.
Arcadia didn’t adapt to this threat, which is one of the main reasons it struggled to compete in the market towards the end of its life. But it also didn’t take the other option. In the face of fast fashion, Arcadia could have positioned itself as an alternative.
Over the last few years, more and more consumers have begun to think sustainably.
A number of reports into the fast fashion industry have shown the dangerous impact it has on our environment and the amount of waste it produces each year.
Not-for-profit Fashion Revolution estimates 92 million tonnes of textile waste is created annually from the fashion industry.
2020 has accelerated this interest in sustainability, encouraging more consumers to shop locally and support companies that have clear and transparent operations.
A recent international survey from Unilever found one in three consumers choose to buy from brands which are doing environmental good.
A Nielsen Insights report shows the majority (73%) of consumers would change their consumption habits to reduce their impact on the environment.
More importantly, Accenture research shows more than half of consumers would pay more for a sustainable product.
The fashion industry is taking note.
H&M has a ‘Conscious’ collection and has pledged to use 100% recycled or sustainable materials by 2030.
Asos has a transparent supply chain and uses a sustainable sourcing program.
Sustainability-focused influencers are pushing local fashion brands that are eco-conscious.
And it’s a movement that’s still growing.
There is currently an intention-action gap in Millennials who have said they want to support brands that are ethical and sustainable but aren’t yet purchasing at those levels, but it will just be a matter of time before habits catch up.
Green is a traditionalist. He comes from the rag trader days of fashion.
His aggressive business strategies, treatment of workers and accusations of bullying have tainted the Arcadia business in the eye of consumers.
If fashion businesses going forward want to be successful and guarantee the future of the industry, they need to start looking past the products they sell.
In 2020 and beyond, it will be more important than ever for your company to stand for something.
Ignoring sustainable business practices won’t fly for much longer and if other big fashion empires continue to operate like Arcadia, they’ll find themselves facing the same fate.
More and more, fashion brands are learning that increased product lines and collections don’t necessarily yield better financial results.
The last year has highlighted a need for a shift in the profitability mindset.
We can expect brands to take advantage of new technology and innovations that will enable them to reclaim, recycle and reuse their own merchandise and monetise their own supply chain.
While the year ahead might be an arduous one for some fashion brands, it will also be a year of opportunity for others to unlock new technologies.
Many brands have already begun making opportunistic investments into increasing their Environmental, Social, and Corporate Governance (ESG) compliant activities, adopting new sustainable technologies and accelerating the migration of data onto shared digital platforms.
It’s time for others to do the same.