On the Podcast: Balancing Profitability and Responsibility: Navigating the Complexities of Sustainable Fashion
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As the fashion industry recognizes the importance of sustainability, a fundamental conflict arises between the drive for profit and growth on the one hand and the principles of environmental and social responsibility on the other. This conflict highlights the complex connection between the industry's economic demands, consumer expectations, and the limited resources of our planet.
While fashion has long thrived on fast-paced trends and exploitative practices, stakeholders within the industry are now grappling with the need to reconcile profitability with sustainable strategies. In recent years, numerous fashion brands have made notable strides in adopting sustainable practices. However, despite these advancements, the pressure to deliver short-term profits, meet consumer demands for constant novelty, and compete in a saturated market often impedes the integration of sustainable strategies.
The very structure of capitalism, with its emphasis on relentless growth and consumption, poses a challenge to fashion's sustainability goals. Traditional business models prioritize profit maximization and shareholder value, focusing on generating immediate financial returns. This pursuit involves seeking growth, expanding market share, and minimizing expenses to enhance profitability.
Sustainability goals, such as reducing environmental impact, promoting social responsibility, and ensuring long-term economic stability, often require fashion businesses to make decisions that do not solely prioritize short-term profits. This tension creates a complex dilemma for brands striving to achieve sustainability while remaining economically viable.
Nevertheless, there is a growing recognition that integrating sustainability into business practices is crucial for long-term success and resilience in the fashion industry. Balancing profitability with environmental and social responsibilities has become essential. Brands that fail to address sustainability risk reputational damage, consumer backlash, and loss of market share. As a result, many fashion businesses are now reevaluating their strategies and exploring ways to align profitability with sustainable practices.
The path to profitability in sustainable fashion is multifaceted and riddled with challenges. Transition costs, scalability concerns, pricing dynamics, awareness gaps, and evolving industry standards all contribute to the complexity of the sustainable business landscape. Overcoming these challenges requires a combination of innovation, strategic planning, and a steadfast dedication to discovering sustainable solutions that mutually benefit the business, people, and the planet.
This week on the Crash Course Fashion podcast, we take you back to the 2023 Sustainable Fashion Forum conference, where SFF founder and CCF host, Brittany Sierra, had an insightful discussion with industry experts. Joining her were Raz Godelnik, Assistant Professor of Strategic Design & Management at Parsons School of Design - The New School, Jan Lo, CEO of Lo & Sons, Kohl Crecelius, Co-Founder of Known Supply, and Nina Ahuja, Head of Business Development at Trove. Together, they explore sustainable fashion's journey toward profitability.
Key Insights:
“The ease and the brand ecosystem are irreplaceable to customers. If you make something any more difficult than it already is, they will not buy it. Access is king.” Nina Ahuja. [7:32:00]
“When you look at the research, you find that customers are only second to investors in terms of driving companies’ behavior, driving companies attempt to become more circular, to become more sustainable.” Raz Godelnik. [9:55:00]
Can sustainability be profitable? Hell ya! The key, however, is designing a program that's in line with the brand's values and that takes into account the scale that is needed to hit those right profitability inflection points. Think about it from the actual math. At what point do you make enough money where you don't need to make more stuff, and you can use consumers' closets as your additional supply chain? How do you access your items? Every item you've ever created as a brand is an asset. It is an actual asset of your brand and an extension of your brand. Rather than thinking about it as this person owns it, and then they can go and sell it, why don't you just go resell it? You've already paid the cost of goods sold. How much will it cost you to acquire that item back, and at what level do you need to sell to actually become profitable? Nina Ahuja. [13:28:00]
“Can sustainable business be profitable? Hell, yes! There are dozens of studies showing that this is the case. This is more than anecdotal evidence. However, I would say that most of what we see around us is what I would call sustainability, as usual. It's the sustainability that is framed in ways that we feel comfortable doing, not necessarily what we need to do. You can look around and see different examples of new ways to create, deliver, and capture value that could bring both sustainability and profitability. I think that we just need to be more innovative and to consider how do we make it happen in ways that are truly aligned with moving beyond sustainability as usual.” Raz Godelnik. [17:02:00]
“We have to have a new understanding of what scale and growth mean. Are we trying to build a sustainable brand that is as big as H&M when we know that these brands are, just by the nature of the volume, is not sustainable? How do we leverage and understand our growth and understand how we do that sustainably for ourselves and for the future of our brands in a context that's rooted in sustainability and not rooted in this broader sense of scale and growth and being extremely massive?” Kohl Crecelius. [22:08:00]
“We need to move from what we consider quantitative growth to qualitative growth. The idea is that at a certain level, you need to move from selling more stuff to thinking about different ways that are more qualitative, that are more about connections and relationships and learnings. How can we create more revenue by not necessarily selling more garments but by enhancing and deepening brands' relationships with their customers?” Raz Godelnik.[31:20:00]
Additional Resources:
Follow the Sustainable Fashion Forum: @thesustainablefashionforum
Connect with Raz for a FREE digital copy of his book, Rethinking Corporate Sustainability in the Era of Climate Crisis: A Strategic Design Approach.
If you enjoyed this episode of the Crash Course Fashion podcast, leave us an iTunes review and let us know! Reviews help us get more guests like Chris on the show. For more episodes, hit 'subscribe' on your favorite platform - we're on Apple Podcasts, Spotify, and Google Podcasts!
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