On Saturday night, conversations with several different friends of mine confirmed what I had suspected: people are generally curious about where what they buy comes from and what impact they personally are having on the planet. A little bit of information on the chain that they tug on every time they click “buy” creates value.
On 24 April 2013, 1,134 people were killed and over 2,500 were injured when the Rana Plaza factory complex collapsed in Dhaka, Bangladesh. The tragic event has served as a catalyst for a consumer-led industry movement on the topic of supply chain transparency.
Exactly two years later, Fashion Revolution Day called for a systemic reform in fashion supply chains with the #whomademyclothes campaign. Thousands of people from over 70 countries participated in a day of awareness. In particular, the campaign highlighted that 95% of fashion brands do not know where their materials came from and 75% do not know where cut and sew processes are performed.
Fashion Week will be held around the world in a couple of months, kicking off in New York on 10 September. With a new generation of designers each fighting to have his or her unique voice heard, I expect we will begin to see the value of social and environmental responsibility tied to brands and individual designers.
Nike is one fashion company that has been a leader in supply chain transparency as part of its authenticity promise. It never sourced from Rana Plaza, due to its own concerns based on findings from its robust social and environmental responsibility programmes and supplier code of conduct.
Disney is another leader in managing trust and transparency in its supplier network. It considers the entire ecosystem required to meet its code of conduct standards and focuses efforts in those countries where it has the most reasonable chance of making a difference. Disney released a statement in 2013 that demonstrates the power of intangible value from sourcing responsibility:
“We have undertaken this decision with the understanding that our requirements may be more demanding than those of other licensors and brands. While this may result in a loss of royalty revenues to Disney, we believe that the benefits of reduced risk and increased compliance with our standards justify the potential financial impact. We also understand that there is no ‘perfect’ solution to the challenges we confront as a global licensor and that others, particularly direct buyers, may pursue different approaches in the management of their own international labor standards commitments.”
Consumers do not necessarily distinguish between players across the value chain – consider the horsemeat scandal in Europe. As the data below shows, blame for risk events is spread across multiple organisations in the value chain and equally for retailers and manufacturers.
The same value chain effect is seen in reverse when consumers are asked about brand loyalty. Three in 10 say they are loyal to manufacturer brands, while only 1% more picks retailers. The remaining 39% see no difference between the two. Individual loyalty is up for grabs in the consumer value chain.
Companies like Eileen Fisher, Patagonia and American Apparel used the #whomademyclothes campaign to positively engage with customers by sharing photos and biographies of workers in their respective supply chains across social platforms. These three companies literally put a face on the intangible value of knowing how your decisions as a consumer impact people around the world.
For many companies, mature markets have had several years of stagnated growth. It is an indication that purely price-based competition has fully matured. The next growth engine in these markets is tapping into the intangible value of features like convenience, trust and transparency. The ability to connect directly with consumers, as the three companies mentioned above have done, is one way to empower the individual in these markets.
It’s a win for customers, a win for the fashion industry and a win for supply chain professionals. Maybe all of our jobs are more fashionable than we even knew.