NEW BUSINESS MODELS FOR THE ECO-CONSCIOUS CONSUMER
Originally written for WhichPLM, digital printing expert Debbie McKeegan explores the subscription-based business model. Debbie is the CEO of TexIntel – an expert advisory practice serving the Creative, Digital and Print Textile manufacturing Industry.
IMAGE CREDIT: VIN+OMI
Are we entering an era of subscription …or are we already there?
We are a new shopping generation born of digital nomads and, as such, a generation that is well accustomed to the e-commerce space. With incredible confidence, today’s “New Gen” happily shop online for almost (or maybe actually) everything. And there is no sign of a slow down; in fact quite the opposite, as according to Forrester online sales are predicted to grow to $765 billion in the next 3 years. That’s a staggering growth rate of 58% year on year, and it’s predicted that 36% of all fashion purchases will be placed online.
It seems you can rent almost anything these days and so it’s hardly surprising that subscription-based business models are on the increase, catering to a new (or newish) market that has exponential growth predicted.
What’s driving this growth?
As consumers we now seek gratification, and reward. We also increasingly have an eco-conscience and look to sustainable options wherever possible – once again delivering gratification, in that each and every one of us can singularly help to save the planet, one purchase at a time! Whilst most shoppers wouldn’t go as far as limiting their fashion purchases, the offer of a conscious purchase is very appealing and it’s taking hold of a new e-commerce space.
It’s almost an old-fashioned mail-order business model, with a twist: it’s in reverse, in that the purchase is never yours! This is still credit, however the clothes are merely the tokens that now circulate around the supply chain. And, what’s more, the “to-rent” model is not only viable, it’s sustainable too. In a market where the returned purchases that once plagued the e-commerce space (incredibly running at 25%) are factored in, the supplier expects you to return the clothes you purchase, it’s just a matter of when. It’s fashion on circular credit.
Is it a little old fashioned to own your wardrobe? Why would you want to? Aside from those couture purchases that you might invest in and want to keep forever, isn’t your wardrobe already a cabinet of waste heading for landfill? It’s just a matter of when. Subscription-based business models offer the reverse: you decide how much you want to spend each month on clothes, and your wardrobe becomes a self-sustaining circular vehicle of the fashions you desire. Nirvana for the millennial consumer. (I’m not being ageist here, this business model suits the entire fashion space, regardless of age or demographic).
Social conscience must be the new paradigm for the fashion brand, regardless of turnover or scale. Brands offer value to their consumers by recycling clothes or using sustainably sourced fabrics (and in contrast to traditional retail), often incentivizing their clients to return the items at end of use to be truly circular.
One such brand that has for many years held sustainable manufacturing at its heart is Vin + Omi, who define a new generation of circular fashion where designers offer truly sustainable alternatives for consumers. Exploring many different avenues from rPET plastics, to Chestnut leather the brand is defining change. Their textile production is based on science, social and environmental awareness and problem solving.
As we approach I4 (Industry 4.0) innovations and technologies are driving fashion to new heights. The new definition of “fast fashion” is “fast delivery”; it is not the mass-produced mountains of identical, duplicated garments once destined for landfill. The consumer no longer has an appetite for materialism. Fashion is as it’s defined a “moment in time”, it makes perfect sense to move to a circular business model.
So how do you manufacture these items?
Once again, the wheel of innovation delivers the solutions that allow the retailer to control the supply chain. Utilizing AI (artificial intelligence) and smart manufacturing technologies, it’s now possible to customize production to make on demand, with no minimums, no held stock, and still servicing your customers with the products they desire at great speed.
To do so you need to have brand loyalty and truly understand your customers’ style. It’s this platform that is spawning a new generation of manufacturers: smart factories that can react at warp speed to their clients needs. This can only be achieved with great transparency and a conductive, bi-directional supply chain that shares reciprocal data. White-label manufacturing delivers products direct to the consumer on behalf of the retailer. Subscription-based services define the stock and accurately specify their requirements electronically. Because it’s only transferring data, no humans are required in the order management process, and as such the new “Fashion for Rent” service is the perfect business model for on-demand production.
What is a smart factory?
Based around the world the smart factory is the manufacturing hub for multiple retailers. With a difference: they often ship direct to the client. Taking orders electronically, the supplier fulfils the order on demand, holding the smallest amount of stock (raw materials) and only creating the garment when the order is placed.
Robotics and electronics play a huge part in production, which is set by demand in real-time. As the labour force is electronic, there is no downtime as such, and overheads can be fixed.
This highly efficient factory can be placed at the epicentre of demand, and therefore reduces the carbon footprint when compared to the traditional manufacturing route. As more and more brands stake their sustainability pledges to become carbon neutral, the location and source of manufacture will become more acute.
For the fashion industry, the most difficult part of the process from a labour perspective is sewing garments. Skilled sewing employees are often centered around traditional manufacturing routes across the globe. In order to truly manufacture in any location this has been a recurring issue even for the traditional fashion business.
Sewing robotics now offer the solution and are pioneering innovative new manufacturing processes in many sectors of the world that will, without question, change the landscape of manufacturing communities. TY garments, based in the USA, invested $20 million into the build of a highly automated production plant in 2019. With a production volume of over 100 million garments per year, TY now utilize 330 sewing robots designed by Softwear Automation, and each robot can manufacture (on an eight hour shift) over 1000 T-shirts. In comparison, a staff of 10 people could manufacture 669 T-shirts in the same shift.
In truth, the consumer is unaware of the huge strides that are being made behind the scenes by the fashion industry and the manufacturing communities as they too strive to remain viable in a sustainable footprint. The business models of the past and the waste they produce are not sustainable for the 21st century and must evolve to succeed.