OXFORDSHIRE, United Kingdom — In the second session of BoF VOICES 2022, speakers addressed a broad range of themes that are increasingly urgent for the fashion system, from the need to regulate corporate greenwashing to what comes after the post-pandemic rebound.
Achim Berg, senior partner at McKinsey & Company, presented a first look at the latest edition of BoF’s flagship The State of Fashion report.
After a first half of 2022 that was “all about growth, about lots of opportunities to wear and buy fashion,” a deterioration of the global economy in recent months has left fashion executives bracing for a slowdown, according to Berg.
“Even if we have a bit of a V-shaped recovery in the US, even if China reopens faster than we expect, it’s going to be challenging in the first six to nine months next year,” Berg said. “Then we can hope for a better Christmas.”
McKinsey expects global fashion sales growth of 5 percent to 10 percent for luxury, and negative 2 percent to positive 3 percent for the rest of the industry in 2023. Bright spots include surging sales in the Middle East, as well as a rebound in more formal dressing.
Can Regulation Stop Greenwashing?
Splashy corporate pledges to improve environmental impact have become commonplace in fashion as well as finance, energy and other industries in recent years. But activists, public officials and even some fashion insiders are increasingly losing patience with self-regulation that has delivered few results and are now calling for government “referees” to speed change.
Tariq Fancy, a former banker and founder of the Rumie Initiative, spoke about leaving the industry of “green bonds” and low-carbon exchange-traded funds behind as he became increasingly disillusioned with a “system that was painting itself green.”
“This ESG stuff can actually be harmful if people don’t know its BS,” Fancy said. “[It’s] a convenient fantasy… where the world corrects itself and no sacrifice is required.”
When surveyed anonymously, most CEOs agree their companies are engaged in greenwashing, Fancy added. After years of allowing companies to appear to regulate themselves through a patchwork of corporate responsibility pledges, change needs to become “both systemic and mandatory” by changing the rules that constrain capitalism.
“It’s time to call in the refs,” he said.
Maxine Bédat, director of the New Standard Institute, spoke about the New York Fashion Act, proposed legislation in New York State that would put in place “basic guard rails” on the industry by setting minimum environmental standards for all companies with revenue over $100 million doing business in New York (no matter where they are headquartered or where their products are produced).
Bédat said the bill was modelled after efforts to fight air pollution in California, where the state’s rules on automobile emissions quickly became a global standard due to the scale of the market.
Fancy and Bédat were joined in a panel discussion by Baroness Margaret Omolola Young, a member of Britain’s House of Lords and Ken Pucker, former chief operating officer of Timberland.
“We’ve refined this system to work for a relatively small number of people who are ageing. It’s not borrowing from the future — it’s stealing,” Young said. “Regulation has to step in. Systemic change has to come to governments, too, as they’re in thrall to certain types of businesses that depend on [fossil fuels].”
“Governments need to take bold action, and we need to tell them to be bold at the ballot box and at every opportunity,” Young added.
Reaching Underserved Customers
2022 has seen a veritable renaissance in brick-and-mortar retail as brands tried to reach consumers by opening new stores in locations that were historically underserved, from massive emerging economies like India (where the pandemic sparked a shift to luxury customers shopping domestically) to smaller cities in developed markets like the US and the UK.
Michael Murray, CEO of UK-based luxury retailer Flannels, spoke about his company’s strategy of focusing on building luxurious physical boutiques outside of London’s historic shopping hubs.
“The regional consumers are severely underserved,” Murray said, referring to smaller UK cities like Liverpool and Leeds. “Luxury brands obsess over capital cities; we’re obsessing over those white spots where they’re not going to invest because there isn’t a Bond Street.”
Sometimes underserved customers can be found closer to home. Retail activations in big-city neighbourhoods away from shopping high streets can help brands find new customers and deepen engagement with their existing base, Appear Here’s founder Ross Bailey said. Bailey’s company has helped stage temporary retail experiences for major brands, like Gucci’s centennial pop-up in London’s Hackney in 2021, as well as developing ultra-local shopping villages dedicated to promoting products and services from the immediate area.
Cecilia Morelli, co-founder of Mumbai luxury boutique Le Mill, spoke about her efforts to reach Indian customers. Those shoppers, who previously focused their spend on gold jewellery and traditional Indian fashion are becoming more interested in mixing in items from Western luxury brands — and in being able to buy those products close to home.
“Finally India is really coming forward. Luxury brands are starting to look to India in ways they haven’t done before,” Morelli said.
The former Bergdorf Goodman executive’s advice for building a business in a new market? Listen.
“I thought I could impose my vision of good style, good taste,” she said. “What I learned was all I could do was really listen to my customer.”
She’s seen success by really considering the lifestyles of local customers — learning what sort of occasions they go shopping for, and what would be seen as suitable to wear. Fashion brands can still do a lot better on this front, adapting their approach for different climates, body types and languages.
After the DTC Era
The sleek, neutral brand messages favoured by DTC brands don’t resonate as much as they used to, writer and technologist Toby Shorin said.
“The DTC era has hit a cultural impasse,” he said. “[These] brands couldn’t create a relationship with the subcultures they wanted to become or to identify with.”
Consumers are now moving on from an “impoverished lifestyle economy” to “lifeworlds” imbued with cultural meaning, values and the promise of transformation.
“People opt into these communities with the self-awareness that they may be changed,” Tobin said, citing transformative concepts like effective altruism, or brands like Peoplehood, a group therapy-inspired service created by the founders of SoulCycle. “We see an increased willingness to be told ‘the right way to be,” Tobin said.
Brands should think about bringing more elements of the broader culture into their work, referencing memes or invoking subcultures. They can adapt to the focus on values by thinking about how to cater to adherents of various ideologies or to create their own “lifeworlds” with intrinsic culture and ideologies, Tobin said.
American Luxury
In conversation with BoF editor-at-large Tim Blanks, Fear of God founder Jerry Lorenzo spoke about his vision for American luxury.
“You don’t have to be in a stiff suit to be elegant,” he said. “American luxury is freedom. It’s about being able to wear what you want when you want to … so you can be the best version of yourself.”
The Los Angeles-based brand, which tripled sales in the last two years, is set to stage its first-ever fashion show and open its first flagship store as part of a wider expansion drive. It will also add new categories such as women’s shoes and bags, Lorenzo said.
“Our intention is that when you come into the store, there’s a shift that happens,” Lorenzo added. “We want to bring you into a space that’s beyond an environment; it’s an atmosphere.”
BoF VOICES 2022 is made possible in part through our partners McKinsey & Company, Shopify, Flannels, Brandlive, Lenzing, ShopRunner, Snap, Canada Goose, Invisible Collection, Soho House, and Getty Images.
