BrazilClothing industry can cut emissions by 3% by reducing overproduction
The apparel sector is plagued by extensive overproduction, with annual rates ranging from 10% to 40%. This rampant overproduction contributes to a substantial waste problem – and if it were remedied, it could cut emissions by 3%.
Despite increasing costs caused by inflation, the apparel sector has still failed to avoid such high rates of overproduction. The issue continues to be an obstacle to growth and a huge burden on the environment. For example, news articles about a massive ‘fast fashion’ waste dump in Chile caused global outrage as the public at large has become increasingly aware of the negative impact the industry has on the environment.
Transitioning to a demand and data-based planning and buying model could reduce overproduction by anywhere from 5% to 15%, effectively eliminating a major source of excess waste. That is according to a report by British strategy consulting firm OC&C Strategy Consultants. This shift could represent a roughly 3% reduction in carbon emissions.
A major buying model transformation is therefore a crucial step towards enhancing a brand's sustainability outlook while driving profitable growth.
Though the retail industry appears to be performing relatively well, particularly in China and the Middle East, despite a somewhat challenging global economy, it is still crucial for brands to adapt their purchasing processes. Margins and stock are under increased pressure, making it essential to reduce overbuying and unnecessary spending.
Reallocating these wasted resources to other areas can allow brands to improve other aspects of their business models. Companies could benefit from improving sell-through rates, selling more products at full price, and strategically optimising discounts and markdowns. Additionally, using demand forecasting data empowers brands to make confident decisions when adjusting the quantities of specific product lines, giving them the ability to buy with greater certainty.
But overproduction is not just commercially ineffective, it also has a major consequence on companies’ sustainability agendas, which are increasingly seen as a strategic imperative and a core value in their operations. Companies worldwide are under mounting pressure to demonstrate their commitment to ESG targets.
To align with the UN Paris Agreement, the fashion industry must reduce emissions by a whopping 45% compared to 2019 levels. However, a staggering amount of garments – 15-45 billion out of approximately 150 billion produced annually – go unsold or unworn, often ending up in landfills or incinerated. This results in significant environmental consequences, equivalent to approximately 500 million flights per year for each clothing category.
Among the various ways the report suggests overproduction can be decreased include: increase the use of smart technology tools that can be used for more effective decision-making.
“Inflating costs and complexity are driving the need for greater efficiency in operations,” said the authors of the report. “Technology is critical to unlocking ‘doing more with less’.”
Another suggestion is for companies to use real-time planning that better reflects the actual demands of consumers. This goes hand-in-hand with a shift in fashion trends from fast fashion (that pumps out loads of products hoping something sticks) to something slower and more sustainable.
“Shifting to shorter, more frequent buys more directly linked to demand allows better reaction to trend, management of waste, protection of cash flow, and reduction in markdowns,” the report notes.
