Over the last decade, dozens of brands have made noise about their efforts to use more sustainable materials, reduce packaging and plastics, and run garment “recycling” programs. While these initiatives make for good PR and serve to placate a number of consumers demanding more environmental responsibility from the brands they do business with, they fail to make even a dent in the volume of CO₂ released into the air by retail brands, which is accelerating climate change.

Case in point: In 2010, fast-fashion pioneer H&M launched its Conscious Collection of clothing made from organic cotton, recycled polyester, and other eco-friendly materials. Yet the brand currently produces 3 billion garments annually and was sitting on more than $4 billion in unsold inventory as of 2019. This stockpile of inventory is pretty horrifying when you understand that 84% of the retail industry’s emissions come from the production of new goods. 

Greenwash Away Your Sins

Originally coined in the 1980s, the term “greenwashing” has grown in popularity alongside consumers’ concern for the environment. It refers to brands’ attempts to position and market their production processes and products as sustainable using unsubstantiated claims, lack of transparency, or even outright deception. 

Recent research by the Changing Markets Foundation found that nearly 60% of sustainable fashion claims are misleading and can be categorized as greenwashing. The biggest offender according to the report? H&M, whose Conscious Collection was found to contain a higher percentage of synthetic fibers than its original fast fashion line. 

It’s no longer a secret that the retail sector is one of the most wasteful industries on the planet, with sins these greenwashing brands seek to cover up including:

• Poisonous Production. By conservative estimates, the fashion industry alone is responsible for up to 8% of global annual CO₂e emissions, and, as previously mentioned, 84% of these emissions come from the production of new goods.
• Recycling Roadblocks. Less than 1% of the material used to produce clothing is recycled to produce new clothing, but because so many garments are made from mixed materials, many of which contain plastic, only about 40% of clothing is recyclable, to begin with.
• Languishing Landfills. Today nearly 85% of clothes wind up being incinerated or going to landfills, where they can take 200+ years to decompose and release toxic methane gas and leach chemicals into the soil.

Of course, striving to use natural and eco-friendly materials is an admirable and worthwhile endeavor for brands that take it seriously. But it still doesn’t address the issue at the core of the retail industry’s massive environmental footprint and the most effective sustainability (and responsible) lever available to brands today: reducing overproduction. 

Overcoming Overproduction: An Opportunity for Lasting Change

Despite the ongoing deluge of sustainably-minded claims, brands are failing to curb the 92 million metric tonnes of textile waste produced by the global fashion industry each year. Retail overproduction has reached an astonishing 40% per season, while 60% of products wind up in landfills within one year of being produced — and no amount of recycled polyester in the world can help. 

As Timo Rissanen, course director for fashion and textiles at the University of Technology in Sydney said, "Garment recycling may make the current overproduction seem acceptable, just as plastic recycling makes single-use plastics seem acceptable. Neither are acceptable. We need a drastic reduction in the production of clothing overall: A strategic degrowth of the fashion industry that is commensurate with the planetary emergency we are now in."

The problem? This approach runs contradictory to retail’s deep-seated supply-driven mindset. For decades, retailers controlled demand as consumers looked to their favorite brands to tell them what to buy each season. Producing more products basically meant generating more profits.

But today, brands are no longer in the driver’s seat. Modern consumers have instant access to unlimited options and purchase products that speak to their social influences, personal values, and unique senses of self. Yet, most brands continue to crank out new products in an effort to hit ever-growing revenue targets.

And it’s not just damaging the environment — it’s also hurting their profitability. Markdowns for items that fail to sell at full price now represent 40% of total retail sales, compared to just 4% in 1980. Not to mention the resources brands waste sketching, sampling, and developing products that simply don’t sell. 

It’s time for brands to go beyond generating waste using eco-friendly materials and reduce the volume of waste itself. Taking serious steps to minimize overproduction is the key to satisfying environmentally-conscious consumers, increasing profit margins, and driving sustainable business growth. Let’s explore a few ways leading brands are taking action.

3 Ways to Curb Overproduction

1. Tune into Your Consumers

Given retail’s supply-driven past, decisions about which products to bring to market are often made with little to no consumer input. Former adidas General Manager of Outdoor & Golf and current MakerSights advisor, Tim Janaway, put it best when he said, “It’s not uncommon to have an American working with a German trying to figure out what a young Chinese consumer wants and the final decision being made months later by a 50-year-old buyer.” 

Building assortments based solely on historical sales performance and stakeholders’ gut feelings is the fastest path to producing products that consumers don’t want — products that inevitably wind up in off-retail stores like TJ Maxx or landfills like the one in Chile’s Atacama Desert. That’s why sustainably-conscious brands like Dearfoams are leveraging the latest technology to collect consumer sentiment data to help narrow down silhouettes, prints, patterns, and more before even investing in sample creation.

Not only did this lead to a 50% reduction in proto sampling after just a few months of testing, but it has also enabled Dearfoams to effectively appeal to its younger target consumers. The brand was able to confidently make the decision to stop producing indoor-only slippers in favor of the indoor/outdoor slippers that consumers now prefer.

To hear Dearfoams’ Chief Merchandising Officer Angela Kenney share more about how the brand puts consumers at the heart of assortment decisions, tune into MakerSights’ recent PI Apparel session here.

2. Let Demand be Your Guide

According to McKinsey, the number one priority for modern brands looking to avoid markdowns caused by overproduction and increase full-price sell-through is to take a demand-driven approach to their assortment strategies. The most accurate and efficient way to do this is to harness target consumer feedback alongside historical sales and trend information. 

This involves measuring consumer demand data for each product in an assortment and comparing these numbers against each item’s sales plan percentage. If demand is higher than the plan, you’re at risk of missing out on revenue. If the plan is higher than demand, there’s an opportunity to reallocate budget to higher-performing products. It helps to do this exercise at regular, frequent intervals so teams can adjust investment depths based on up-to-the-minute sales performance and evolving consumer intent. 

Some brands may even choose to explore exclusive, limited-edition collections or pre-order and made-to-order models, similar to Taylor Stitch. Taylor Stitch crowdfunds new products by allowing consumers to purchase them in advance at a discount via its weekly Kickstarter-like program called “The Workshop.” Combined with frequent consumer testing, this initiative has led to a 7.5% decrease in seasonal overproduction, plus a 10% reduction in annual markdowns.

3. Embrace the Circular Economy

While clothing production and sales continue to grow, the average number of times garments are worn continues to decline. In fact, the average US citizen throws away just over 80 lbs of clothing every year. Brands can actively combat this waste by participating in the circular fashion economy, which can be defined as “a regenerative system in which garments are circulated for as long as their maximum value is retained.” 

Estimated to be worth a potential $5 trillion, the circular fashion economy seeks to extend the life of products and minimize overproduction through tactics including:

• Sourcing highly durable yet recycled and biodegradable materials;
• Making products using fabric scraps from discarded garments or secondhand clothing (otherwise known as “upcycling”);
• Establishing programs that repair items for free and buy back unwanted items for resale;
• Engaging consignment and thrifting partners such as Thredup.

One example of a brand that has fully embraced the circular fashion economy is Rothy’s. To date, Rothy’s has transformed more than 125,000,000 single-use plastic bottles into its signature thread. The brand leverages knit-to-shape manufacturing to minimize material waste, and harnesses consumer data to ensure they’re making the right products in the right quantities. Last but not least, all of Rothy’s bags and shoes are machine washable to extend the product lifespan, and the brand has shared that it’s on track to achieve total carbon neutrality and closed-loop production by 2023.

Entering a New Age of Responsibility

Limiting responsibility to focus solely on sustainable materials is failing brands, consumers, and our planet. “Recyclable” products are piling up in landfills and taking decades to decompose. Brands are bleeding money from markdowns on products consumers don’t want and turning to deceptive greenwashing tactics in a last-ditch attempt to drive growth through more production.

Brands must stop trying to generate “acceptable” waste and instead focus on eliminating overproduction altogether. The only way to do this is to listen closely to what consumers want when crafting assortments, more frequently measure consumer demand and adjust investment depths accordingly, and embrace a circular fashion ecosystem focused on extending the life of each and every product.

To learn more about how retail’s obsession with growth is leading to unprecedented environmental and economic waste, check out this recent blog post: When More Isn’t More: The Secret to Shrinking Production to Grow Margins.