PRINTABLE VERSION HERE

Fashion is the second most polluting industry worldwide, which is now a top worry for retailers. How come? Consumers want to reduce their environmental impact and ask for "green". Retailers have to follow their customers and avoid becoming irrelevant: 60% of 19-24 years old Chinese women living in Tier 1 cities prefer brands and stores that seek sustainable solutions.

Department stores have several options to engage on sustainability: corporate initiatives, eco-friendly brands, rental clothing, and resale. But how far have we gone? Turning desires into reality, a panorama of the industry’s actions below.

CSR: Clarity of messaging does not replace clarity of purpose

![2020 ARTICLE Sustainability: the options for department stores go for good

Department stores are going environmentally friendly instore and want their customers to know it. Some, including Galeries Lafayette and El Corte Inglés, joined the Fashion Pact during 2019 G7 in France, along with global brands and suppliers. In order to commit on climate, biodiversity and oceans, specific actions and goals were set: eliminate single-use plastic packaging by 2030, support new technologies and new antipollution measures to protect oceans and rivers, reduce greenhouse gas emissions to reach zero net emission by 2050, switch to 100% renewable energy on the production line by 2030, among many other goals. But is that enough for customers?

To remain convincing and credible, department stores are forced to do more than switch off lightbulbs at night.

Two years ago, before the Fashion Pact, IADS member Galeries Lafayette launched its Go For Good initiative, a programme advocating transparency in the fashion chain, from raw material to finished product. An instore corner is dedicated to the operation and features several sustainable brands; its size shows that options on the market are not as wide as one would expect in terms of suitable brands. They also launched a sustainable capsule collection via their private brand, named Fashion Integrity, in 2016, which is supposed to be relaunched at some point.

Last fall, at the same time as the Fashion Pact, IADS member El Corte Inglés launched the Sustainability Movement with the aim of building a healthy, sustainable and prosperous environment. It focuses on three areas: product, planet and progress. El Corte Inglés has even  developed a product guide with sustainability criteria for fashion, home, mass consumption, leisure as well as sports goods and accessories.

More recently, Seattle-based Nordstrom outlined its new environment sustainability goals for 2025. The principles include using sustainably sourced raw materials in half of Nordstrom Made products and ensuring 15% of them are sustainable. The retailer also added a “Sustainable Style” category filter on the navigation panel in many categories on its website and app to facilitate search.

Is this enough to please consumers? Where does sincere commitment end and “green washing” start? Gone are the days when turning off the heating system and switching bulbs was enough to proclaim yourself sustainable and gain the full customer’s trust. Now, general opinion is much more inquisitive and critical. For instance, when Swedish fast fashion giant H&M claims to invest on sustainability, through its eco-friendly Conscious collection, and by collecting customers’ old clothes to recycle them, reactions are mixed. Customers do not forget that the core business of the fast fashion player requires consuming chemicals and water to produce garments.

Resale: a solution during a global economic crisis for customers?

![2020 ARTICLE Sustainability: the options for department stores thredup

Resale has become a trend in retail over the past few years, and it is likely to continue. According to ThredUp’s 2020 Fashion Resale Market and Trend Report, resale is expected to grow 5 times over the next 5 years. Younger customers, especially Gen Zs, are fond of this business, as for them, buying vintage links sustainability with savings.

![2020 ARTICLE Sustainability: the options for department stores GEN Z power

![2020 ARTICLE Sustainability: the options for department stores shifting habits

For now, digitally native platforms are playing their cards right and winning over the market. TheRealReal claims to extend the life cycle of luxury products by reselling them, to the point of having several physical locations across the US. Their growth exceeded by far the growth rate of the retail market in the US for the last 5 years.

Last year, Farfetch launched the pilot Farfetch Second Life, a new service that enables customers to sell their own (and old) bags in exchange for credits to spend on their platform.

This suggests that acquisition of start-ups is, for now, the only way. For instance, H&M has taken a majority stake in re-commerce platform Sellpy; which is now opening its first online store outside Sweden in Germany. The start-up is an all-inclusive platform for resale, handling the entire process from picking up the goods from sellers’ homes, to photography, sales, and shipping.

What about department stores? Neiman Marcus Group is the first major retailer to invest in the resale business, as it has bought a minority stake in Fashionphile, a 20-year-old business specialising in the buying and selling of used luxury handbags, jewellery, and accessories. Fashionphile has set up space inside some Neiman Marcus stores for customers to bring in pre-owned products for sale.

At the beginning of this year, Nordstrom launched a resale shop dubbed 'See You Tomorrow', available online and in the NYC flagship. It features an edited, authenticated assortment of apparel, accessories, jewellery and watches from a variety of brands, pulled from the Nordstrom Quality Center, the facility that receives and processes returned and damaged merchandise from Nordstrom's full-price channels.

Last year, British Selfridges partnered with London-based fashion resale app Depop, offering it a space in the luxury department store’s Designer Studio for three months.

Resale platform ThredUp has launched many shop-in-shops inside Macy’s and JCPenney. “People will always want to buy new stuff,” says ThredUp CEO James Reinhart. “What’s really changing [is] the line between 'it’s brand-new' versus 'it’s new to me'.”

Travel will still be very limited in the next few months, and tourism (a significant portion of the business of some department stores) should remain slow. The resale market, which exploded during the lockdowns, as money was tight for consumers, is a good balance between sustainability and savings. Played well, it could be a way to attract the local clientele that is facing tough times and lead them to spend time in department stores. The only question that has not been solved so far is the business plan: is it profitable? And if not, can it attract enough customers to be considered as a marketing investment?

Rental: Selling things while giving the impression of selling services

![2020 ARTICLE Sustainability: the options for department stores rent

Renting clothes went quiet during the lockdowns, for obvious reasons:

• Hygiene: renting does not feel like the best way to avoid infection
• Lack of events: weddings, proms and galas were cancelled

The timing might not seem optimal for the clothing rental market amid the health crisis as retailers, including department stores and all our members, clean or quarantine all items tried instore (we will issue a special piece about our members’ actions soon). However, as the world slowly exits lockdowns, the fashion rental market is not dead yet. For instance, YCloset in China has seen the numbers of people renting increase since lockdown measures were eased at the end of March. The concept of renting clothes is particularly attractive to millennials, while Gen Z are still a bit reluctant about it.

Launched in 2009, pioneer Rent the Runway has been dubbed “the Netflix of Haute Couture” by the New York Times. The designer clothes renting company has physical locations across the US, and also drop-off boxes in several Nordstrom department stores. The company recently launched RTR Revive, a resale initiative allowing customers to buy items that were taken out of the rental circuit at a low price, a service available through their website and in some Nordstrom Rack locations.

H&M has also entered the rental market with a concept featuring a selection of some dresses, wedding dresses and exotic evening tops that can be rented for one week. All items are made of sustainable materials and come from H&M’s Conscious Exclusive collections.

Other department stores have also dipped a toe in the rental market: Bloomingdale’s launched “My List at Bloomingdale’s” trial last fall, providing more than 100 exclusive pieces from 60 brands for rent, covering all women’s apparel categories. The customer browses the curated assortment and adds pieces to her list, with the option to prioritise favourites. Within three business days, a box is delivered containing four pieces from the list. Once ready for a new batch, pieces are returned and a new selection of four items is sent out immediately with no limit to this cycle.

Last year, France’s Le Bon Marché hosted luxury rental service Armarium to offer customers the opportunity to rent pieces from the Spring/Summer 2019 collections of around 50 labels.

During the spring of 2018, Galeries Lafayette gave space to Panoply, a rental service specialised in luxury and designers’ clothing.

This February, UK-based peer-to-peer wardrobe rental platform Hurr Collective opened a pop-up store in Selfridges.

Not to mention that clothing rental company Le Tote acquired Lord & Taylor department stores last fall from Hudson’s Bay Corp, demonstrating that such a partnership might be of interest for both businesses.

It seems that no department store has a dedicated clothing rental service instore. However, even though current timing might be off, renting clothes could be a good option to sell additional services to a clientele that might. Not otherwise have visited the store. Indeed, it is an opportunity to suggest underwear, accessories, beauty, alterations, and services such as hairdressing or restaurants.

Conclusions

Customers are expecting more from department stores when it comes to sustainability, and retailers are under scrutiny at a moment when financial stability is challenged.

How may we attempt to combine sustainability and profitability:

• Know what your priorities are: if you have old buildings in city centres, maybe it is better to renovate them and make it known (and save money on operations) rather than engaging in ambitious product-oriented operations.
• Know what your customer wants:

+ Better communications: transparency is a must for customers. Be ready to show everything. For example, the financial report of IADS member Falabella includes pages fully describing the actions taken and measuring them.

+ Avoid green washing: it is linked to a better communication. Department stores should take real measures and offer real answers to customers, who are more and more demanding. Do not claim without grounds. The price to pay is too high.

+ Communicating on eco-friendly assortment does not exempt department stores from taking ecological measures at the corporate level.

• Resale: in a post-covid world where many jobs have been lost and the economy has dramatically slowed down, resale should become a significant part of the retail market and might just be the future of fashion. It is a way to attract local customers and generate traffic instore.
• Rental clothing allows for cross-selling including merchandise and services (in beauty for example). Like resale, it could attract the locals and bring traffic instore.

Food for thought to go further (share your thoughts with us at [questions@iads.org](mailto:questions@iads.org))

• Why would a department store go green? Is it for profitability or to bring traffic instore? Is there already a working business model somewhere?
• Is it more rewarding to communicate on a green assortment or on corporate measures? Who do you need to convince? Your customer or your shareholder?
• What should be the place of ‘sustainability’ in the department store organisation? An obsession from the top like at Selfridges? A job per se? A KPI for all team members?

Credits: IADS team (Louise Ancora, Christopher Knee, Selvane Mohandas)