The High Cost of Low Transparency
In recent years, the fashion business has made major strides in working to shift its image from one of an unsophisticated, non-tech, ‘rag’ business to a more forward-thinking, socially responsible and tech-savvy industry. Amidst the challenges posed by the tectonic shifts of rising e-commerce and omnichannel shopping, declining foot traffic and increasing mass personalization — and in large part because of them — businesses both small and large are reworking their supply chains to become more agile and transparent, within and without.
There are other good reasons for doing this. In recent years, calls for the apparel industry to become more environmentally and socially responsible have forced businesses to better account for the work conditions of their factory partners and the environmental regulations that they adhere to. Many brands, ranging from H&M to Nike, now issue in-depth Corporate Social Responsibility (CSR) reports and also publish complete lists of the factories with which they partner.
Lately, some of the newer direct-to-consumer brands entering the spotlight have put a twist on this transparency model, standing out for the way they have opened it up to the customer in an easily accessible format, and made that a hallmark of their brands. Because let’s face it, it’s doubtful that many customers, if any, take time to search out or read CSR reports.
This new generation of company is giving the consumer a look into its supply chain that is unprecedented when it comes to putting that information front and center. Some of these companies offer views not only into the working conditions of factories and the environmental impact of inputs, but also a look into sales margins, allowing the customer to see just how much value they are receiving for their money, and where the costs originate.
Consider Everlane, a pioneer in what it calls “radical transparency,” with a mission to know its factories, know its costs and always ask why — and to pass that information to its customers. Along with the more typical product specifications, rich imagery and customer reviews, Everlane reveals the city in which the product was made, how Everlane came to find the factory (although it does not reveal the factory name), what the personality of the owner is like, where the fabrics used in the garments are sourced, and how. Most astounding is the fact that Everlane also provides transparent pricing right there on the web page as part of its product info, revealing its own true costs in materials, hardware, labor, duties and transportation, its price at retail, and how this compares to the price that would be charged by a traditional retailer. (Its Drape Trench Coat, for example, costs Everlane $67 to produce — that’s $35.22 in materials, $3.84 in hardware, $20.70 in labor, $5.32 in duties and $1.75 in transport. It retails for $138, compared to $335 at traditional retail, according to its website.)
Other companies, such as Cuyana, DSTLD and Ayr, to name a few, are playing in this space — offering luxury product at a fraction of the price by cutting out the middleman, and getting this message of savings and social responsible operations clearly out to the consumer. It’s a message that resonates well with its audience — Gen Z and Millennials in particular, who have grown up with technology and with expectations of transparency, and who are increasingly gravitating toward this type of business model.
One thing is sure no matter what. However and whether or not you choose to demonstrate transparency to your customer, your supply chain requires it for your business to run efficiently and successfully. The demands of 24/7 shopping, the competition from Amazon, the rising number of smartphones globally, the incredible amounts of data that are being collected and need to be smartly analyzed, the constantly shifting global trade rules and regulations — all of this requires seamless, automated and connected systems that give you visibility into inventory from raw materials to finished product and into your enterprise from design to retail, and one version of data throughout.
Very few companies have come close to achieving this level of connectedness, but the industry is moving a little bit closer every day.
You might say that’s radical, but today, the opposite of transparency isn’t opacity, it’s failure.
Jordan K. Speer is editor in chief of Apparel.
She can be reached at [email protected]