The State of Fashion & Textiles in 2022 – Décor and retraced Q & A
2022 will be a big year for fashion, the topics of sustainability, and textile traceability.
- Consumers are curious and critical about how their favorite brands treat workers and the environment.
- Fashion and textile companies see a tremendous value in becoming increasingly sustainable and transparent.
- Companies are also under more regulatory pressure to prove their compliance efforts.
These challenges bring forth opportunities to reassess and rethink the way the business of fashion production is done. The Décor & retraced partnership is intentionally designed to explore these innovative possibilities.
Launched in December 2021, the partnership aims to build enterprise-ready, chain-of-custody traceability solutions for cotton and other materials while promoting multi-tier collaboration in the supply chain. The two companies will be combining their textile production expertise, strong supplier networks partnerships, and digital platform capabilities to help deliver traceability, supply chain transparency, and compliance management at scale.
To get more insights on the partnership, we sat down with the team driving the project forward to ask 8 Questions about the state of fashion in 2022, and what the Décor x retraced partnership will mean for the industry. From the Décor side, we have Michael Cai, Global Director of Operations & Supply Chain for Décor, and Vince Beaman, who leads the Sourcing and Supply Chain team within Décor’s North American offices. From retraced we have Philipp Mayer, Chief Product Officer and co-founder of retraced.
2022 - Challenges and opportunities
1. What do you think the impact or the legacy of the continued Corona Pandemic will be on the fashion and textile industry for 2022? Are we still in the “wait and see” mode? Are we in recovery mode? or are we on the way out of this, and can we expect an uptick in activity for the industry?
Vince from DÉCOR: The global pandemic forced the industry to reassess how they manage their supply chains. Travel is limited, city and country lock-downs shuttered doors, and global logistics have become a bottleneck; but the consumer’s expectations have continued to rise. Whenever there is this kind of disruption, it takes time for industry leaders to make the right adjustments. We are in that recovery mode and a period of innovation. While we work on fixing the current issues, we are simultaneously working on new processes that will impact the future. It will be the evolution of the industry. New ways of working, selling, and distribution - and at the foundation is a stronger, healthier, and more transparent supply chain.
Philipp from RETRACED: From the retail perspective a lot has changed for eCommerce and consumer buying behavior has shifted considerably. Even with stores open again, people are still showing a preference for online shopping. Retailers will need to refocus their strategies. From the supply chain perspective, A lot of brands and retailers want to bring their supply chains ‘closer’ and have more transparency about all production steps. Companies see the potential to consolidate supply chains, cut down on the number of indirect suppliers in T2 and T3, and bring the production processes physically closer to the main area of business. This enables them to mitigate against supply chain risks and disruptions (like the recent shipping container crisis) and address rising costs. In general, fashion and textile supply chains need to become more flexible. It's hard to know what will happen during uncertain times, but having the ability to adapt is critical.
"One main challenge for large companies will be to prepare for supply chain due diligence regulations that will come." - Philipp Mayer, retraced
2. What will be the biggest challenges for brands and retailers in 2022?
Vince from DÉCOR: For the next few years, the largest priority across the industry will be how brands and retailers are improving overall supply chain management and removing or mitigating risk – not just in regards to inventory, but socially and environmentally as well. There needs to be a paradigm shift in how businesses approach their entire value chain, because the last few years have exposed stress points for everyone. The consumer has changed, expectations have changed, and technology has changed - the supply chain needs to change as well. However, the apparel and textile industry is highly globalized and complex, and individual companies won’t be able to do it alone. While individual commitment is a great first step, it will require end-to-end buy-in and effort across all value chain stakeholders – retailers, brands, suppliers, facilities, NGOs and industry associations – to make a real difference. This is why Décor has sought out like-minded and innovative leaders, like retraced; to develop true partnerships and strategic collaborations to enhance factory oversight, improve working conditions, provide greater transparency, and deliver sustainable, systematic supply chain improvements. There is still a lot of work to be done, but it is a very exciting time to be in the business!
Philipp from RETRACED: One main challenge for large companies will be to prepare for supply chain due diligence regulations that will come. In Germany, companies need to be ready for the LkSG which kicks in next year. In the rest of the western world (EU, US, UK) companies will need to be prepared for similar nationwide and region-wide compliance regulations that are already being discussed. Unfortunately, companies don’t have a lot of visibility over their supply chain, nor do they have insights into who makes their materials and their provenance. To address this, companies will need to get a better overview and ensure compliance through verified proofs and complex traceability. No one has completely solved this (but we are on it). Next to that, the lack of truly verifiable organic cotton will be a massive issue for the industry. The NYT article “That Organic Cotton T-Shirt May Not Be as Organic as You Think” helps spell it out clearly – a lot of cotton is being sold as organic when in fact it is not. Brands will need to find better ways to verify these claims.
3. What are the biggest opportunities for brands and retailers in 2022in your opinion?
Michael from DÉCOR: Innovation. With all the challenges the world is facing, now is the perfect time to innovate. In fact, we could see the end of some businesses who don’t take this moment to innovate. There are too many disruptions, in all facets of our industry, and no shortage of opportunities to change how you approach your business. Whether it’s in the supply chain, distribution tactics, inventory management, or sales channels - there really is no excuse not to innovate right now. We have identified our partnership with retraced as one of our top strategic priorities in helping push our supply chain into the future.
Philipp from RETRACED: Sustainability as a value-driven strategy will become more and more relevant. All the big conventional brands are jumping in and launching “sustainable collections”. There is still a lot of potential for brands to establish themselves as thought leaders and innovators. Given the numbers, you’d think that fashion is a more than saturated market. Out of the 150 billion products produced a year, 50 billion are going straight to landfills, having never been worn. But brands are still popping up and having success - especially those brands that take sustainability seriously, try to do all the right things the right way, and then effectively communicate their actions and position themselves as leaders, which helps win consumer trust. Established conventional brands can take this opportunity to rethink the way they operate to ensure better sustainability and making that a core company value driver. Then back that up with supply chain transparency.
4. What factors should we be on the lookout for in regards to supply chain stakeholders, and their involvement with regards to the mentioned industry changes?
Vince from DÉCOR: Meeting the consumer’s higher expectations, even during supply chain disruption, will be the driving force for the next 1-2 years. Stakeholders will be asking a lot of questions as they examine their best practices - likely taking a two-pronged approach to addressing challenges. The first will be all about mitigation – how do they minimize current disruptions and get products to stores and to consumers with as little delay as possible? The second will look further out and focus on strategy and innovation - how and why do current operating models exist? Are those models still relevant in a post-pandemic world, or do new mitigation models make more sense for the future? There will be a global exploration into the health and agility of the supply chain, which will lead to further global supply chain transparency.
Philipp from RETRACED: When we talk about sustainability, we must talk about the supply chains. 80 percent of the total CO2 emissions lies within the supply chains, so supplier stakeholders need to be considered when thinking about a viable sustainability strategy. The same goes for innovative materials. Brands and designers need to make use of them, but suppliers are the ones who usually invent these materials and make their adoption scalable. Suppliers tend to put their resources where they see financial opportunity, therefore brands will need to show that extra commitments will be made, and higher prices will be paid for such sustainable materials. Companies will also need to empower more stakeholders that are part of the value creation. Take the organic cotton example: while premiums are being paid for the organic cotton, in many instances the farmers that grow organic cotton are still not being fairly compensated. Usually, it’s just the intermediaries that earn the extra money. Brands need to make sure that the right people in the supply chain are getting fair compensation for the higher valued and more sustainable practices. To address these issues we need to get everyone sitting at the same table, working collaboratively.
Our partnership: Traceability & supply chain data management
5. What’s the most exciting thing for you, about the Decor and retraced partnership?
Michael from DÉCOR: This partnership, and retraced’s innovative platform, propels our supply chain management into the future. We will be able to visually see our entire supply chain map, view critical documents and certifications, and provide instantaneous traceability details from one centralized location. The platform also provides us the ability to start small and build big. While our initial focus will be cotton-based materials from China, the system will allow us to quickly expand to all raw materials from every country we source from and produce in. It’s a versatile platform that can be just as agile and flexible as our business is – which is very exciting for us!
Philipp from RETRACED: Usually we work primarily with brands that want to use our sustainability and compliance management platform. However, our platform works best when we have engaged suppliers onboard when we have collaboration. And many of those times, suppliers have to be persuaded by their brand clients to join. It’s different with Décor. we’ve gained a proactive partner that is entrenched in the supply chain and wants to do things the right way, and push for innovation in the industry. Décor joined without a mandate from one of their clients – they honestly believe in the same mission and potential for this partnership that we do. Moreover, we are building traceability and sustainability from within. This is what excites me most. We are working with a player that has all the knowledge and expertise about the processes and how everything works in the supply chain. Décor has great relationships and visibility upstream, which will enable us to get the necessary data needed, directly from the source where all the processes happen - this is normally a huge challenge to execute. Overall, it’s a strong partnership for the industry. Retraced brings the technical knowledge and digital platform capabilities, which couple well with the deep industry expertise of over 30 years from Décor and their partners.
"Access to information is at an all-time high, and companies that do not have a firm grasp on their supply chain, or make questionable supply chain decisions, will be held accountable by the consumer – whether that be through social media conversation or taking their consumer dollars elsewhere." - Vince Beaman, Décor
6. Why is traceability critical for the fashion and textile industry? Is traceability even really necessary, in your opinion?
Vince from DÉCOR: Supply chain traceability is absolutely critical in today’s world. Besides the numerous different regulatory requirements around the globe, the end consumer has very high demands of where a product is made, how it is made, and what it is made from. They want to trust the businesses they are buying from. End-to-end responsible sourcing practices and transparent supply chains are not trends; they are expectations that are here to stay. Access to information is at an all-time high, and companies that do not have a firm grasp on their supply chain, or make questionable supply chain decisions, will be held accountable by the consumer – whether that be through social media conversation or taking their consumer dollars elsewhere.
Philipp from RETRACED: Traceability is tough, especially if you want to do it right. It requires changing processes in the supply chain. But traceability is critical. Ultimately there cannot be sustainability without traceability. For example: As a brand, you’d like to make sure that the chemicals being used in your dying processes are sustainable. But how do you do this if you don’t even know who produces your fabric, and who is does the dyeing of that fabric? How will you find out what dyeing agents are being used? It’s one thing to know your direct suppliers, and to make sure that social considerations are in place at T1 level. But upstream in the supply chain, there are a lot of environmental factors to also consider, such as the usage of wastewater from the dyeing process. If you want to take action and be more sustainable in your operations, you have to know who the suppliers are -- only then you can make a change. In the end, it’s a process, and we anticipate that this process will get better and better in time. Traceability is a deeply collaborative effort. You need to identify your supply chain stakeholders, get buy-in, and, ultimately, get started with the high-level transparency of the data, which can enable you to take actions. Ultimately, we want to provide a platform where you can trace down every single purchase order. So that you know where every single product that you produce comes from. But we also know how much effort this is to do. It’s not just about having the technical abilities, it’s also about getting the buy-in and effort from stakeholders at the different supplier tiers. Traceability is a deeply collaborative effort. It’s not always perfect in the beginning. But, by laying the groundwork and getting engaged with your supply chain, it’s a great start, and it’s so important to start acting now.
"The more we can model this behavior and prove that robust traceability can be done efficiently and effectively, the more we can influence our industry partners and stakeholders to get involved." - Michael Cai, Décor
7. How do we get more key supply chain stakeholders involved with the collection and validation of important data in the supply chain?
Michael from DÉCOR: Décor is the central hub of our supply chain - we source, purchase, ship, and produce materials all over the world. Because of our purchasing position, and our strategic relationships, we feel it’s our job within the supply chain to lead by example. Our hope is that by taking the necessary steps to bring greater traceability to our value chain, we can encourage and bring our supply chain partners along on the journey - everyone from raw material suppliers, brands and retailers, as well as 3rd party authenticators. The more we can model this behavior and prove that robust traceability can be done efficiently and effectively, the more we can influence our industry partners and stakeholders to get involved.
Philipp from RETRACED: The ‘easy’ answer is regulation. Various standards and laws can force stakeholders to record and register their actions with regard to sustainability, and to monitor the actions of their suppliers. But ultimately it should rather be about the empowerment of supply chain participants. Regulatory efforts need to be centered around including suppliers and brands in the same conversation, encouraging collaboration, and sharing knowledge about how certain changes can help make the industry better as a whole. Education is key here -we need to spread awareness about certain topics so that stakeholders at all tiers can get a better understanding of the impact. Finally, I believe it’s also all about trust and building long-term relationships with suppliers, instead of changing suppliers every season. Having a relationship that promotes collaboration and awareness will inevitably lead to more sharing of the crucial information that can help companies lead the way in sustainability.
Michael from DÉCOR: 2022 is going to be a year of trial and error, but also the year of investment and digitization. Many companies are focusing on traceability, but if you are just starting it's overwhelming to know where or how to begin. For those that already have a system in place, it may be overwhelming to find ways to streamline. As real-time-data becomes more important, data management will become a priority and digital platforms like Retraced will be the solution. This shift will take time; there are a lot of factors – financial investments, new system setups, internal process adjustments, documentation needs, supply chain buy-in, third party validation – but at the end of 2022, we hope that the industry will have seen the value in digital solutions and will have taken the steps necessary to move traceability in this direction
Philipp from RETRACED: As mentioned earlier, this will be a process. By the end of 2022, our partnership with Décor will have companies in a great place to collect the data that they need, and brands will likely be tracing their first orders. Step by step, companies will be collecting their supply chain data digitally, and they will be recording and reviewing all the internal processes in their supply chain, as well. This will give companies the right overview of the proof points to know what they produce, where they produce, how, and with whom. As the start of 2023, robust and advanced traceability will start to take shape as a viable and necessary strategy for successful sustainability and compliance management.
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