Sustainability Responsibilities of a Fashion Retailer

How do you look at the responsibility of retailers, in that sense? In working with suppliers to ensure quality and a sustainable supply chain, in that everyone can function profitably and sustainably?

I think it’s the best approach, for sure. Obviously, it’s an approach where everybody can try to win and keep going, versus an approach where I’m the retailer and I’m expected to win and the supplier, you just have to try and do the best to survive. You have a total value of the industry, which you want to try and maximise between you, the retailer and the supplier. If you work together, it’s where you actually get the best value out of it.

For instance, a factory and a supplier that has a contract for two years with H&M, if they work with this retailer, they will know what kind of pricing that this retailer is looking for. They know the kind of margins that they can get out of the garments. That, combined with a capacity that they have already signed off, they know how much money, what type of margin they can bring in, for the next couple of years and that will give them the ability to make long-term contracts with their fabric supplier, which will also help a lot. It’s definitely a virtuous circle for everybody.

How exactly does that work when you have a partner supplier? I know you mentioned that they share financials, they share forecast, but do they commit to a certain capacity over a certain length of time? What’s the real benefit for the supplier?

There are actually some commitments, in terms of capacity, that is correct. There are even contracts that stipulate capacity commitments, with plus or minus percentages. As a retailer, you will still maintain a little bit of flexibility, in terms of being able to go over or under your capacity forecast, within a certain percentage. Obviously, the advantage for the supplier is evident, because you get a forecast for one, or even two years, of how many pieces and what kind of budget will be allocated to you. For a factory, that is extremely important because, as we said before, you are facing the unknown, in terms of how many orders you are going to receive, from one month to the next. If you can actually plan your production, you are one big step ahead, so it’s a big point in favour of the factory.

Why don’t all retailers approach this model?

It takes a lot of planning. Frankly, it’s also a question of mentality. Some retailers, from their point of view, have a win, win mentality. Some retailers have an I win, you lose mentality, which is actually a bit of an old mentality, but it’s still around. It’s a combination of the two things.

Some retailers are very focused on design, rather than buying. If you are very focused on design, then you want to have this flexibility to be able to change from season to season and whatever you see as the best design, wins. It doesn’t matter who the supplier is. Others take the point of view of, we make agreements with factories and then you can have your design change, within the parameters of what this factory is able to produce. It’s just a matter of what focus you put on your business model.