As part of their Summer StartUp Tour (SSUP!), three INSEAD MBA students of the Tech Couture team share their findings of how technology is making fashion sustainable. The Hoffmann Institute is collaborating with the SSUP! Team, allowing selected teams to explore the global start-up ecosystem across industries.
Fast fashion, despite its overproduction and waste, opaque supply chains, and exploitation of human rights and environmental laws, was leading the fashion industry in the last two decades. However, things have changed as consumers realise the huge environmental cost of the industry. According to Business Insider, the fashion industry consumes 1/10th of all of the water used industrially and comprises 10% of total global carbon emissions. As a result, the industry is now witnessing the growth of sustainable fashion and conscious consumers, who vote with their wallets for brands and retailers that share their values and promote greater ecological integrity, inclusion and social justice. The pandemic and the subsequent increasing focus on wellness and the environment has further accelerated this shift.
With that in mind, Tech Couture has met with innovative companies that value sustainability at their core. For example, the team caught up with the New-York based Queen of Raw, which offers high-quality, sustainable textiles, a so-called ‘deadstock,’ at a discount. Using integration to the brands’ inventory systems, Queen of Raw can identify companies’ unused fabrics and offer them at its marketplace so that other brands can use such materials for clothes production.
Paris-based Weturn also deals in textiles and recycles unsold textiles from fashion houses and manufactures them into new quality yarns and fabrics. Customers can choose either to use the recycled thread or to sell it, ensuring transparency on the source of the materials.
London startup Pangaia, a trendy lifestyle clothing brand that positions itself as a ‘materials science company’ and sells its clothes via TikTok, among other channels, sees the materials from which it produces its clothes as a differentiating factor. Pangaia develops or buys alternative materials that, as the company puts it, “consider the delicate balance between sustainability, functionality and purpose.” That resonates with its customers, among which many are influencers.
One of the essential decisions that budding brands need to make is how and where to produce their designed apparel, especially when they want to test market demand, and prevent overproduction. A solution to this problem can be efficient on-demand production offered by SLEEVE. The company has an on-demand production management platform and product configuration software that works without minimum order quantities. It allows brands to order only the products they need when they are required.
Returns are one of the pain points of online fashion retailers and can seriously impact profitability. One of the reasons customers return apparel bought online is due to incorrect sizing or mismatched style. Many people order the same product in different sizes to ensure the right fit, thus generating a return flow. Tech Couture team saw that the ‘fitting problem’ was a common one to be tackled by the FashionTech start-ups, but their approaches varied.
Paris-based Fitle has developed software that leverages Artificial Intelligence to predict customers’ sizes for every apparel based on the customers’ height and weight. The technology can be incorporated into brands or retailers’ online shops and can advise shoppers the right size at the point of sales. Sydney-based Mys Tyler took a different approach and created an app where women can get inspiration from other women with similar body types who love to share information about their outfits. This way, a user can shop and select the correct size.
Another possible solution comes from London-based Sozie, which offers brands and retailers the option to integrate user-generated styled photos of product try-ons to their e-commerce sites to show their shoppers how fashion looks on real people like them.
Another area of innovation in the fashion value chain is the introduction of reusable packaging. By replacing single-use cardboard boxes with waste-free packaging, companies can build closed-loop logistics systems that contribute to their sustainability goals.
Returnity, which is based in Santa Cruz, California, provides such a solution to customers; however, the company focuses on cases where customers already have a platform for circularity in their supply chains, including customers with high return rates (e.g., rental businesses), or with shipments between locations where reverse flows can be controlled, to ensure that the solution is economically viable. Although it will take time for reusable packaging to become mainstream and profitable for all use cases in the fashion industry, the change towards more environmentally friendly solutions in fashion distribution has begun.
In addition, new technologies are disrupting traditional retail and creating new business models for all players in the industry. If we look at the innovations in the value chain of fashion, we see new technologies emerging and being implemented from the beginning of the value chain, from garment design, material production and sourcing, through to garments production, sales and distribution and even until their resale and end-of-life. Tech Couture met with the companies that found business opportunities across the whole fashion value chain and implemented digital technologies to optimize it.
Amongst others, Yoona is a B2B AI-based analytical tool that aims to shorten the design process to a few simple clicks. It makes the fashion design process more effective by removing the repetitive tasks that could be automated, especially when it comes to standardized designs that are constantly reused in fast fashion. The software can be fed with any possible visual and text data like design trends, drawings, photos, and inputs from social media and will generate ready-to-produce garments and accessories in just minutes. By implementing such software, fashion brands can free up designers to focus on more creative and value-adding work, ensuring that the AI-designed clothes will still be meeting their consumers’ tastes.
We next spoke with FashionTech start-ups that enable companies to do rentals and resale via their own online shops. According to an Online Clothing Rental Market report, the online clothing rental market size is estimated to reach $1,856 million by 2023, growing at a CAGR of 10.6% from 2017 to 2023. The second-hand market is projected to double in the next five years, reaching $77 billion in 2025, according to Thread-up.
Paris-based Lizee is a software as a service (SaaS) platform that enables brands and retailers to manage their rental offerings. According to the company, studies have shown that >90% of brands want access to the circular economy but don’t know how to do it because of differing mindsets, little or no experience with circular business models, and frictions with handling operations aspects.
Aya Murr and Apeksha Gupta, Inna Kostyuk
In addressing resale, we reached out to London-based Reflaunt, which provides brands with white-label technology and capabilities. Amongst core services, Reflaunt manages end-to-end logistics and distribution to over 25 global second-hand marketplaces while ensuring service quality, preserving the brand’s image, and reducing fraud risks.
The paradigm is shifting in the fashion industry. With the rise of the rental and resale marketplaces and more consumers enjoying sustainable fashion, many brands and retailers realise they do not want to be solely observers and instead want to participate. With the propositions of companies like Lizee and Reflaunt that commit to a standard of quality and experience for brands’ customers, rental and resale business models become more accessible.
Throughout this tour, Tech Couture aimed to answer the question: where is the fashion industry headed and who are the key players pioneering these changes? All in all, the team met with over 24 start-ups and experts with exciting solutions that address all challenges of the fashion industry, including its environmental footprint, supply chain inefficiencies and lack of customer centricity. The direction is clear: the industry is increasingly moving towards sustainability, inclusiveness, digitalization and customer knowledge world and that change is mostly being powered by innovative start-ups that are combining, for the first time in the industry, business and positive impact.
By the Tech Couture team: Inna Kostyuk, Aya Murr and Apeksha Gupta and the Hoffmann Institute
For the team’s additional findings about the tour, read their second story about key trends in the fashion industry.