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Zalando

Leading the way towards more sustainable fashion

 

Every other Wednesday, h/commerce provides in-depth analysis of the most impactful trends reshaping retail.

©Zalando

While the pandemic dominated the majority of 2020, it is also the year where we have seen first-hand the humanity’s impact on the environment. With the example of the peaks of the Himalayas visible from parts of India for the first time in decades as pollution has dropped amid the lockdown – staying indoors revealed the benefits of a slowed-down life for the planet.

This new lifestyle and lockdown measures made us reflect on our lives, and most and foremost, its vulnerability. As stated by Forrester researchers: The pandemic has let us experience the very real global disruption brought by a seemingly science-fiction-like natural event.

Facing this sudden vulnerability, for many consumers the pandemic outbreak is a wake-up call that will only accelerate the shift in their shopping habits. As revealed by the study made by Havas Group: Beyond Covid part 2:

71% of prosumers and 70% of mainstream consumers count changing their purchasing habits turning more towards local and sustainable brands in the future.

What is more, 73% of prosumers and 60% of mainstream consumers declare to stop buying brands that ignore the challenges our world is facing.

Sustainability matters, but does it sell?

With this major consumer shift, time for the reflection as well as the people putting some money aside in times of crisis, the fashion world has been the sector that has struggles the most since the beginning of the pandemic. Recent McKinsey calculations, based on the changes in market capitalizations over time in our index on global fashion, suggest that the industry’s economic profit will fall by 93 percent in 2020 after rising 4 percent in 2019.

Credits: McKinsey State of Fashion

With this devastating impact on the sector and jobs, there is one fashion retailer though, that seems to avoid any harm. The German retailer Zalando has shown a growth rate of 29,9% in November, which is a result significantly above the overall fashion market.

This growth is without any doubt strongly driven by the fact that the consumers were forced to shift from offline to online shopping. Yet, Zalando has another competitive advantage – as the company keeps sustainability at the top of its agenda.

While many fashion giants are behind the sustainability front, constantly searching for profits or doing little to practice what they preach in their social responsibility strategies, Zalando understood that being a part of a problem (fashion sector is one of the most polluting ones) may have the positive outcome, as the company can position itself as a world fashion leader in providing concrete solutions to the problem.

The first-mover advantage and strong sustainable brand positioning

Since its creation in 2008, Zalando has made significant progress in the online fashion world to eventually become Europe’s number one fashion retailer. What was initially an online destination for purchasing shoes, has become Europe’s leading online platform for fashion and lifestyle, committed helping over 29 million active customers to make choices that feel good. While many other brands and retailers took bigger and smaller actions and have also set sustainability goals, Zalando’s sustainability plan is tangible and already filled with achievements.

The company positions itself as a credible and committed player in sustainable fashion industry. The word credible is a key here, as Zalando acknowledges that the fashion industry is a huge contributor to environmental issues, but the company also strives to be the front player providing concrete solutions.

To do so, Zalando has set science-based sustainability targets expressed in a global plan “do.MORE” announced in 2019. The commitment has three focus areas that guide the company to achieve its vision to become a leading sustainable fashion platform with a net-positive impact for people and the planet.

The plan is followed by concrete achievements and commitments. Zalando is the first retailer to use the SAC’s version of the Higg Brand & Retail Module to make sustainability assessments mandatory for brands selling on its platform. Those brands that will not measure up to Zalando’s ethical standards will disappear from the platform by 2023.

“As Europe’s leading online platform for fashion and lifestyle, we want to raise the bar, act first and bring our partners on the journey to address today’s most important issues: climate change, use of resources and worker rights,” said Kate Heiny, director of sustainability at Zalando.

The goal of putting such pressure on brands is to create a broader sustainable assortment to choose from, and the results are there: over one year, the sustainability assortment has grown from 27 000 items in 2019 to more than 60 000 today. Zalando’s private label was no exception and has been redesigned in order to fully reflect the company’s commitment and goals.

As a part of its vision, the company embraces also the circular economy and surfs on the second-hand vague. In September 2020, Zalando has announced the launch of a new resale category allowing its customers to buy and trade pre-owned clothing directly on the platform.

Another interesting point of Zalando’s plan is reducing the return rates, which we know, have a catastrophic impact on the environment (and are very costly for retailers). According to the company, about 30% of returns occur due to sizing issues. At Zalando’s Berlin headquarters, engineers are experimenting with 3D scanning and machine learning in an effort to slash the number of size-related returns. A solution that is good for business, consumers and the planet.

For 2020 winter season, Zalando has launched a new capsule collection called “Small steps. Big Impact. By Zalando” created in collaboration with designers and the most innovative minds from the fashion industry. The contributors were chosen from Scandinavia, Germany, the UK and Italy, on the base of their values. An initiative that aims to educate and inspire consumers to shop consciously without compromising on style.

Why is it interesting?

According to Zalando, the searches for sustainable products increased by 66% on the platform. The company’s positioning is simply meeting a growing interest. At the same time, given Zalando’s size and scope, it can influence positive change, guide consumers to make more sustainable decisions, without compromising on style… and the company’s profitability.

While “do.MORE” strategy is driven by Zalando’s corporate social responsibility, the first-mover advantage has given them a business opportunities. As stated by the company’s CEO Rubin Ritter:

We see a clear link between acting sustainably and continued commercial success. (…) Only those who incorporate sustainability into their business strategy will stay relevant for their customers and we believe that it will be a competitive advantage in the future.

Obviously, Zalando was not the first to see that the customers demand business practices that are both ethical and sustainable, yet the company is the first to have such dedicated emphasis, strong positioning, clear scientific goals as well as concrete actions behind – all of them driving a sizeable growth.

According to IBM study, amongst the shoppers indicating that sustainability is very important to them, over 70% would pay a premium of 35%, on average, for brands that are sustainable and environmentally responsible.

An increasing number of customers see beyond the pure transactional interactions. They still want to consume and buy things, but at the same time, to feel like they are consuming in a “good way”. The beliefs drive sales and Zalando is leading the way towards the post-pandemic shopper reality, where sustainability is a business necessity, not just a differentiator.

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New Business:

Maxime Sabot maxime.sabot@havas.com

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