Can data help fashion slash overproduction and reduce emissions?

According to a new analysis of practices, one of the most wasteful consumer sectors can significantly improve its environmental record with relative ease. 

Currently it’s estimated that the fashion industry disposed of between 14 and 15b brand new items of clothing each year. This is largely down to overproduction, with some brands believing that disposing of excess stock is the best way to protect value and company name. 

One highly publicised example of this was Burberry, which burnt £28.6m of items that went unsold in 2019. However, this approach is widespread, and a leading cause for concern about the high environmental impact of the industry overall. 

Most clothes wind up on landfill, with others destined for incinerators. The result being high levels of land and air pollution. Now OC&C Strategy Consultants has produced research in collaboration with trend forecasting company WSGN pointing to how the situation can be improved. 

Essentially, it come down to more effective use of data to predict what consumer demand will look like in the coming year. Buying more in line with this can increase the contribution margin by between one and three points per product category, boost open-to-buy and lower waste.

With this approach, overproduction can fall by between five and 15% depending on category. This would lead to a reduction in clothes making their way to dumping grounds and furnaces, but by reducing production in line with demand, carbon emissions would also come down by an estimated 3%. This is due to less manufacturing and waste. 

There are also significant financial benefits, too. A 2022 case study found that a mass market retailer could improve margins by £1m – £1.5m if more accurate data forecasting was used for the women’s skinny jeans category. A line that has seen overall market decline, between ten and 40,000 less units would have wound up in the queue for disposal. 

‘A top priority for our clients revolves around reducing overproduction and creating a more sustainable business. While business practices can’t always evolve as quickly as brands would like, WGSN helps brands focus on improving their bottom line through AI-driven forecasts that influence accurate and effective product planning,’ said Francesca Muston, VP Fashion of WGSN.

We speak and work with fashion brands that are under significant pressure as the complexity of business models continues to increase, cost inflation rises, and there is a need to operate more sustainably. Evolving planning and buying to be more demand-led is a practical first step, enabling significant margins to be gained, and unnecessary waste and CO2 emissions to be reduced,’ added Mairi Fairley at OC&C Strategy Consultants. 

In addition the two main takeaways, a number of ways in which fashion was being disrupted were also identified. These include more complex trends requiring more details analysis, greater efficiency from technology, shorter supply chains leading to more flexibility in orders, real time planning possibilities, growth in circular, rental an resale markets. 

Image: Hannah Morgan