Marketing a Sustainable Clothing Industry

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The globalized clothing industry is producing and selling more than never before. However, its success is causing environmental damage. If the current state of the clothing and apparel industry is not sustainable, how can marketers manage to balance both sustainability and profitability in a global environment that is tempting us to sell more and more?

Clothing consumption is booming. New, hot, and affordable trends attract more consumers to stores both, online and physical, and as demand increases, production also increases. According to The Economist (April 8th, 2017) only between 2000 and2014 worldwide clothing production has doubled.

Main factors that have helped this growth are globalized brands that have expanded their market shares to many more countries, and cheaper and more efficient supply chains. Buyers around the globe are getting more options faster and cheaper than ever. Long gone are those days when fashionistas around the globe had to travel to the U.S or Europe to shop for new trends. Now, collections are released in many more countries at the same time and at affordable prices that suits budgets in both developed and developing worlds. This is a very inspiring and positive landscape for many players, those that love being trendy for less money, businesses that are expanding to both rich and poor countries, and fashion marketers that want to sell their products faster.

Yet, a trendy and ever changing wardrobe has a tremendous environmental impact. Let’s take only water consumption. According to ABC News (Sept 13, 2016) the clothing industry is the second-most polluter of clean water. It takes 700 gallons of water to produce enough cotton to make one t-shirt, this can be the same as the total of one person water consumption in one month. In terms of greenhouse gases, according to the consultancy McKinsey, the process of making 1kg of fabric generates an average of 23kg of greenhouse gases. Then these garments end up very quickly being discarded, and being very difficult to recycle or reuse they commonly end up at landfills.

The situations is critical not only because of the harm that the industry is currently causing, but also because looking into the future with clothing shoppers increasing consumption, this harm will most likely increase in the coming years, unless the whole industry changes. This is where marketers have a huge opportunity if they want to move towards promoting new alternatives that causes less harm to the environment.

Some successfull environmentally responsible brands have proved that demand for more eco-friendly products is slowly gaining momentum and some consumers are already moving towards a more conscious shopping or towards investing in higher quality products that last longer.

Therefore, marketers at many other fashion brands and start-ups have a real opportunity to make positive impact. Research and development into new materials that cause less environmental harm, innovations in terms of water and land use, and less CO2 emissions will be the key for a new clothing and apparel marketing to be successful. Furthermore, there will be a tremendous space to grown for more responsible brands in the developing world. Unmeasured consumption behavior is more deeply rooted in the consumers mind in countries like the United States, in some other developing countries this behavior is still new and thus has not become a habit yet.

Globalization helped promoting a growing apparel industry even when it is not sustainable. Globalization then can also help marketers catch the eye of consumers towards more responsible brands. Social media and e-commerce are powerful tools to promote those brands that can innovate and become more environmentally friendly, last longer and offer attractive designs.

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Walmart Continues as World’s Largest Retailer

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“Save Money. Live Better” appears to resonate with consumers worldwide. Since Walmart opened in the United States in 1962, it has grown to become the largest retailer in the world. In the 1990’s Walmart was the top retailer in America and decided to take the company international. Walmart has retail locations in all 50 states and in 29 other countries worldwide.

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Using their size, scale and operational efficiency, Walmart is able to deliver products to consumers at low prices around the world. The bigger they get, the more efficient they could become – driving the prices down again. It is nearly impossible for smaller retailers to compete with a company like this on the global market. Local retailers are able to win customer loyalty with other tools, such as “Made in America” or “Shop Small Businesses.” Walmart leads on price and differentiates on access and assortment.

Walmart is spending large portions of its budget on digital operations and closed hundreds of Walmart Express stores in 2016 to focus “on existing Supercenters, its growing Neighborhood Market grocery chain and its e-commerce business,” according to a statement.

According to the 10-k, the Walmart International “segment net sales for fiscal 2017 , 2016 and 2015 , were $116.1 billion , $123.4 billion and $136.2 billion , respectively, which have been impacted by unfavorable currency exchange rate fluctuations.”

In other countries, Walmart operates under banner companies or the Walmart name. Massmart operates in South Africa and 12 other sub-Saharan countries. Asda in the United Kingdom was acquired by Walmart in 1999 and is now the second largest supermarket in Britain. However, in countries like China, Walmart operates as Walmart China.

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In addition to international brick and mortar stores, Walmart operates ecommerce websites in 10 countries, including the United States, Argentina, Brazil, Canada, Chile, China, Japan, Mexico, South Africa, and the United Kingdom.

During a recent investors meeting, Walmart shared their plans to focus on retail locations and e-commerce in the United States and international. They also want a sharpened focus on Walmart China.

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Duty Free Retailers Targeting Travelers

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As consumers become increasingly busy and have shorter attention spans, marketers are trying harder to capture their attention even if just for a few seconds. Reaching consumers with the right message at the right moment can be quite challenging. So where can you find a captive audience? One place marketers are finding success is duty-free shopping for international travelers.

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Duty-free products are items sold without local import tax. Travelers can purchase duty-free goods inside international airport terminals, ferry stations, cruise ports and border stops.

Potentially long TSA lines and preparing for the unexpected leads travelers to arrive at the airport 2-3 hours before their flight is scheduled to depart. If you are lucky TSA is quick and painless and your gate is the first one after security. But not what can you do in the terminal for the remaining 1-2 hours before boarding? Eat and shop. With limited options, travelers usually sit down for a drink or a meal. Others choose to browse the gift shops for a snack and a magazine. With the increase of duty-free shopping in international airports, consumers have another browsing option – and hopefully a way to ditch the extra currency they have before heading home.

According to SBWire Market Research, “Duty-free retail is a unique selling channel to cater the international tourists and travelers..these passengers prefer buying expensive items such as cosmetics, fragrances, wines and liquor, and fashion accessories available at much lower prices due to exemption of excise duties at airports.” In this same article, we found that “airlines and airports are emphasizing on increasing revenues through the sale of amenities on-board and in airport facilities.”

The duty free retailing market has seen growth in recent years; however, just like other industries it was impacted by the recession and the European crisis. Thanks to an increase in low-cost airlines, more international travel paints a bright future for of duty-free retailing. Consumers enjoy buying these higher priced items at lower costs without the duties typically imposed. However, government regulations and language barriers prove to be issues limiting growth in certain areas.

A recent report from RnR Market Research found “Global duty free retailing market will register a CAGR of 6.7% during 2015-2020 with Asia-Pacificcontributing to majority of the sales, within which South Korea is the largest market globally and will retain its position growing at a CAGR of 9.6%. India will be the fastest growing market at 20.7% during 2015-2020, followed by Japan, which will enter top 10 largest market lists at the seventh position in 2020.”

TRBusiness identified the Chinese millennials will play a critical role for the duty free and travel retail industry going forward. One article noted the double digit increase in Asia Pacific travel retail sales in 2016 and expected the same for 2017.

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Macy’s, a retail giant looking for a turnaround

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Recover the customer’s experience in store is one of the goals of the Macy’s real state strategy goals for 2017.

The American retail industry has been suffering considerably in the last decades. New technology, fast changing consumer tastes and a market that has been making seasons shorter in order to sale more, it’s making big retailers such as Macy’s work harder to keep their inventories and businesses on track.

About new technology affecting the way retailers see their business, The Economist (February 11th, 2017) said that during 2016, one fifth of the trading happening online was generated by purchases of clothes and accessories. And analysts expect that Amazon will surpass Macy’s sales this year.

Additionally, the fashion industry as a whole has been speeding up change in trends searching more profit. In contrast, department stores suffer because of the slow pace that the business implies. Inventory stays longer on stores and discounts are heavily impacted by negotiations between retailers and manufacturers. When the stores finally put items on sale to rotate inventory, margins shrink and their performance suffer. This strategy has affected and seized the entire industry.

In January 4th, 2017, Macy’s, the biggest American retailer, announced actions to execute real state strategy which includes closing 68 stores in order to reorganize the company’s structure and reinforce the remaining stores, focusing on customer’s satisfaction with the in-store experience. In Southern California, the company had already close one store in North Hollywood and is expected to close three more in San Diego, Santa Barbara, and Simi Valley. In February 21, the WSJ said the company earnings for the quarter that includes the holidays seasons sales dropped by 13 percent.

To counteract the declining of their business, Macy’s is opening outlets called Backstage, most of them inside current stores. This strategy, still on an early stage, with most of the stores located on the East Coast, seems to be a successful but rather late answer to the market change. Additionally, online sales still offer room to improve for the company. A better online merchandise, and a wide variety of discounted products that appeal to younger generations may help the company in improving its online market share.

In conclusion, a smaller Macy’s, with less stores and a more aggressive online activity may be the marketing strategy to save the largest American retailer and keep it thriving as one of the industry leaders.

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Zalando, shaping Europe’s online retail business

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Zalando has become Europe’s biggest seller of shoes and clothing. The company started as an online site that sold flip flops in 2008, and quickly became the most important fashion online platform in the continent.

As the company’s website claims, Zalando goes one step further the traditional retail and catalogue sales by offering a broad selection of items with the benefits of their custom care process, company owned logistics centers, and unlimited opening hours.

Traditional retailers in Europe, as in the rest of the world, are seeing their customers walk away from their stores to shop online. In contrast, Zalando was one of the pioneers of the e-commerce and has grown into a giant, with increasing sales at a rate of 30% a year, in 2015 the company sold $3.3 billion. Zalando makes it easier to buy online even for customers in those countries where e-commerce is still a novelty. For example, in Italy and Poland shoppers can pay the postman in cash.

But not all retailers are racing against Zalando, some are starting to join the giant like the British retailer TopShop with whom Zalando started an alliance in 2014 and boosted sales with a popular tv commertial featuring Cara Delevigne.

Watch TV commercial: Cara Delevigne for TopShop and Zalando

Investors are also happy with Zalando’s performance, in the last three years the company’s shares have risen from €20 to around €40.

One key for this success was their TV commercials campaign that started in 2010 and quickly gained public attention. Using humor for the early commercials and then well-known models for the recent ones, the company reached almost 90 points in brand recognition in Germany.

Zalando’s competitive advantages are constantly underlined on their marketing campaigns: excellent logistic center that provides on time delivery, payment and customer care tailored to each country or market, and free returns are some of the constant themes not only on the tv commercials but also on their webpage and online ads.

With more than 5 million daily visits to its site, Zalando has also became a specialist in managing big data. The company uses this data to forecast change in fashion trends as well as to evaluate their marketing campaigns impact on sales.

The future for Zalando however, may not look as bright as their present. With big competitors entering the European market, such as Amazon and Alibaba, the company has to keep their customers engaged. Strategies that they may keep using are their very attractive online merchandising, and their ability to customize their operations in each different market to attract customers with different purchasing styles.

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