How AI Can Help Fashion Retailers Reach Ultimate Sustainability

Updated: Aug 3

1. Introduction

2. Why Brands Can’t Ignore Sustainability

3. How Can Adopting AI & ML Make Fashion Brands Sustainable

4. Becoming more sustainable fashion retailer



Introduction

It’s a well-known fact that the fashion industry is plagued with a sustainability problem. In the last few years, more and more brands have fallen under the eye of public scrutiny due to their unsustainable practices.


Burberry was called out for burning overstocked items in 2018. H&M faced backlash for “greenwashing” in its “Conscious” fashion collection in 2020. These are just some of the most recent examples, but there are many more.





The truth is, fashion has had a true sustainability crisis on its hands for a long time and it’s projected to only get worse. In fact, according to the UN Framework Convention on Climate Change, emissions from textile manufacturing are projected to increase by 60% by 2030.


Before writing this piece, we spoke to Rossella Rinaldi, a marketing, event, and fashion retail professional with over 10 years of global experience. Rossella expressed her concerns with the current layout of sustainability initiatives in the fashion business:


“60-70% of fashion's harmful effects come from the materials used in production. There are plenty of new materials that could be used to replace synthetic ones like polyester and nylon.”

- Rossella Rinaldi


As you can see, environmental concerns are mounting and if your brand hasn’t already started embracing sustainable practices - now is the time to do it.


In today’s article, we will discuss the three main reasons why brands need to prioritize CSR efforts and how artificial intelligence and machine learning can help make your company more sustainable. Let’s get started.


Why Brands Can’t Ignore Sustainability




There are three main reasons why companies can’t just sweep sustainability under the rug.


First of all, there’s the ethical side and the real environmental damage that our world is experiencing. Second, consumers are paying attention and choosing to shop from brands that are truly incorporating sustainable practices into their business. Lastly, overstocks and overproduction lead to money loss, which any long-term looking business wants to avoid.


Let’s take a closer look at each one of those reasons.


1. Surging Environmental Damage


The fashion industry is said to produce 10% of all humanity’s carbon emissions. It’s also the second-largest consumer of the world’s water supply. If you take a second to think about these numbers, you’ll see that there is an enormous problem.


Such negative effects from a single industry carry with them responsibility, whether some choose to take it on or not. Climate change and environmental damage are affecting the entire world, and your business’s ethical side simply can’t ignore them.


2. Consumers Spare More Attention


Consumer behavior is always changing and currently, the majority of buyers are leaning towards embracing mindful shopping and choosing to purchase from brands that are implementing sustainability practices and are transparent about their approaches.


A report by IBM revealed that 6 in 10 consumers are “willing to change their shopping habits to reduce environmental impact”. Moreover, customers are slowly but surely looking for sustainable brands, with 45% of those surveyed claiming that it’s a very important factor for them.


If consumers are prioritizing environment-friendly initiatives and choosing to support brands with such programs - it’s hard to find a downside to making sustainability your priority.


3. Fashion Brands are Losing Money


Finally, the last reason that should motivate fashion brands to become more eco-friendly is the fact that unsustainable practices lead to a decrease in revenue and profits.


For instance, whenever there are mistakes in demand forecasting and item performance outlooks - you may face overstocks and end up producing items that won’t be sold. As a result, besides having wasted valuable resources, you’ve also lost money. Unsold pieces of clothing are not only revenue not made, but also investment lost.


Hence, embracing sustainability can also play a significant role in making your business more profitable.


How Can Adopting AI & ML Make Fashion Brands Sustainable




At this point, you might be asking yourself, “how can I make my brand more sustainable and reap the benefits of environmentally-friendly practices?” Well, everything starts with emerging technologies.


By embracing artificial intelligence and machine learning, companies can start using external data for demand forecasting and customer intelligence. That way, prediction errors can be minimized and overproduction almost eliminated.


However, relying on technology to do all the work for you isn’t an option. You’ll have to be involved in critical decision-making even if you turn to IT-enabled insights.


“Technology by itself won’t do anything. The human factor makes the difference in technology application.”

- Rossella Rinaldi


So, let’s dive into a bit more detail.


Utilize Demand Forecasting Tools To Avoid Overstocks


Whenever fashion retailers begin preparing for the upcoming collection, they start by forecasting trends that the new season may bring. Additionally, they consider their past experiences and make predictions about how in-demand certain items will be.


As you can imagine, processing this much information is very time-consuming for a human. Not to mention, important factors might easily get overlooked even by the best in-class professional. So, to speed things up, reduce errors, and minimize costs - you can turn to artificial intelligence and machine learning.


By processing data and learning from it, AI and ML technologies can supply you with smart demand forecasts in a highly speedy manner. So, once you are armed with highly accurate predictions, you’ll be able to leverage them and determine how much stock to produce. Thus, significantly reducing overstock levels and becoming a more sustainable business.


Leverage Analytics To Understand Customer Behavior


Another area that AI and ML algorithms can improve is customer analytics.


The retail industry is highly affected by changing consumer behavior. A new trend wipes out the old one and a comment by an influencer leads to a complete sell-out. This high level of volatility makes it difficult for fashion brands to keep up.


However, with AI and ML there’s a solution. You see, once you leverage algorithms to better understand your existing and potential customers — you learn how to cater to their ever-changing needs.


By processing enormous amounts of data, AI and ML extract insights about your customers and deliver them to you in an understandable manner. After that, you can easily see which segments are at risk of churn, which bring the most value, and figure out how to personalize campaigns for each of them.


As a result, customer analytics in retail not only end up helping you target marketing efforts effectively and sell items that might be overproduced but also better understand your customers and their behavior. Thus, always keeping you informed and prepared to act in the interest of sustainability.