Ipsos Corporate Reputation

Fashion Victims: The Losers in the Fast Fashion Race

What can comms. leaders learn from the challenges facing companies in the fashion Industry?

The fashion industry has been under the spotlight recently for all the wrong reasons. The industry is going through a period of rapid change, brands and retailers are increasingly exposed to Environmental, Social and Governance (ESG) issues in their supply chains, resulting in an intensified threat to reputation. Just last summer Boohoo was caught up in allegations around poor working conditions and allegations of paying employees in their supply chain below the minimum wage.

The restrictions imposed on consumer life throughout the COVID pandemic have acted as a rare speed bump on an industry that has otherwise been evolving unabated at a frightening pace. Ipsos Sustainability Monitor (SBM) 2020 data reveals that over half of consumers (55%) are buying less clothing than they were pre-pandemic. With the world on pause we ask what’s next for the fashion industry? How do brands best navigate these issues? How engaged are consumers in these issues? And what can comms leaders, across all industries, learn from the challenges being faced by the fashion industry?

Fast Fashion: a quick overview

Fast Fashion: “Inexpensive clothing produced rapidly by mass-market retailers in response to the latest trends.”

Since the late 90s, globalisation has opened-up Western markets to cheaper labour in the East. Cheaper clothing and ever shortening fashion cycles (including the development of the weekly ‘micro season’) means that clothing production doubled between 2000 and 2014, while the average number of garments purchased by the average Western consumer increased by 60% (McKinsey).[1]

Fast fashion is fuelled by celebrity culture, fads and the 24/7 nature of social media. SBM 2020 data shows that three-quarters of consumers agree that clothing and fashion are becoming cheaper and more throw-away in nature. And while just 14% of consumers say they feel under increased pressure to keep up with the latest trends and fashion, this rises to 24% among the youngest group (18-34 year olds). The fashion industry (and fast fashion in particular) are associated with serious ESG issues, outlined below.

Figure A) ESG issues typically associated with fast fashion (and the wider clothing industry)

  • Environmental issues: The fashion industry is considered by the UN Conference on Trade and Development (UNCTAD) to be the second largest polluter in the world, after the oil industry (UN)[2]
  • Social issues: Forced/ slave labour, child labour, dangerous working condition… The Clean Clothes campaign reports wages in Eastern markets are typically a fifth of average living wage there.[3] Average working days are 14-16 hours, 7 days per week (Clean Clothes Campaign)[4]
  • Governance issues: Overproduction is a massive issue. More than half of fast fashion produced is disposed of in under a year, (McKinsey)[5] with consumers keeping clothing on average half as long as they did 15 years ago

1) Ethical considerations and the impact on purchasing behaviour

ESG issues around fast fashion and the clothing industry have been widely reported. As consumer awareness grows, we might speculate that ethical considerations will come to take on more importance in the minds of consumers. But how much impact do ethical considerations have over clothes purchasing decisions?

When it comes to what actually drives clothes purchase decisions, the more conventional levers such as price style and quality hold the most sway. None-the-less almost a third of consumers say that ethical issues are one of the top 3 factors that influence their decisions over clothes purchases (and 8% say that it is their primary consideration).

In the era of fast fashion it is perhaps surprising that ‘trends’ (keeping up with friends, celebrities, social media and advertising) is the least selected factor influencing clothes purchases. Caveats should be applied (the results are self-reported and people might underplay the amount of influence trends hold on them, the sample is 18+, missing a key demographic target for fast fashion, teenagers). But the result does suggest that fast fashion is concentrated not only in small proportion of the worlds markets (Western markets) but also within a small proportion of the population within those markets. A small number of people are likely to be responsible for a lot of clothes purchases. While 30% of consumers say they buy more clothes than they need, this rises to 42% among those that say ‘trends’ are a top 3 influencing factor, and 55% among those that say that ‘trends’ are the primary influence on their clothes purchases (SBM data 2020).

#1. Know your customer: For 3-in-10 consumers ethical issues are a key decision-making criterion in what clothes they buy. Whether your business is in fashion or elsewhere, there is clear reputational risk in not being aware of, or not fully understanding what motivates and what matters to your customers.  

Chart B: Ipsos SBM data 2020: Clothing and fashion purchase decisions

2) Consumer disconnects over ethical issues

What consumers want they don’t necessarily get

Ethical issues play an important secondary role in clothing purchase decision making but what action do consumers think should be taken? Four-in-five consumers agree that brands and retailers should do more to help protect the environment and safeguard workers’ rights within their supply chains, and 77% of consumers say that clothing brands and retailers should provide more information. However, there is a large disconnect between what consumers want and what they get. Just 17% of consumers agree that the fashion industry provides enough information about the environmental and social impacts of the manufacturing of clothes.

Consumer good intentions not necessarily reflected by their actions

When it comes to taking personal action, although 56% of consumers say that if a clothing brand was associated with environmental pollution in its manufacturing process, they would be putting off from buying clothing from that brand, just 28% of consumers have researched brands that provide ethical clothing.

#2. Be transparent: As globalisation has increased the complexity of supply chains in the fashion industry, it’s becoming harder for many brands and retailers to maintain transparency. Whether your business is in fashion or elsewhere, consumers want to be able to make informed decisions, they want to be provided with clear and complete information (and they probably expect you to do at least some (if not all) of the legwork).

Chart C: Ipsos SMB data 2020 & Ipsos Sustainable Fashion Survey 2018 data: The disconnect between consumer good intentions and their actions

3) What's to be done?

Consumers clearly want more ethical accountability from brands and retailers. But by what means do they want this delivered? In 2019 the Environmental Audit Committee (EAC) published its “Fixing Fashion Report”[6] making 18 recommendations to the government to help clean up the industry, including;

  • Mandatory environmental targets for fashion retailers with a turnover above £36 million
  • More proactive approach to enforcement of the National Minimum Wage with greater resourcing for HMRC’s National Minimum Wage team to increase inspection and detection work
  • The Government should publish a publicly accessible list of retailers required to release a modern slavery statement. This should be supported by an appropriate penalty for those companies who fail to report and comply with the Modern Slavery Act

The Ipsos SBM 2020 survey tested what level of consumer support there would be for clothing and fashion brands and retailers that adopted similar commitments through their own volition. Across the 8 statements tested by the SBM survey (see chart D) between 67% and 78% of consumers said that the measures would make them feel more positively about a clothing brand or retailer. Commitments to national minimum wage (43%) and proof of compliance with the Modern Slavery Act (40%) had the most ‘much more’ positive impact. There are notable differences by demographics.

18-34 year olds are much more likely to say that they would be ‘much more’ positive about brands across all of these measures:

  • 44% of 18-34 year olds said they would be much more positive about brands that set themselves environmental targets compared to 24% of 55+ year olds
  • 44% of 18-34 year olds said they would be much more positive about brands that made commitments to using sustainable materials compared to 28% of 55+ year olds

Women are also much more positive across all of the measures:

  • 46% of women felt much more positive about stores that set-up in-store schemes to help customers recycle their old clothes compared to 30% of men
  • 40% of women felt much more positive about brands that helped to reduce textile waste compared to 25% of men

Women and millennials with disposable income form a key target audience for the fashion industry. As ethical and ESG considerations climb up the agenda they are likely to hold more influence over brand reputation and consumer purchase behaviours. If your clothing range is targeted at younger consumers and women in particular, then commitments to the environment and the wellbeing of employees in your supply chain is quickly transitioning from a nice-to-have to a necessity.

#3. Collaborate with your customers: There is clear support for measures that help clean up the fashion industry and reputational rewards are available for brands that adopt similar commitments. Whether your business lies in fashion or elsewhere it pays reputationally to align your business’s commitments to those of your customer. Take pride in your commitments and collaborate with your customers.

Chart D: Ipsos SBM data 2020: Impact of brand and retailer ethical commitments

4) Conclusion & Recommendations: An opportunity to build brand reputation

Fashion at its heart is an outlet for self-expression, choice, freedom, communication, it’s a vehicle to bolster confidence, for consumers to feel good about themselves. Exploitation and corporate greed aren’t a great look for brands trying to make their customers feel good about themselves. And there’s evidence that fashion brands are starting to take a long hard look in the mirror.

Model examples   

  • Sustainable materials & Slow fashion - H&M offers a new ‘Conscious’ range. To qualify the product must contain at least 50% sustainable materials e.g. organic cotton or recycled polyester. Levi’s ‘Water<Less’ collection uses up to 96% less water in its denim production. Patagonia only uses sustainable materials in their outwear. They champion “slow fashion” by helping customers repair garments and encouraging customers to recycle and buy second hand
  • Circular economy – TK Maxx ‘Give Up Clothes for Good’ campaign has recycled 1.6m bags of clothing since 2004. They also have a zero waste to landfill target. M&S ‘Shwopping’ partnership with Oxfam 30million garments swapped and £21million raised for people living in extreme poverty. The circular economy is based on reusing and recycling materials rather than throwing them away
  • Codes of conduct – TK Maxx operates a ‘vendor code of conduct,’ committing vendors to use no child or forced labour, protect employee rights on wages, working hours and adhering to health & safety regulations in the workplace

Whether or not we see a return to business as usual on the high street as COVID-19 subsides, consumers are expecting more from businesses and brands, challenging them to perform a social purpose beyond simply turning a profit. This increased scrutiny presents a risk certainly, but with it also a growing opportunity. Ipsos Corporate Reputation Centre has 40 years’ experience in helping global businesses navigate reputational challenges.

Ipsos Recommendations

1) Know your customer – understand what issues concern them and to what extent it concerns them. How does this impact how they perceive your brand?

2) Transparency & third-party endorsements – good brand reputation is built on trust. Third party endorsements such as the Fair-Trade Foundation and the Impact Report are a means to showing your customers that you care and take their concerns seriously. Avoid shortcuts and greenwashing and practise what you preach.

3) Collaborate & take pride – show consumers that you are on their side, that you want to make life easier and more straight forward for them and that you can help bring clarity, speed and convenience to the purchasing decisions that they care about. Collaborate and work in partnership with customers towards shared goals.

Article links

[1] https://www.mckinsey.com/business-functions/sustainability/our-insights/style-thats-sustainable-a-new-fast-fashion-formula

[2] https://news.un.org/en/story/2019/03/1035161

[3] https://www.sustainyourstyle.org/en/whats-wrong-with-the-fashion-industry#anchor-environmental-impact

[4] https://www.sustainyourstyle.org/en/whats-wrong-with-the-fashion-industry#anchor-environmental-impact

[5] https://www.ellenmacarthurfoundation.org/assets/downloads/publications/A-New-Textiles-Economy_Full-Report.pdf

[6] https://publications.parliament.uk/pa/cm201719/cmselect/cmenvaud/2311/2311.pdf

For more information about how Ipsos can help you, get in touch:

Tom Cox
Research Manager
Corporate Reputation, Consumer Sector

Tom.Cox@ipsos.com

The AI Paradox: Businesses must not overlook their responsibility to reputation as investment in this technology grows

Digital technologies, from social media to Artificial Intelligence (AI), have undoubtedly altered peoples’ lives – some for the better, some for the worse. We’ve seen the rise of intelligent assistants like Siri and Alexa, grown reliant on communication platforms to keep in touch with friends and family, and have witnessed the positive impact of wearable technology in healthcare.

According to a 2017 PwC report[1], AI technology could deliver a 10% increase in the UK’s GDP by 2030, provided that different types of AI technologies are invested in. To nurture this potential, in early March the government outlined a plan to position the UK as the global leader of artificial intelligence[2]. The plan incorporates investing in R&D, helping people develop skills for the new age of AI, and supporting sectors in boosting their use of AI and data analytics technologies. The hope is to create resilience among the UK’s workforce as the use of AI becomes widespread across sectors and helps boost the economy.

The indication that AI is the future is evident among business leaders too. In a recent study by Ipsos, the authoritative Captains of Industry, three in five stated they have already invested in digital technologies such as machine learning and artificial intelligence. Another third plan to invest in the next five years, as businesses prepare for the utilisation of AI technologies, align with government priorities, and foster the potential for economic growth – especially in a post-pandemic world

However, while the benefits that could be reaped from digital technologies are limitless, it doesn’t come without its challenges. In an Ipsos poll published by the World Economic Forum, four in ten adults across the world said they are worried about the use of artificial intelligence, and nearly half of adults globally agree that the use of AI by companies should be regulated more strictly than it currently is[3]. In another poll, less than one in five adults in the UK believe their job will be automated in the next 10 years, and almost four in five feel confident they already have the skills to carry on with their current employment in the future – contrasting senior leaders’ perspective of digital technologies potential.

While government and businesses are working toward unlocking AI’s potential, efforts will need to be put in place to convince employees of AI’s positive societal impact, the need for upskilling, and the benefits it could bring to jobs in the UK. Uplifting the reputation of AI and automation will need to be at the forefront of the government’s transformational strategy – especially as trust in the sector[4] hit an all-time low in 2020, according to the Edelman Trust Barometer.

Companies such as Microsoft have already taken some steps toward convincing the public in their efforts toward responsible technology by publishing six ethical principles to guide the development and use of artificial intelligence[5], with focus on working closely with employees and teams across the company to enable this effort. The government is also taking steps on this by launching an independent Centre for Data Ethics and Innovation that will advise on the ethical use of data, ranging from evaluating its social and economic impacts through to its fair and responsible application across businesses.

These efforts are a step in the right direction. Digital technologies are notorious for their fast evolution, with policies and regulations coming too late to resolve issues that have already left a negative mark on society and employment. Governments, businesses, and industry experts will need to work coherently and transparently when implementing AI, and work toward foreseeing issues with its implementation before they happen.

Building trust with the public will be key, alongside convincing the UK workforce of the benefits for upskilling, with a focus on fully communicating how utilising digital technologies would affect society and employment, both positively and negatively. Turning the UK into a global AI leader will be a challenging endeavour, but as long as we remember that having the capability to create technology is not all it takes for its success, realising all of its social and economic benefits are very much within our grasp.

Article links

[1] https://www.pwc.co.uk/economic-services/assets/ai-uk-report-v2.pdf

[2] https://www.gov.uk/government/news/new-strategy-to-unleash-the-transformational-power-of-artificial-intelligence

[3] https://www.ipsos.com/en-us/wef-artificial-intelligence-press-release

[4] https://www.linkedin.com/news/story/were-losing-our-trust-in-tech-5042340/

[5] https://www.microsoft.com/en-us/ai/responsible-ai?activetab=pivot1:primaryr6

For more information please contact:

Nadya Valkova
Research Manager, Corporate Reputation

Nadya.Valkova@Ipsos.com

What drives judgement of an organisation’s reputation?

An important focus for Ipsos Corporate Reputation is to help our clients understand what drives their reputation, in other words, what are the issues stakeholders think about when they make judgments about companies and organisations. In this article we will show what are the key aspects organisations should be mindful of according to MPs and business journalists who we regularly interview.

What exactly drives reputation will vary from one organisation to another – there isn’t a single, off-the-shelf answer to this. Feeding into an organisation’s reputation will be elements of what it does (for example, product quality and innovation), what it stands for (such as business acumen, ethics, corporate social responsibility and ESG performance), expectations and perceptions of the sector it’s in, expectations of business and industry, and other wider context issues. Furthermore, an organisation’s delivery against its corporate promise needs to match or exceed the expectations it creates.

There will be many tangible benefits that an organisation gets from building reputation value. It will, for example, help ensure your point of view is heard in policy making and regulation, make stakeholders more receptive to communications, build resilience to draw upon during times of crisis, and strengthen your employer brand.

Factors shaping reputation will vary from company to company, as reputation isn’t formed in a vacuum. It is shaped by perceptions of the sector, by the ongoing socioeconomic climate and policy agenda, as well as the behaviour, performance and communications effectiveness of a company. However, MPs and journalists have told us which issues they tend to consider when they from opinions about companies and organisations, which we’ll discuss here.

The most common consideration for business journalists when judging an organisation tends to be its financial performance. Often, this is seen to be a hygiene factor which an organisation needs before it can start to credibly engage with other issues. As one national business journalist states;

“If you haven't got that [financial performance] you can't do anything else. If you're not a viable business nothing else really matters. You can be as nice as you like to everyone else but if you're going to go bust, there's no point.”

Other common considerations today among business journalists include quality of management, treatment of customers, treatment of employees, and how it engages with journalists.

Journalists tell us that there are three key benefits for an organisation from engaging well with them; it allows journalists to get an organisation’s message across in the pieces they write, it could position an organisation in a more favourable light, and it helps journalist to report more accurately and less one-sided. As a regional business journalist explains;

“You're never going to stop bad headlines if things go badly but engagement on a number of specific issues such as remuneration, climate change, you know if I have a full understanding of a company's policy and why it's doing something, I'm much less likely to shot from the hip. If I have a full understanding of that company's strategy and why something has happened, I'm probably going to have a more holistic, a fuller appreciation of what that is rather than just writing "This is a bloody disaster"”

Indeed, between 2015 and 2017 we saw that engagement with journalists rose in importance as an important factor (see illustration below), and it has maintained its importance ever since. It’s also interesting to note how treatment of employees has become an increasingly important factor for journalists; as Covid-19 lockdown restrictions start to ease and companies announce their plans for their employees (a return to office working or a continuation of remote, flexible or hybrid working), companies need to be mindful of how their demands of employees might be perceived and how this might impact on their reputations.

Meanwhile, the factors that MPs most commonly consider when judging organisations are treatment of employees, track record, financial performance, social responsibility and environmental responsibility.

When asked to rate each aspect in terms of importance, treatment of employees has over time continuously been rated as an important attribute by MPs, while social and environmental responsibility is becoming increasingly important:

However, which aspects are of most importance does to some extent depend on which side of the House an MP sits on.

For Conservative MPs, a company’s track record and financial performance are the key considerations – and financial performance is far more commonly mentioned by Conservative MPs than Labour MPs. As one Conservative Backbencher states;

“Longevity is important, successful track record in either financial terms or stuff they sell or market. The reality is you don't really know about their CSR. The brand reputation is hugely important.”

Meanwhile, the key aspect for Labour MPs is treatment of employees (a far greater consideration among Labour MPs than Conservatives), followed by social responsibility. As one Labour Shadow Minister sates, the way a company treats their employees can be seen to be a reflection of the wider ethos of a company;

“First and foremost, in terms of the management and the whole ethos, the way they treat their employees… how employees are treated is very important to me, are they on proper contracts, are they paid properly, do they have security of employment, do they have things like pensions.”

In line with the views of Labour MPs, our most recent wave of the Reputation Council showed that corporate communicators commonly view employees as a stakeholder group which is increasingly influential on company reputations (legislators, such as MPs, are also seen to be increasingly influential by corporate communicators). Employees are no longer an afterthought for corporate communicators and are increasingly treated “much more seriously as a sophisticated stakeholder audience” and a trusted and credible source of information about a company.

Once organisations understand how key stakeholders form their opinions of them and their competitors, and how they perform against these criteria, they can then put plans in place to target communications more effectively – as well as identifying how (and if) an organisation needs to ‘course correct’ to deliver against stakeholder expectations. In terms of planning a communications strategy, further insight on how best to engage with MPs can be found in our recent post: Creating relevant and engaging comms with MPs for effective corporate planning.

Ipsos MORI can help you better understand what drives opinions about your organisation among various stakeholder groups, and the steps you need to take to bolster the way you are perceived to perform on those key attributes. We provide tailored advice through bespoke research and/or through our syndicated stakeholder surveys among legislators, journalists, business leaders and investors.

Want to know more about our MPs and Business Journalists syndicated surveys (or our wider bespoke surveys)? Get in touch with Ipsos MORI….

For more information please contact:

Guto Hunkin
Associate Director, Corporate Reputation

Guto.Hunkin@Ipsos.com