Every week, The Interline rounds up the most vital talking points from across the landscape of fashion technology news. This roundup is also delivered to Interline Insiders by email.
The long-term implications of taking a stand on sustainability, and why data could be the only way to make change stick at a global level.
Last week we wrote about some of the more immediate fallout from the Xinjiang cotton crisis, which spotlighted the rapid ripples that can spread out from an initial change in sourcing strategy, and that can reach as far as digital brand collaborations for videogames.
This week, fashion has begun to wrestle with the long-term implications of the same situation, with H&M announcing that, in light of poor fiscal performance in the first quarter of 2021, it would be working to re-establish its reputation with Chinese consumers. Implicit in that statement, of course, is the fact that, like very few other places on earth, consumer sentiment in China is tightly correlated with the opinions of government. In a very direct sense, Chinese shoppers’ attitudes towards H&M (and the other Western brands that have chosen to make public statements about the possibility of raw fibres and fabrics from the Xinjiang region using forced labour) reflect the ruling party’s attitudes towards criticism of what appears to be a significant human rights crisis.
Which begs the question: what hope do international brands have of influencing domestic attitudes towards sustainability and transparency in China? Unlike the EU, US, and UK, which all have a relatively free press, the Chinese state exerts considerable control over its citizens’ primary media sources, meaning that its shoppers are less likely to be as environmentally and ethically active as their counterparts elsewhere. Or, more accurately, they will be as environmentally and ethically active as they are permitted to be – which is currently a permission that is being severely curtailed.
From the perspective of multinational retailers who have expanded to China, this creates a difficult, borderline-unwinnable game.
To appeal to conscious consumers in their home markets, these brands need to be ethically unimpeachable, and shoppers in the US, UK, EU and other Western markets will almost certainly shift their purchasing power away from brands and retailers that do not take a public stance against forced labour. But these same brands will need to take a diametrically opposite position in China and compromise their global commitments if they intend to keep selling there – something that many of them clearly do, with the country being a top-five market for a lot of multinationals.
But even if we park the economic considerations, there’s another level to this situation that challenges the seemingly straightforward moral argument that brands whose values are incompatible with trading in China should simply leave those markets. If they do, domestic brands will be more than happy to fill the void they leave, and Western brands with less clear-cut morals may join them.
This may not seem like such a bad thing, since it fulfils the immediate objective of cleansing the slates of brands that are being held to account – and rightly so – for their sustainability credentials in their home markets.
But consider this: if a market requires that the world turn a blind eye on transparency in order to trade there, then a mass exodus of brands that are unwilling to make that compromise is going to lead to significant global blindspot in value chain visibility. And it’s not unreasonable to imagine a scenario where that blindspot is left untended, unscrutinised, and allowed to expand – a world in which we accept that fundamental inequality will persist, and what matters is that we don’t stand too close to it.
From this point of view, The Interline understands to some degree why multinational brands need to safeguard their Chinese operations – not only for bottom line stability, but because being present could prove to be the only way to help evolve people’s perceptions, at a global level, of why sustainability and ethical supply chains matter.
This does not, of course, mean that brands should continue to blindly source from regions of conflict, exploitation, and forced labour – especially when both natural and synthetic alternative sources exist – but rather that international effort is where the vital data on this and other humanitarian disasters have originated from, and if international organisations simply abdicate their places in problematic markets, then we may wind up with less visibility than before as well as creating open ground for less ethical brands to claim.
What matters is not just where you sell, but whether you can confidently stand by what you sell – where it was made, from what, by whom, and in what conditions. And what counts there is whether you have the raw data, the systems, and the item-level visibility to substantiate your claims. All of which are things The Interline will be covering in our April focus on supply chain management.
The potential dangers of early consolidation in growing customer engagement channels like livestreaming and VR.
Putting aside all of the above, one area where China is unquestionably leading the retail world is new channels of customer engagement. Livestreaming and “content commerce” are among the most successful new methods of selling, and Chinese brands – both solo and in collaboration with Western marques – are defining the playbook for how these channels should operate.
In the West, though, there has been a very early consolidation of power in channels such as shoppable live video, shoppable social media media, and now AR and VR. And as a consequence, brands are finding themselves encountering Facebook at every turn, and are wrestling with the question of whether they need to become dependent on the social media giant to secure a slice of new channels.
This is a doubly-relevant quandary, because Facebook recently unveiled what it sees as a potential way forward for augmented reality and the imposition of an interface layer on the real world: wrist-based interaction.
There is much that still remains undetermined about how content commerce will operate worldwide, but one thing is clear: Facebook is making a serious play for dominating it, across WhatsApp, Instagram, Oculus, and of course its eponymous platform. And while having a single ecosystem underpinning multiple different consumer touchpoints could be ideal for convenience, consolidation and centralisation, it also puts a lot of power in one company’s hands – especially one that younger users started migrating away from a while ago, or at least it seemed as though they were.
In reality, as sales figures released this week have demonstrated, the requirement for users to tie their personal Facebook credentials to their Oculus VR accounts has not stopped the Oculus Quest 2 from becoming one of the best-selling consumer VR headsets. Which is encouraging in the sense that it reveals greater adoption of VR, and the growth of what could become a major content commerce channel, but also concerning in that it shows one company already cornering the market.