How Reputations Are Built And Reinforced In Fashion

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This week, Nike was, again, ranked the world’s most valuable apparel brand, with a value of USD $31.3 billion, in the Brand Finance Apparel 50 2023 report. Louis Vuitton, Chanel, Gucci and Adidas were ranked second, third, fourth and fifth after the sportswear giant. Nike has retained its top spot since the report started nine years ago, and this year the brand also achieved the highest “sustainability perceptions value” score.

How did Nike achieve this? The report offers an explanation: “From its relentless commitment to innovation, ability to stay ahead of market trends, and extensive partnerships with athletes worldwide… the brand is continuing to leverage its enormous global influence and reputation to empower positive change in the sporting world and beyond.” Alongside its investments in technology and e-commerce to support its digital and direct-to-consumer sales strategy, Nike has also 5,610 patent publications under its name between 1 January 2019 and 1 January 2023.

Brand Finance also mentioned Nike’s ‘Move to Zero’ sustainability campaign, which grabbed global attention and enhanced the perceptions of its sustainability commitments on the world stage. The brand has pledged to incorporate more recyclable materials into its products and has ambitious goals to enhance its efforts in donating, refurbishing, or recycling products, targeting a tenfold increase by 2025. Nike has also made impressive strides in reducing greenhouse gas emissions from its owned or operated facilities, achieving nearly a 40% reduction, and 93% of Nike’s facilities are now powered by renewable electricity.

With sustainability becoming a growing factor influencing consumers’ choices among clothing brands, the evidence suggests that bold targets and quantifiable improvements (even if the metrics are narrow) are exactly what consumers want to see. On the flip side, fast fashion companies are experiencing a decline in their brand strength and reputation – perhaps for the same reasons. In the same report, H&M saw its brand value drop 26%, and Zara declined by 15%. Their slump in value was due to “vague communication and a lack of transparency regarding sustainability”. For example, H&M’s Conscious Collection was found to extensively use synthetic materials derived from fossil fuels. This case reflects a larger trend in the industry, whereby such retailers engage in ‘greenwashing’ to mask cost-saving initiatives.

Alongside prioritising sustainability to resonate with its consumers, Nike (and several of its rivals) have been capitalising on the trend of casual wear and sportswear in the mainstream, which began during the pandemic. The trend has not only persisted, but has also been sustained by the popularity of high-quality sportswear being produced, a renewed emphasis on women’s participation in sports, diversification into additional sports categories, and a consistent demand for outdoor sportswear.

On the opposite side of the spectrum, despite the rise of athleisure and more easy going fashion, luxury labels Dior, Louis Vuitton, and Chanel all rose in brand value in 2023 and are valued well into the billions of dollars – the highest being Louis Vuitton at USD 26.3 billion. Their iconic and highly coveted status as brands endured the pandemic and any kind of suggestion that the world was headed in the opposite direction, or that consumers would migrate en masse to value brands. Rolex was another top performer on the Brand Finance chart, who placed Rolex at the top of their “brand strength” segment. Along with its Swiss watchmaker peers Omega and TAG Heuer, it has come to be associated with excellence, timeless elegance, and craftsmanship; securing its success despite capricious conditions.

So we know what it takes to build a good reputation, but what does it take to break it? This past week, the Canadian Ombudsperson for Responsible Enterprise (CORE) initiated an inquiry into allegations of Uyghur forced labour in the supply chain of Levi Strauss & Co. Canada. The CORE’s decision was prompted by the conclusion of an initial assessment report, which was carried out in response to a complaint lodged by a coalition of 28 civil society organisations in June of last year. The group, which includes Stop Uyghur Genocide Canada, the Uyghur Refugee Relief Fund, and the Uyghur Rights Advocacy Project, filed similar complaints against the Canadian subsidiaries of Nike, Ralph Lauren, Diesel, Hugo Boss, and Walmart, triggering further inquiries into their operations.

Levi’s has contested the credibility of the evidence presented, asserting that it does not have any business ties with the five suppliers mentioned in the complaint. In its response to the CORE during the initial assessment, Levi’s dismissed the accusations, attributing them to “outdated and inaccurate data from 2017-2019, which were included in reports published in 2020 and 2021.” This underscores the critical significance of maintaining current and accurate supply chain data, as well as the heavy lifting that language can do when distinguishing between current relationships and historical ones. The modern supply chain generates an unprecedented volume of data because of the widespread adoption of technology. Data pours in from various touchpoints, which can include sensors, RFID tags, GPS trackers, customer databases, and more. Managing this immense volume of data, and managing it well, in such a way that the information available to internal stakeholders and external scrutinising bodies, is absolutely crucial.

By using the right technology, integrating the different pieces of the ecosystem, and tracing each step of the supply chain, ensuring that data is collected accurately, and then stored safely with easy accessibility is important for all brands – not only when faced with an investigation by a corporate watchdog. The robustness of a brand’s reputation is also closely intertwined with this aspect. It’s likely that larger, established brands will weather such a situation without substantial harm, but for smaller or emerging brands striving to establish their reputations, a development like this could have significantly more adverse consequences.

Another behemoth brand under scrutiny this week is online retailer Amazon – who coincidentally topped the Brand Finance’s US 500 2023 report earlier this year at US$299.3 billion. And, like Nike, they also were first on the list for sustainability perceptions value. Now, the Federal Trade Commission (FTC) and 17 state attorneys general have sued Amazon, alleging that the company is a monopolist that “uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power” including inflating prices, overcharging sellers, and prevent rivals from fairly competing against Amazon.

Amazon has built a reputation for stimulating competition through its open marketplace, and being innovative in the retail industry, most recently creating cashier-less tech for fashion retailers using RFID tags. Its brand value also comes from its strong position for both B2C and B2B, for both online retail and online cloud computing services, but most of all for its commitment to outstanding customer service. It’s become synonymous with convenience, low prices and customer-centric philosophy.

Nike is not so different, as it sells so much more than clothes and shoes: the brand has its customers at it’s core. It’s always believed that “it’s not so much about the shoes but where they take you.” It sells ambition, confidence, motivation, and success. Both Amazon and Nike have built their brands on not how many products they have sold, but how many relationships they’ve built – with perhaps the fundamental difference being that Amazon has seen many of those relationships (with its logistics teams, its marketplace sellers, its warehouse workers, and the brands it stocks) break down as the perception has shifted towards framing Amazon as a giant abusing its market position – something that people do not appear to feel about Nike or many of the other brands and retailers on the list.

So it’s likely that in spite of any allegations relating to their supply chain and purchasing practices, or for anti-competitive stances, the most powerful brands in the world will continue going from strength to strength. In an ideal world, they would all possess strong reputations, underpinned by genuinely sustainable and ethical practices that were documented by data. In the world we currently have, it’s often a case of how a strong reputation can mitigate headwinds.

In that future – particularly with outstanding sustainability reputation – will work hard to preserve the reputations they have cultivated. This might entail rectifying inaccuracies and outdated information and, even more importantly, demonstrating commitment to ethical and responsible manufacturing through rigorous due diligence, data disclosure and the implementation of traceability systems. Whatever the method, the results speak for themselves at the reputation level: it’s time now for all brands to just do it.

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