Editor’s note: This article is part of a series on sustainability.

Sustainability has been a focus for several DTC brands from day one, and that has helped attract younger consumers. 

From the materials brands use to curb waste to the way in which they produce goods, brands like Allbirds, Reformation, Everlane and others have baked sustainability into their DNA.

But as these brands look to scale, are their sustainability goals in jeopardy?

Despite sustainability targets, certain areas of business are still harmful

Several retailers, including DTC brands, have outlined goals aimed at operating in a more sustainable manner.

Reformation, for example, reports its progress around sustainability quarterly. In the first quarter of 2022, the apparel brand reported that it launched a denim capsule collection made from recycled fabric scraps from factory floors, joined Land to Market — a sourcing solution for regenerative agriculture — and Fashion for Good, and set goals to achieve 100% traceability through its supply chain by 2025, among other things. This comes in addition to Reformation’s other initiatives, including a recycling program.

Allbirds similarly has outlined goals for itself to cut its carbon footprint in half by 2025 and reducing it by “near zero” by 2030, including shifting to regenerative agriculture, using renewable materials and utilizing responsible energy.

“If you’re making things in China or Vietnam or India, you’ve got to ship them all across the world. Your choices are boat or air … and either one leaves a very big carbon footprint.”

Brian Ehrig

Partner in the consumer practice of Kearney

But despite some of the commitments companies are making, there are a number of things brands are currently doing that have negative environmental impacts, like how and where a brand manufactures, transports and packages products; what its back-of-house operations look like; and how it handles reverse logistics.

The consequences of manufacturing overseas is greater, pushing many companies to consider nearshoring, according to Brian Ehrig, a partner in the consumer practice of Kearney.

“If you’re making things in China or Vietnam or India, you’ve got to ship them all across the world. Your choices are boat or air … and either one leaves a very big carbon footprint,” Ehrig said.

And packaging can have a major impact on whether a brand is operating sustainably. DTC brands are still one of the biggest users of plastic and corrugated packaging, according to Tyler Higgins, retail practice lead and managing director at global consulting firm AArete.

That comes on top of the fact that consumers may receive packages frequently depending on the brand and type of product they sell.

“From a transportation standpoint, they’re a high use of miles,” Higgins said. “A lot of consumers might get packages for seven straight days from the same direct-to-consumer brand.”

The targets that some brands set for themselves to address these problems, however, really only focus on the factors within their own control, Higgins said.

“A lot of those things that fall on the world of scope 3 emissions, [brands] don’t put as much onus on or focus on because it’s less in their control and they’re really focused on building their brand around the specific products they’re manufacturing,” Higgins said, adding that sustainability is “sort of in the eye of the beholder, for lack of a better phrase.”

While many DTC brands may claim to be transparent when it comes to their sourcing materials, they may also have ships and trucks burning fuel within their supply chains.

“They may tout their manufacturing process, but then they may go put it in a plastic bag or corrugated box before it ships to your front door,” Higgins said. “What I think brands are doing is picking what they have the most control on and what they’re good at and touting that component, even if the other pieces” are not necessarily sustainable.

But as more digitally native brands turn to physical retail, questions are emerging around how that impacts their sustainability targets. 

Stores versus e-commerce

DTC brands have come to realize the benefits of having a brick-and-mortar presence, including allowing customers to touch and feel a product before purchasing, reducing customer acquisition costs by serving as an additional marketing vehicle and, for some, serving as a fulfillment channel for goods. But does operating a store have environmental benefits as well? It’s a question that doesn’t have a straightforward answer.

When looking at products on a per-unit basis that were manufactured from the same locations, AArete’s Higgins believes a store is more sustainable because “you’re delineating the emissions over a much broader polling of items.”

Source link


Comments are closed.