On July 24th, it was announced that the exclusive operating rights of Allbirds in China are being transferred to Belle Group.
As a representative of sustainable brands, Allbirds' commercial performance in recent years has undoubtedly been disappointing. From various perspectives, Allbirds cannot be considered successful due to its consecutive years of operating losses and a nearly 98% decline in its capital market value. And sustainability, as the biggest label of this company, has also been questioned due to the failure of Allbirds. Is anyone still willing to pay for sustainable products? If a company does not directly contribute to its performance, does it still need to be sustainable? What else can we do
In fact, early Allbirds products did not have much association with sustainability, except for the use of renewable natural wool as raw material. Sustainability was just one of the many selling points such as comfort, washability, and versatility.
KICKSTARTER official website, uploaded via 3over7. Image caption: 3over7 is the predecessor of Allbird
However, in the process of constantly interacting with consumers, the founder found that the sustainable concept behind Allbirds' natural and original design is more likely to resonate with users. So, the label of sustainability is like a self reinforcing and self fulfilling prophecy, accompanying Allbirds to the present day.
The early success of Allbirds was indeed heavily dependent on the strengthening of its sustainability label, from emphasizing the sustainability of wool materials, to calculating the carbon footprint of its products, and to reducing carbon emissions for upstream animal husbandry through regenerative agriculture. Many of Allbirds' carbon reduction practices can be called industry "pioneers".
It is precisely because of this mission driven value vision that Allbirds has firmly grasped its core seed user group - male entrepreneurs in Silicon Valley, and has also attracted many big shots and celebrities to support it - from Larry Page of Google, Tim Cook of Apple, to actress Emma Watson, and even former US President Obama are Allbirds' fans. Hollywood actor Leonardo DiCaprio is not only an investor in Allbirds, but also starred in its first brand promotion video entering the Chinese market.
With numerous accolades, Allbirds was in the limelight at that time, and "a more sustainable Nike" was the ultimate expectation of investors for this yet to be profitable company.
On November 3, 2021, Allbirds was listed on NASDAQ at an issue price of $15 per share, with a closing price of $28.89 on the day of listing and a market value of $4.135 billion. However, this has also become the historical peak of Allbirds. As of the close on July 29, 2024, the price per share of Allbirds was $0.64, and its market value has fallen nearly 98% from its peak in 2021.
What has happened in just a few short years, from Silicon Valley's darling to Wall Street's abandoned son?
Changes in macroeconomic environment, intensified market competition, and evolution of channel ecology Among the many factors that have dragged down Allbirds' performance, strengthening the promotion of sustainable labels may not be the only one, but it is also a crucial one.
Does everyone no longer believe in sustainability?
The fact may be quite the opposite, when the entire industry starts talking about sustainability, Allbirds also loses its differentiated competitive advantage. This also responds to the question raised in the title - is sustainability still a good selling point for clothing products?
The answer is undoubtedly negative.
Sustainable marketing is inevitably unsustainable
Allbirds' "success is sustainable, failure is sustainable" is largely due to its marketing and promotion of sustainability as a product selling point, seemingly equating consumers' purchase of their own products with supporting sustainable causes, or hoping to establish a vague and emotional connection in consumers' minds. Although it has made some attempts and efforts in the field of science popularization, this is far from enough. There is a huge cognitive gap between achieving sustainable goals and creating sustainable products, which is also a misconception that most clothing companies may fall into to some extent in terms of "sustainable marketing".
In fact, Allbirds' target, which is the lack of environmental protection and sustainability in the production process of many clothing products, is a real industry pain point. However, this "unsustainability" is not determined by the application of a raw material, the design of a product, the operation of a store, or the value proposition of a company, but by the linear production and consumption patterns of the current overall fashion industry.
Therefore, attempting to achieve industry disruption through a single product or raw material without changing the overall production and consumption pattern is an unrealistic and immature solution in terms of both technical and economic feasibility.
The application of Allbirds wool material in carbon reduction is definitely better than the original petroleum based materials, but the unsustainability of clothing companies is not only due to high carbon emissions. Carbon reduction is just one of the sustainable issues that many clothing companies need to pay attention to, and excellent carbon reduction results are only necessary but not sufficient conditions for becoming a sustainable brand.
Planting beans is rare, and sustainable actions that focus on sustainability and marketing will ultimately fail, just like the Philosopher's Stone in Harry Potter's pocket. Only those who want it but do not use it can truly obtain it.
When sustainability becomes a standard, what else can clothing companies compete for?
On the other hand, sustainable strategy has become a consensus among clothing companies, which is also the biggest reason why Allbirds' sustainable halo has failed - no brand now claims not to advocate sustainability. CBNData has sorted out the current status of sustainable strategies of major global clothing companies, attempting to explore the key issues and main action paths of sustainable strategies of current clothing companies.
Overall, most companies' sustainable strategies are based on the currently popular three major areas of environmental, social, and governance (ESG), which set specific sub topics and goals. The definition and description of these topics are complex and diverse, but not without rules to follow.
CBNData found that compared to other industries, the core sustainability issues that clothing companies currently focus on are mainly carbon reduction, waste management, water resource management, and chemical use at the environmental (E) level; The six main themes of supply chain labor rights and diversity, equality, and inclusiveness (DEI) at the social (S) level. This is mainly determined by the degree of exposure to risks and opportunities brought by the business model of clothing enterprises.
However, as presented in the previous table, there is not a significant difference in the sustainability goals, core areas, and key issues/goals/paths emphasized by various clothing companies at present. Whether it's a new brand, an old brand, a domestic brand, or an international brand, the focus is no longer on whose sustainable slogan is louder, but on who can do sustainable things more beautifully.
5 essential conditions to form a qualified sustainable strategy
It can be seen that the current sustainable strategies of major fashion companies mainly incorporate the sustainable development goals of some core stakeholders (consumers, employees, supply chain employees, environmental ecology, etc.) into their business landscape, attempting to achieve a win-win result through their own operations and efforts, thereby rationalizing and legitimizing the value of their own operations to society, and giving consumers a reason to choose themselves.
CBNData believes that in order to achieve this complex strategic goal, there are five essential conditions:
[Cornerstone] Governance Support - Almost all companies emphasize the importance of governance in their sustainability reports. From managing organizational structures to internal systems, these underlying mechanisms to some extent prevent non compliant and unethical business practices such as corruption and bribery, ensuring the smooth implementation of overall strategies.
[Prerequisite] Cognitive Science - Scientific understanding of sustainable issues is an important prerequisite for the entire sustainable strategy, helping companies to define the boundaries of sustainable issues and evaluate and calibrate sustainable performance from the perspectives of digital indicators and industry benchmarks. At the same time, understanding the connotations of different issues is also an important prerequisite for confirming target priorities and a necessary condition for building trust among multiple stakeholders.
Key: Path Science - From goals to results, a scientifically effective path is the key to achieving breakthroughs and the hardcore competitive link to truly widen the gap between enterprises.
【 Result 】 Sustainable Goal Performance - Performance evaluation is a dynamic process. On the one hand, companies need to disclose and communicate information based on performance to the outside world, and on the other hand, they also need to dynamically calibrate the current path and execution methods in conjunction with performance.
[Guarantee] Stakeholder Communication - Although actual sustainable performance results are very important, what truly affects the achievement of business goals is still the judgment of the company's performance in the minds of stakeholders, which involves effective stakeholder communication.
Based on this framework, enterprises can clearly identify which aspects of their current sustainable strategy are problematic and which areas need improvement.
Taking lululemon, which has recently been embroiled in allegations of "greenwashing," as an example, in response to the environmental organization Stand.Earth's accusations of "greenwashing," a spokesperson for lululemon issued a statement saying, "We have achieved our goal of using 100% renewable energy electricity and reducing greenhouse gas emissions from our own and operating facilities by an absolute 60%. We are proud of this achievement. But according to Lululemon's 2022 sustainability report, the company's greenhouse gas emissions (Scope 3 emissions) in the upstream and downstream value chains have doubled compared to 2020. At the same time, Lululemon's emphasis on 100% renewable energy electricity usage and 60% carbon reduction is only aimed at Scope 1+Scope 2, which accounts for 0.3% of the company's total value chain carbon emissions. It is clear that the spokesperson for this company has avoided the three parts that account for 99.7% of Lululemon's overall value chain carbon emissions.
Lululemon '2022 Impact Report'
In fact, Lululemon does not have significant issues in cognitive science. The issues presented in its sustainability report and data disclosure are compliant and reasonable, even better than its peers. However, at the level of stakeholder communication, it is evident that this spokesperson has evaded certain facts and concealed them, which directly raises the suspicion of subjective greenwashing for the company; At the level of path science, it has not taken effective measures to reduce its scope of carbon emissions, resulting in negative performance of sustainable performance goals. These issues need to be taken seriously by enterprises and strengthened for improvement.
This also reveals that the core key to sustainable strategic competition in the current stage of clothing enterprises is still the path problem.
In fact, in the current technological environment, the development and application of a material, carbon neutrality of a product, green operation of a store, and waste free production of a factory As long as companies are willing to invest more costs, it is not difficult to achieve. However, from the perspective of data indicators required for achieving overall sustainability goals, these scattered, small-scale, and experimental actions are currently insufficient. The biggest obstacle on the road to achieving sustainable goals for all clothing companies is a scaled action plan.
As a profitable enterprise, the question to be addressed is how to contribute and value to the sustainable development of the industry as a whole, rather than how to develop a sustainable product with zero carbon footprint and sell it.
Taking On Run, which has grown rapidly in recent years, as an example, its sustainable strategy systematically presents the business model based solutions that it can provide as a company, including three strategic pillars of social impact, material innovation, and recyclability, as well as important foundations composed of climate action, traceability and data, governance, and compliance.
On the '2023 Impact Progress Report' by Angpao
On the investor relations page of On Run, it emphasizes that "the award-winning CloudTec® fabric technology, meaningful design, and breakthroughs in circular economy have helped it quickly attract fans worldwide and maintain a sustained growth trend," which closely corresponds to its three strategic pillars of social impact, material innovation, and circular economy emphasized in its sustainable strategy.
Regardless of whether this plan can truly achieve sustainable goals, at least in the current market competition, compared with other companies that straightforwardly sort out issues and list actions, On Run's systematic sustainable methodology is more convincing in terms of path science.
More importantly, for most consumers, On Run's sustainable strategy is implicit, and more people recognize this new brand of the alpha generation due to its technological sense, fashion, and endorsements by Federer and Zandaya, rather than sustainability. This is a sustainable brand that does not say 'sustainable'.
There is no doubt that sustainability will be the foundation of all brands in the future, as only truly sustainable brands can have a bright future. Sustainability here does not mean environmental protection, low-carbon, or inclusiveness, but rather the true integration of human development, corporate development, social and environmental development in the current new business narrative.
How to understand this merging?
When we allow some entrepreneurs to distribute profits to employees first, when the extreme price war is actively cooled down, and when the bottomless "refund only" policy is collectively reflected upon The value of shareholder primacy is being challenged, and the interests of more diverse groups are being incorporated into business considerations. Simply put, being environmentally friendly, animal friendly, community friendly, disability friendly, and employee friendly should not be optional for a brand.
Returning to the clothing industry, clothing consumption, as a concrete expression of the values, culture, and aesthetics of an era, is naturally a product of the times behind the brand. Compared to other industries, whoever can keenly capture the ideological changes of this era, and even lead the trend, has a better chance of winning the minds of consumers; Whoever can break through tradition (inherent conflicts of interest) through technological breakthroughs and business model innovation has a greater opportunity to transform consumers' short-term concerns into long-term business value.
*It should be noted that the consumption of clothing, shoes, and bags discussed in this article is only aimed at those who go beyond the basic necessities of mass fashion consumption. The expressions such as fashion industry, fashion industry, clothing industry, fast fashion industry, and sports and leisure clothing industry mentioned in the article belong to the category of mass fashion consumption and do not include the luxury goods industry.