If it wasn’t already obvious, you could bet that the younger generation will change the fashion industry. They love self-expression and they have raw purchasing power, representing around $350 billion of spending power in the United States alone. Any fashion brand that ignores the younger generation’s consumption and shopping preferences or their need for sustainability will have no business in the future, especially when those preferences reflect their concerns over social and environmental issues.
New kids on the block
Gen Zs are increasingly backing their beliefs with their shopping habits, favouring brands that are aligned with their values and avoiding those that don’t. In other words, they are loyal to brands they perceive to align with their beliefs and concerns over environmental and social issues.
Their beliefs and concerns are not restricted to just their demographic, a growing proportion of consumers worldwide would switch, avoid, or boycott brands based on their stance on controversial issues. Most of them regard themselves as activists, driven by passion. Studies show that a growing number of consumers have brand loyalty towards sustainable products or they are willing to put their money where their mouth is when it comes to sustainability and lower carbon emissions products. According to Nielson’s Global Corporate Sustainability Report, 66% of consumers globally are willing to spend more on a product if it is sustainably made.
What is Brand Loyalty?
Harvard Business Review (HBR) reports that companies with high scores on brand loyalty not only grow revenue 2.5 times faster than industry peers but also deliver two to five times the returns to shareholders over 10-year time frames. The fact that brand loyalty – a long-term commitment to make repeat purchases of a particular brand is not dependent on price, makes this metric a particularly powerful driver of both profit and profitability.
According to Investopedia, the main reason brand loyalty is so essential to profitability is clear: 65% of revenue in most companies comes from repeat business with existing clients. It is not only because existing customers loyal to brands purchase 90% more frequently than new customers, but maintaining the brand-loyal segment of your customer base is also cheaper than marketing to attract new customers.
Brand-loyal customers believe that a certain brand represents both higher quality and better service than any competitor and the price is irrelevant. Brand-loyal customers might make fewer total purchases, but the profit margins on their purchases are much more significant. Once established, brand loyalty is fairly easy to retain, assuming, of course, that product quality and service level remain high. Brand loyalty is also less expensive to retain than customer loyalty, which requires constantly offering low prices and regular discounts to maintain best-deal-on-the-market status.
Brand loyalty for fashion brands will eventually be dependent on the sustainability attributes they build or communicate with and to consumers. In the short-term price may win over sustainability attributes but brands must be willing to invest in rethinking everything across the textile value chain – having a “climate positive” value chain, one that reduces more greenhouse gases than it emits, in other to win long-term.
How to build brand loyalty
Here are my top 3 things fashion brands must do to build brand loyalty today;
Adopt circular business models
Circular business models like resale, rental, repairs and remaking allow brands to increase their bottom line without necessarily making new clothes. Circular business models represent new and growth opportunities which have the potential of providing considerable greenhouse gas savings. It could be worth $700 billion by 2030, making up 23% of the global fashion market. The circular business model falls into three categories;
More use per user – Enabling a user to wear a product more and for longer. This could include designing products to be physically and emotionally durable, providing services to support long-term use, and empowering users to use their products more and for longer.
More users per product (Rental, Resale, Swap) – Designing and providing platforms and services that facilitate the movement of products from user to user so the products can be used more. Products can pass from one user to another after any period and on a ‘one-off’ or periodical basis.
Beyond physical products – Designing and developing non-physical, digital products and/or services that replace, enhance and complement users’ fashion needs and aspirations.
Communicate sustainability attributes:
It takes too much effort for consumers to determine whether clothes are sustainable. Most consumers recognise and care about sustainability in fashion but are frustrated by the complexities. Communicating those sustainable attributes that differentiate your brand from your peers would decrease the attitude-behaviour gap in fashion consumption, for instance, educating consumers about your B-Corp certification or equivalent and the rigour required to gain it.
Younger consumers are motivated to do the right thing when the information is presented in a format they understand. Shedding light on product production processes is bound to engage conscious consumers genuinely and turn them into loyal customers. Brands must include supply chain, sourcing, partner information, and material descriptions with their consumers in publications, social media posts, etc. Brands must also feel comfortable sharing stories about the communities involved in the making of their clothing. All of which help build brand loyalty.
Increase transparency:
Publishing progress made meeting net-zero targets helps consumers see the authenticity of any sustainability claims. Unfortunately, many fashion brands are still reluctant to share information publicly.
According to the Fashion Revolution progress on transparency in the global fashion industry is still too slow among 250 of the world’s largest fashion brands and retailers. Brands are achieving an average score of just 24%, up 1% from last year. Also, only 29% of major brands and retailers publish a decarbonisation target covering their operations and supply chain.
In the wake of plummeting sales during this recession, it is more important than ever for fashion brands to ramp up investment in marketing and communicating sustainability attributes they live by to attract this new cohort of fashion consumers. The winners today and in the future are fashion brands that proactively design sustainability into their strategy and operations. They will increase their brand love, cement their relevance and capture a windfall of unmet demand, now and into the future – Bain & Company