Fashion Accelerators – The Catalyst for Innovation & Sustainability in the Fashion Industry: An Op-Ed for Fashion Roundtable

This piece was originally shared via Fashion Roundtable‘s Tuesday 26th February newsletter which can be read here: http://bit.ly/2BTpNnt

Inclusive, disruptive & informative, FR is a laboratory of ideas & secretariat to the Fashion & Textiles APPG. FR specialises in making the needs of the fashion industry central to mainstream discourse. They seek to grow awareness & solutions for diverse issues across all components of the fashion sector for better business results. 

The fashion landscape is a rich tapestry of innovation saturated with revolutionary ideas that have the potential to propagate sustainability. Innovations today are the solutions of tomorrow. These innovations could be in raw materials, dying and finishing processes, manufacturing, retail strategies, end of use practices as well as transparency and traceability.

Fashion accelerators are at the crux of providing a crucial platform for these innovations to drive value, whether it be economic, environmental or social to tackle the increasingly urgent issues of sustainability facing the industry. This may be mitigating social inequalities dispersed throughout global value chains or curbing devastation to the earths eco systems and biodiversity in order to ensure a safer operating space for current and future generations.

This piece traces the advances of accelerators in recent years, contextualises our urgent need for them to promote innovation and their purpose as a strategy to address the transition from a linear to circular and shared economies. Their ability to envelop a cradle to cradle philosophy in order to achieve the common goal of a sustainable industry underpins how fashion acts as a force for good.

What Are Fashion Accelerators?

A fashion accelerator can be best defined as a programme and bridge that links those with different values, objectives and perspectives with a common purpose of creating a sustainable fashion industry. Most commonly, as an example this could be the mediation and pairing of a start up with a larger corporation. This approach conjoins an innovator who may be disruptive in nature, holds higher than average risk and delayed economic value with an accelerator who is in turn linked to corporates who benefit from immediate economic value, have lower risk and are actively seeking guided disruption.

This exact power of fashion accelerators to remove the friction of companies that exist in the same industry but are from seemingly disparate worlds will nurture sustainable development. For example, linking the funding of banks, venture capitalists or angel investors with innovators that can connect with those that have knowledge such as consultancies, think tanks, circular economy experts such as the Ellen MacArthur Foundation and even those that provide co-working spaces!

Contributors to a fashion accelerator include a wider network of stakeholders on the periphery that inject into the innovation processes such as venture capitalists, incubators, NGO’s and political/educational institutions.

An example of an industry leading fashion accelerator is the H & M Foundation Global Change Award
Source: Accenture Fashion X Tech Trend Report 

From the nuance of a network perspective, we see increased benefits of the programme through tacit knowledge and information sharing as well as skill building and developing a flexible supply of labour which increases the overall long term economic value of the industry. This narrative of unification and collaboration over competition stimulated by accelerators is at the heart and values of corporate social responsibility and allowing innovation to thrive.  Those that refrain from collaborating with industry players in order to achieve short term profit maximization, risk not obtaining crucial knowledge and sacrificing their ability to tackle the sustainability agenda. An example of collaboration through knowledge sharing are the actions of iconic denim brand, Levis. They purposefully developed and shared amongst other producers technologies and manufacturing techniques that use less water in production to address the impending water scarcity that faces the planet whereby 2030, 47% of the world’s population is predicted to face severe water shortages. Although not specifically a fashion accelerator, this case underpins at a broader level how collaborative action and mutually beneficial relationships can be used to communicate their desire for a deep commitment to sustainability within the fashion industry.

Why Do We Need Them?

Approaches of accelerator models address an inherent challenge to fueling the rise of sustainability within the industry; fostering innovation. Innovation is an enabler of technological based solutions, knowledge-based capital and resources which are fundamental to the future of the industry. Technology can be divided into digital, physical, or biological components and exists across the fashion landscape to varying degrees.  It can be incremental in altering services and platforms like apps for new capabilities but can be taken a step further to modernise the entirety of a core business. Examples include artificial intelligence, biomimicry, 3D solutions as well as the apparatus of block chain. In particular block chain technologies have provided salient contributions to enhancing transparency disclosure. They have done so by increasing supply chain efficacy benefitting both consumers and producers in the realm of fashion business and identifying the provenance of their purchases.

A multitude of reasons exist as to why we urgently need fashion accelerators. Firstly, diffusing these incubators of innovation will allow us to pursue credible alternatives that can push the industry to close the loop and propel the number of those moving towards integrating a circular economy into their core businesses and distancing themselves from a linear economy. This essentially involves overcoming the outdated orthodox outlook of fashion production as ‘take-make-waste’ ‘take-make-renew and restore’. For those unfamiliar, this propagates what is known as the ‘Cradle to Cradle’ philosophy brought to fruition by William McDonough that views waste as a valuable nutrient and believes ‘doing less bad isn’t good enough’.  An archetype of the success of accelerators in material regeneration is Orange Fiber who have patented the world’s first luxury material made from citrus waste. Their innovation has been used in collections by Salvatore Ferragamo and displayed at the V & A’s 2018 Fashioned from Nature Exhibition. Orange Fiber are graduates from the Fashion 4 Good’s Plug and Play accelerator programme and also received funding from the platform provided by the H & M Foundation’s Global Change Award. Reconfiguring the core of the fashion industry to be sustainable through circular principles is cited by Peter Lacey and Jacob Rutqvist in their 2015 publication ‘From Waste to Wealth’ to have clear economic payoff. This report estimates that the industry can generate approximately US$4.5 trillion from sustainable circular economy business models by 2030, certainly not a figure to be frowned at.

Secondly, we need accelerator programmes as for many, the cost of launching into market exceeds the financial abilities of start-ups who often lack the capital to enter or market their products. Concurrently for those that have launched, their scope for action and development may be restricted by their need for finance to invest in research and development to achieve objectives in responsibility and circularity. Circular business models are by nature disparate to corporate business models that are centred around outdated shareholder ideals who may be reluctant for patient capital and demonstrate desire for myopic quarterly profit maximization. Hurdles also include the inherent characteristic of many as SME’s and startups who are frequently risk averse due to the lack of capital as insurance. Risk overstatement also occurs as investors may confuse general launch risks with those pertaining specifically to circular business models. This need for funding is supported by the 2018 Accenture and H & M Circular X Fashion Tech Trend Report. Of their sample group of 2600 start-ups, a significant 43% cited that their lack of funding was the most critical challenge to realizing their ideas which had increased from 32% in 2017. Interestingly, they found this was most prevalent in African companies which highlights accelerators may also aid in lessening regional inequalities dispersed throughout the fashion industry. Other challenges included technical issues where 19% voted this as most critical and also of note was that 12% stated their biggest problem was finding the correct partners, suppliers and sellers – a topic that fashion accelerators acutely combat through their provision of networks.

The urgent demand for capital investments provided by accelerators for innovation in fashion technology and circular business models is apparent when comparing injection of investments across other industries that are comparatively higher. Evidence of this is published in Atomico’s ‘State of European Technology’ which found that in 2017 over US$4 billion of capital was invested into the FinTech Industry whilst the food industry and transport industry achieved over $2 billion and $1.5 billion respectively. It is thought provoking to see that the fashion industry achieved only $0.8 billion, a reduction from $1.3 billion in 2016 which suggests fluctuation and volatility may continue and provides a lens to view how accelerators could stabilize and grow capital investment in fashion technology.

However, whilst financial backing is a crucial aspect of the benefits of accelerators, it is not the sole factor that expedites change as kick starters or crowdfunding can only go so far. What distinguishes an accelerator is that both the smaller and larger companies gain advantages in the intangible assets gained through knowledge sharing. This two-way flow of expertise can be brought to the table to develop business models and value propositions that facilitate an ongoing collaborative conversation between fashion players. It is my belief that financing and knowledge sharing should run in parallel and not be mutually exclusive of one another in order to cultivate a breed of hybrid sustainable fashion enterprises that can trigger the necessary shift in the industry.

Thirdly, accelerators empower these smaller companies to overcome traditional market entry barriers. This could be in the case of disrupters and drawbacks that come with first mover advantages such as the fact the market may not yet be ready to adopt their sustainable innovations. They can alleviate other hurdles such as generating consumer brand loyalty, combatting economies of scale to break even and sustain profits, and also navigating geographical barriers such as a lack of expertise in operating in a specific region for which their product/service is needed or supply chain is based.

Fourthly, we need accelerator programmes due to the nature of the fashion market which is polarized in power and condensed in terms of market value where the top twenty companies in the industry account for 97% of the economic profit. These ‘super winners’ as defined by Business of Fashion, include the likes of Inditex, Nike, LVMH and H & M to name but a few.

Finally, the urgent requirement for accelerators to address a trust deficit should not be underestimated when considering how players must match the ongoing consumer shifts as we witness the rise of a conscious citizen. According to Ethical Consumer Magazine, the value of the ethical clothing market has experienced a substantial rise by 19.9% in 2018 alone. As the world becomes increasingly attuned to the environmental and social toll of fast fashion, the hunger for credible alternatives in order to make informed purchasing decisions is only increasing. Accelerators through their efforts in encouraging innovation for companies and its players will help lessen impacts, educate shoppers and provide better choices both behaviorally and in garment availability. This has been saliently addressed by the Business of Fashion’s and McKinsey’s 2019 State of Fashion Report which addresses that firms must take an active stance on social issues to satisfy consumer demands for ultra-transparency and sustainability.

We also need sustainable enterprises that develop innovations to mitigate the environmental and social toll of the consumers cravings for constant newness. Fuelled by social media and a mindset that pins intrinsic happiness on ‘things’ has seen one in three British women consider clothes as ‘old’ after wearing them once or twice and that one in seven consider it a fashion faux pas to be photographed in an outfit twice. This has driven a new model of fashion business to alleviate such desires that focuses on a shared economy and ownership through rental and pre-owned business models like Depop or the closet in the cloud innovation, Rent The Runway. 

Accelerators in Action

With the nature and purpose of fashion accelerators outlined, we now turn to accelerators in action.  Scaling operations and projects that foster innovation in sustainability enabled by accelerators are not restricted to one particular size of organisation. In fact, in their various guises they are coming to fruition whether it be by onboarding some of the world’s largest luxury conglomerates as partners including Kering Group or by utilising their own their start up experiences to consult for ethical brands. Here are three models of fashion accelerators that vary in origins but are very much united by a common purpose of driving momentum in sustainability.

  • Fashion 4 Good is an organisation based in Amsterdam that connects brands, producers, retailers, suppliers, non-profit organisations, innovators and funders to work together in their shared ambition to make the fashion industry a force for good. One means by which it seeks to do so is through its provision of a global innovation platform that has three tangents.
  • Fashion for Good Plug and Play Accelerator which is a 12 week start up programme to drive environmental and social impact in the industry. They search for, invest in and provide platforms for companies to fast track their transition into a sustainable and circular apparel industry. Inspiration for these start-ups is also provided through business development and mentoring with key partners that include the C & A foundation, Adidas, Kering, Target and Zalando.
  • Scaling Programme which assists companies further down the line in terms of proof of concept and offers them support in expertise, customer acquisition and capital. This is a longer term 18-month programme.
  • Good Fashion Fund – An element of the initiative soon to launch that will catalyse access to finance to scale up sustainable production methods.

The success of Fashion 4 Good in accelerating fashion sustainability has merged over 10 partners with over 60 innovators over 500 various sessions and 10 pilot schemes. The success is readily observed through the growth of companies including the Good on You mobile app which provides over 1000 ethical brand ratings for clothing purchases and benchmarks their impact on people, the planet and animals. Advocates of this app which inspires transparency and conscious purchasing decisions include none other than Emma Watson. Other examples include ICA Bremen which uses nano technology to introduce tracers into fibers of organic cotton for tracking along the products value chain or A Transparent Company which utilises blockchain technology to verify information and increase transparency along supply chains. You can read more about graduates of the accelerator programme here.

The Global Change Award is initiated by the H & M Foundation, a non-profit global foundation founded by the Stefan Persson family, who are the founders and main owners of globally renowned H & M Group. The mission of the GCA is to drive long lasting positive change, subsequently improving the living conditions by investing in people, communities and innovative ideas. Since its launch in 2015, this accelerator has generated over 8000 ideas and in 2018 alone received 2600 applications from 151 countries. Five winners of the award are selected annually and receive a € 1,000,000 grant to pursue their innovations. This accelerator programme is focused in particular on providing unique insights, access to the industry and opportunities to maximise their potential. These partnerships have created organisations over the world with the vision of reaching the UN Sustainable Development Goals by 2030 focusing particularly on education, water, equality and planet.

The GCA has cultivated the growth of a plethora of the programmes entrants and winners that address various challenges including material regeneration and ethical harvesting. These include Algae Apparel that transforms algae into bio fibers and eco-friendly dye that does not damage skin.  Another fantastic organisation that has come to fruition through the GCA is Smart Stitch, a dissolvable thread that eradicates the complication of recycling zippers and buttons on garments!

  • Factory 54 – A case of a smaller scale fashion accelerator that still creates impact. Founded by Shannon Lohr, Factory 54 was created following the success of Shannon’s own sustainable clothing company {r}evolution Apparel, featured in Vogue, WWD, The New York Times, Forbes.com and Yahoo!News. Through her own learnings, she launched this platform to consult smaller brands seeking to be sustainable and ethical and who find it intrinsically more challenging to tackle issues of complex supply chains. The accelerator programme has nurtured over 50 entrepreneurs and sustainable apparel brands from concept to launch, connecting them with customers and crowdfunding projects that have exceeded their goals by as much as 300%. Take a look at some of the brands that Factory 54 have helped launch on its dedicated retailing sit­­­­­e Market 45 here

The Future for Fashion Accelerators

Accelerators are a model of reorganisation within the industry that nurtures and cultivates innovative disruptors needed to tackle the systemic social and environmental issues that face the fashion world. Ultimately, they are the key to lessening the impact of the industry, educating actors involved in all stages of garment life cycles and value chains and providing better choices to an increasingly conscious and sustainably attuned citizen. They also facilitate an endured and prolonged product life cycle for many companies that do not wish to sacrifice quality or style in the process of becoming ethical and sustainable. For true impact, accelerators require collaboration across luxury and mass market segments from all stakeholder groups including the innovators, financial institutions, policy makers and intermediary organisations.

The future trajectory for fashion accelerators as a catalyst and bridge between small and large players in fashion looks bright. As graduates from accelerator programmes such as Fashion4Good, H & M Foundation and Factory 54 enjoy success in growth and making tangible impacts to the industry and addressing the consumer trust deficit, we may witness an increased confidence and uptake in circular business models by key market players. Whilst potential challenges in scaling up the ideas created from this joined up thinking exist, accelerators ability to drive economic, environmental and social value through collaboration further enable the fashion industry to innovate as a force for good in sustainable development.

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