In this article Dr. Preetha Menon and Tanaya Ranade, FLAME University have shared industry insights on how private lables in the fashion industry can save the environment.

Fashion Tips: In the last decade, the global fashion industry has burgeoned with a growing population and ever-growing demands. Within the Indian market, this is the result of a new consumer segment willing to raise spending to look and feel good. Despite such developments, the industry is highly unorganized, with formal retail expected to account for only 45% of sales by 2025.

Brands are overcoming such obstacles through improvements in operational efficiency and value creation. A solution that has proven to be fruitful is the creation of private labels by established retailers. Private labels are retailer-owned brands that sell their products and services at specific retail stores. They can either be identified with the retailer’s brand by having an associative brand name (store brand) or dissociate themselves from the larger retailer by holding a unique name (individual brand).

In the Indian context, these range from players like FBB (Fashion at Big Bazaar), which is composed only of private labels, to Reliance Trends and Westside, which house a mix. Even purely e-commerce retailers like Myntra have their fair share of private labels like Dress Berry and Roadster. Associated with 3050% profit margins and greater brand loyalty, they currently occupy a 15% share of the Indian apparel industry. However, is improved profitability the only use these retail wonders should be limited to?

The fashion industry, encouraged for its economic advantages, is also one of the biggest environmental threats due to overproduction leading to massive textile and water wastage. Multiple stakeholders are now advocating for circularity in fashion, with the resale of unwanted apparel taking center stage. This is apparent from the volume of new businesses that help brands facilitate such exchanges, for example, Relove in India. However, the biggest obstacles to buying preloved apparel, especially for Indian consumers, are hygiene and trust.

Private labels can provide the perfect breakthrough for these barriers due to their various benefits. Initially, private labels in the Indian apparel industry focused on producing apparel stylistically similar to well-established brands and offering it at highly competitive prices. However, with improved information management and price-point flexibility, private labels could satisfy the specific needs of their niche target markets while maintaining their products price competitiveness.

Today, private labels stand for affordable yet high-quality products that hold the same benefits for retailers as they did before. Such advantages, especially economic ones, make the implementation of resell technologies in private labels favourable not only for the consumer but also for the retailer.

Here are some of the advantages of environmentally friendly, preloved private labels:

A study conducted among apparel consumers revealed clear advantages for private labels, especially in the preloved segment.

Private labels enjoy the brand loyalty of customers

Private labels have well-established relationships with their customers, implying greater brand loyalty than national brands. This arises largely from their ability to develop and design products that are specific to the needs of their target segments. For instance, consumer interviews revealed that many of the younger audiences prioritize price, quality, and fit over brand names when making purchase decisions. One of them explains how she largely only shops from Westside-housed brands like Gia and Nuon due to sizing and fit. Consumer interviews also revealed that the retailer’s brand recognition is important during initial purchase consideration for a private label. However, after determining product-person fit, they are willing to shop from those brands as stand-alone retailers too, which indicates their power to create high brand loyalty.

Thus, through personalization and focused targeting, private labels overcome the foremost barrier of trust regarding product quality, hygiene, and technicalities like return or refund options.

The price advantage of preloved private labels

Preloved apparel is almost always sold at a lower cost than a new piece. Undoubtedly, this increases customers purchase intentions. However, this doesnt cost the private label as extravagantly as it would for any other retailer since they already earned high margins on the first sale. An added advantage is that consumers also have the satisfaction of knowing the kind of other customers who would own that particular private labels apparel, furthering their intention to engage in reselling activities. These critical perks of familiarity are currently missing from any third-party resale or thrift platforms.

Appealing to the environmentally conscious customer

Consumers in todays age are highly conscious of the kind of impact their purchases will have on the environment and societies around them. They appreciate brands that can stand for meaningful causes and have a unique personality, thus distinguishing themselves from generic competitors. Findings from the consumer interviews indicated the same: most of the younger audiences are aware of and prefer brands that allow them to be environmentally conscious shoppers. However, this was not the case with older consumers, who were wary of buying preloved items due to hygiene and quality concerns. Yet, these are issues that can be overcome through meaningful marketing by the private label or retailer.

Adopting resale technologies can work in favour of the private label by enhancing brand perceptions and improving sales. Furthermore, it can also reduce the cost of acquisition for new customers. Thus, the resale program can prove to be extremely rewarding for consumers, the private label, and the environment.

The earlier-cited example of Relove enabled the resale of garments from previous customers for two brands: Summer Somewhere and Bunaai. Both brands observed that the majority of customers buying from their resale program were new customers. 77% of preloved apparel buyers were new customers for Summer Somewhere and 45% for Bunaai. Whats even more interesting is that of these new customers, 26% converted to first-hand shoppers for Summer Somewhere.

In conclusion, private labels are truly a retail wonder that have immense scope for growth and scale, especially within the apparel industry. They also have great potential to conducively redirect an industry notorious for massive environmental damage. As consumers, we often feel powerless to contribute significantly to the environmental movement. However, our power often lies in our individual choices. If we are collectively able to make considerate consumption decisions for our environment and communities, we can bring about positive change without sacrificing profitability and economic sustenance.

This article has been authored by Prof. Preetha Menon, Faculty of Communications, FLAME University, and Tanaya Ranade, PG Diploma Student, FLAME University.