According to Kant, India is creating three unicorns a month and this has been possible because young entrepreneurs are tapping into huge data available and using it to technologically leapfrog. India’s policy regime should be pro-innovation, light touch and progressive if it wants its entrepreneurs to grow and prosper, NITI Aayog CEO Amitabh Kant said, though challenges of cyber security, land acquisition and huge pendency of court cases remain. “My view is that your policy regime should be pro-innovation, light touch and progressive. You should benchmark yourself against the world’s best and even better than the world’s best,” he said on Tuesday. According to Kant, India is creating three unicorns a month and this has been possible because young entrepreneurs are tapping into huge data available and using it to technologically leapfrog. “The challenge, as we grow along, will be the challenge of cybersecurity and India needs to equip itself for cybersecurity. Indians will trust the digital means,” Kant said. “India needs to really work a lot on cyber security so that we are ready to meet future challenges and that’s critical to my mind,” he added. Kant was speaking on The Growth Trinity - Digital Innovation, Sustainability, Social Balance at the Microsoft Future Challenge, the flagship event of Microsoft India. Talking about the challenges being faced by entrepreneurs in acquiring land, Kant said, the only way you can solve your land issues is using satellites for land records. “You need new technologies. Geographical maps is what you need to do and India has liberalized that regime.” Vouching for liberal use of drones, Kant said, “Controlling drones is not the solution. You need to liberalize this because that’s the area of the future,” he said, adding you need to handle rogue drones through a separate anti-drone policy. Reiterating that the large number of pending judicial cases in India is due to lack of technology and unavailability of land data, Kant said the Indian judicial system should embrace technology in a big way. “I don’t think it’s physically or humanly possible to bring down cases without two simple things. The number of cases cannot be reduced without using artificial intelligence and machine learning,” he said. “Also, we need to crack this huge challenge of availability of land records as 70% of the cases in India relate to land. Therefore, we need to use satellite data for land,” Kant added. Talking about India’s transition to clean energy including green hydrogen, Kant said India has set ambitious targets for itself and will have to really use solar energy to crack water and create green hydrogen. “The important thing to understand is that the Western world took 40 to 71 years to move from peaking to net zero. We are going to do this in a very, very short period. And therefore, India’s targets are really ambitious and audacious and India can only do this by really making a massive technological jump,” he added.
Source: Economic Times
A bilateral talk was held in New Delhi to discuss trade and investment-related issues Commerce Minister Piyush Goyal met South Korean Trade Minister Yeo Han-koo on Tuesday and raised concerns regarding the non-tariff trade restrictions faced by Indian steel, rice, textile, engineering goods, mango, and pharmaceutical exporters, said officials aware of the matter. The bilateral talk was held in New Delhi to discuss trade and investment-related issues. “The ministers agreed to impart fresh momentum to the discussions on the Comprehensive Economic Partnership Agreement (CEPA) upgradation negotiations and also promote extensive B2B interactions on trade and investment between the industry leaders of the two countries,” an official statement said. They agreed to address difficulties expressed by industry on both sides and instructed officials to meet on a regular basis to conclude the CEPA upgrade negotiations in a time-bound manner. Officials said Goyal also pointed out concerns regarding the trade deficit, which is in favour of South Korea. India’s trade deficit with South Korea has continued to remain high over the last few years. Exports from India did not witness a massive rise, despite a free-trade agreement between the nations. On the other hand, imports from the East Asian nation continue to remain high. Both nations implemented the CEPA 11 years ago. Trade between India and South Korea during April-October stood at $13.69 billion, with a trade deficit of $5.29 billion.
Source: Business Standard
The issue was raised during the meeting between Commerce and Industry Minister Piyush Goyal and Korean Trade Minister Yeo Han-koo India on Tuesday flagged market access issues being faced by domestic players from several sectors such as steel, engineering and agri products in Korea and sought redressal of the matter with a view to boost bilateral trade ties, an official said. The issue was raised during the meeting between Commerce and Industry Minister Piyush Goyal and Korean Trade Minister Yeo Han-koo. Certain industry groups are of the view that due to some stringent regulatory issues in Korea, there are difficulties in terms of market access for Indian products. "These barriers need to be addressed and some concessions need to be made on both sides," the official said. Among the products that are facing market access issues in Korea are bovine meat, grapes, pomegranate, okra and eggplants. The Indian side also raised its concerns over the widening trade deficit with Korea. The deficit has increased from USD 5 billion in 2008-09 to USD 8 billion in 2020-21. Both the countries implemented the Comprehensive Economic Partnership Agreement (CEPA), a kind of free-trade pact, in January 2010. The bilateral trade between the countries stood at USD 17.5 billion in 2020-21. The trade is in favour of Korea. In the last fiscal, India's imports stood at USD 128 billion while exports were only USD 4.7 billion. During the meeting, India sought investments from Korean companies in sectors like semiconductors, chemical batteries for e-vehicles, and technical textiles. India's share in total steel exports to the Republic of Korea is abysmally low and averaged a meagre 0.04 MMT per annum over the last five years. According to industry experts, Korean steel companies prefer to do business with firms with which they have prior experience of business relations and these things act as an implicit barrier for accessing the Korean steel market. Similarly, in the case of rice, Korea has introduced the tariff rate quota (TRQ) arrangement for the import of rice from January 2020, under which 3,88,700 tonnes is allocated to its five major importing partners — China, USA, Vietnam, Thailand and Australia. And, as a result, only 20,000 tonnes is left for all other countries across the globe including India. Indian textiles exporters face the issue of the Korean Certification mark. This mark is required on textile/apparel items (including footwear and leather products) to be imported or sold in Korea. Complaints have also been received from Indian exporters of engineering goods on requirements of local certification from a Korean agency, which is a time-consuming process and takes on an average of 27-28 weeks. Meanwhile, a joint press communique issued after the meeting of the trade ministers said that both sides have agreed to impart fresh momentum to the discussions on CEPA upgradation negotiations and also promote extensive business-to-business interactions on trade and investment between the industry leaders of the two countries. "The two ministers agreed...to address difficulties expressed by the industry from both sides and instructed their respective negotiating teams to meet on a regular basis in order to conclude the CEPA up-gradation negotiations as soon as possible (and) in a timebound manner," it said. They expect to achieve the target of USD 50 billion trade before 2030, it added.
Source: Business Standard
India needs to strictly adhere to standards to achieve potential: Experts With the European Union blacklisting five Indian organic certification agencies and concerns being raised over the country’s process, India’s organic exports may not achieve a 10-fold increase in next five years unless the Union government takes stringent measures to ensure quality, according to experts. According to a report by US Department of Agriculture (USDA), India’s organic products market - food and beverages, health and wellness, beauty and personal care and textiles – are estimated to grow to $10.1 billion by 2026, s against $1.04 billion in 2020-21. However, challenges related to India’s organic control system and increased incidences of fraud continue to impact the credibility of India’s organic sector, and its exports, according to the report released in September 2021. Problems aplenty More than 50 per cent of organic exports from India go to the US. “We lost our organic recognition from USDA last year. In ethylene oxide (ETO) issue, five organic certification agencies from India were de-recognised by European Commission. There are more problems in the store and it is a bellwether of India’s organic agriculture,” said S Chandrasekaran, a foreign trade analyst. Having a huge pool of localized agriculture graduates across the country, government should develop “competent person” model, using Skill India and Digital India, said Chandrasekaran. “In the long-term, creation of a Natural and Organic Agriculture Promotion Board to perform focused and large scale activities should be the road map,” he said. The problem with regard to organic certification is that loopholes in the system are taken advantage of by unscrupulous elements. This is one of the reason why some of the export consignments did not conform to ETO norms, resulting the EU issuing quite a few rapid alerts against Indian shipments. Agricultural and Processed Food Products Export Development Authority (APEDA) in October last year had derecognised five firms by suspending accreditation to Aditi Organic Certification for a year and banning four others - CU Inspections India , ECOCERT India, Indian Organic Certification Agency (Indocert) and OneCert International - from registering any new organic processor or exporter for organic products certification. Blockchain system The action followed after some shipments cleared by them failed to meet the norms for ethylene oxide (ETO) presence, which was also flagged by the European Commission. “The biggest challenge in organic products marketing is assured product integrity. Without traceability and use of blockchain technology it will be very difficult to win consumer confidence,” said Vijay Sardana, a food policy expert. All laboratories and certification companies must be part of blockchain system to avoid fake certificates and test report, Sardana said adding without tough measures, reliability cannot be ensured. As many as 44 per cent (or 2.32 million) of the world’s certified organic farmers are from India, the highest in the world. Still, India’s total certified organic area is about 2.3 million hectares, as against world’s total area of 72.3 million hectares, according to USDA.
Source: The Hindu Businessline
Every stimulus package to boost the economy has its own burdening impact on the country’s fiscal position. However, a stimulus through tax reforms will be more helpful in infusing resilience in the economy in a sustainable manner. Finance Minister Nirmala Sitharaman is seeking suggestions from stakeholders in the run-up to finalise the annual budget for 2022-23. It is high time to go for an out-ofthe-box initiative on the front of personal income tax. There is an opportunity to provide stimulus through direct tax reform in the form of an expenditure tax, which will be a more rational substitute for the income tax. If personal income tax is done away with, about 6.32 crore people will have the freedom from the burden of submitting annual Income Tax Returns (ITR). The ITR has a demoralising effect on new entrepreneurs and emerging start-ups to grow as they are not exempted from personal tax compliances. Income tax regulations require people to maintain and submit various records and file returns. The Income Tax Department tirelessly scrutinises millions of returns, which are followed by queries, clarifications, refunds and protracted correspondence. The litigations, if any, go on for years, taking a toll on both the citizens and the government. The various organisations complying with TDS will also be free from the burden of collecting, remitting and submitting various returns if personal Income Tax is shelved. There are several countries such as the UAE, Qatar, Oman, Kuwait, Cayman Islands, Bahrain, Bermuda, Saudi Arabia, and Brunei Darussalam where you do not need to pay Income Tax. People in these countries, however, do need to contribute towards social security. Some of these countries are well-known tax havens, while most others have managed to use natural resources to fund government expenses. Income Tax is largely levied on middle-class salaried people. The rich have dividends and capital gains as a major source of their income rather than salaries. According to the data of Income Tax Department, only 8,600 individuals have revealed that their annual income is above Rs 5 crore. About 42,800 people have declared taxable income of over Rs 1 crore annually. Further, four lakh people with income more than Rs 20 lakh, and constituting 1% of the tax base, account for 63% of the income taxes collected from individuals in an economy with a tax-paying base of about 1.5 crore people. Thus, 99% of India’s tax-paying people are being coerced into filing their ITRs, while they pay a minuscule amount as tax on some pretext or the other. The people who pay up are mostly the salaried class because they can’t evade taxes as these are deducted as TDS. Personal income tax is effectively collected only from salaried individuals. All other categories somehow escape by adopting different methods. The salaried class pays tax on the income and then spends the net income, whereas the non-salaried classes spend money under various expenses heads and reduce their tax liability. Expenses on rentals, phone, electricity, domestic and foreign travels, water, entertainment are part of taxdeductible expenditure for the business and professional category. Only 2,200 doctors, chartered accountants, lawyers and other professionals have disclosed annual income of more than Rs 1 crore from their profession. Big agriculturists hardly pay any income tax. Even political parties ensure that they do not pay any taxes. As revealed by Prime Minister Narendra Modi at a summit in February 2020, only 1.46 crore individuals are liable to pay income tax, which is less than 1% of the population. For the year 2020-21, out of gross tax revenue of Rs 24,23,020 crore, the income tax was budgeted at Rs 6,38,000 crore which comes to 26.30% of total revenue receipts. Corporate tax of Rs 6,81,000 crore (28%), GST Rs 6,90,500 crore (28.5%), excise duties Rs 2,67,000 crore (11%), customs Rs 1,38,000 crore (5.70%), and service tax Rs 1,020 crore (0.045%). Generation of Black Money It is a general tendency among the people to evade tax. Tax planning or tax avoidance is considered a legitimate right to reduce tax liability. However, evasion is an offence. There is a parallel black money economy blocked in shape of properties and gold. If personal income tax is replaced by expenditure tax, then there will be no scope of converting genuine income into black money through tax evasion and the entire funds will be available for productive purposes of the economy. Banks Credit Creation Banks generally retain 3% of the deposit under the cash reserve ratio (CRR) and lend 97% including Statutory Liquidity Ratio (SLR) requirement. This is because of the fact that 97% will come back to the banking system as deposits, which will be lending again retaining 3%, and the process will go on and on. This is the process of credit creation by banks. If any black money comes to the bank as a legitimate deposit, this will steeply increase the money supply and hence productivity as well. This will also significantly increase the lending capacity of banks. The Outcome The expenditure tax is quite like the income tax, with one key difference being that the tax base is one’s expenditure, and not his income. The rates of expenditure tax can be made steeply progressive to tax the rich heavily. One would be still better off as a large part of the spending by the rich is out of capital, which is generally untouched by the income tax. India must explore the option of replacing income tax with expenditure tax. The shift from the income base to expenditure base will not only mitigate the harmful effect and inequities of a non-comprehensive income tax but will also reduce extravagant consumption and promote savings to a significantly larger extent than the present system promises. Another significant gain will be placing a part of personal taxation on a family basis without imposing high marginal burdens on the incomes of working wives. Expenditure tax will be a blockbuster reform with immense potential to provide a fillip to the economy. The author is the vice-chairman of Punjab State Planning Board, and Chairman of ASSOCHAM, Northern Regional Council. The views expressed in this article are those of the author and do not represent the stand of this publication.
Source: News18
The move is being considered after proposals worth $6 billion were stuck amid the red tape, say sources India is considering easing scrutiny on certain foreign direct investment, according to people familiar with the matter, after rules mainly aimed at China created a bottleneck for inflows. Currently, Prime Minister Narendra Modi’s government scrutinizes all investment proposals from companies that are either based in countries that share a land border with India or have an investor from one of these nations. It is now considering exempting proposals where the so-called beneficial ownership is less than 10%, which means the investor may be from a neighboring country but holds only a small stake in the firm proposing the investment. The move is being considered after proposals worth $6 billion were stuck amid the red tape, the people added, asking not to be identified discussing private deliberations. The proposal could be approved as early as the next month. The government had imposed curbs on such investments amid a bloody border standoff with China and also avert risks of opportunistic takeovers. The move slowed down the approval process with proposals from the neighboring nations including China and Hong Kong piling up. An email and text message sent to the trade and industry ministry spokesperson remained unanswered. Apart from delaying, the restriction had also complicated deal-making for investors. Relaxing the rules will broaden the pool of investors that capital-hungry Indian firms can tap, as local firms increasingly turn to large global investors to fund their growth. As of Nov. 2021, over 100 proposals are awaiting clearance from the government, with around a quarter of them of over $10 million each.
Source: Bloomberg
The exhibition of India and Europe made textile mega hi-tech weaving machines and ancillaries commenced at the Surat International Exhibition and Convention centre at Sarsana on January 8. The three-day Surat International Textile Expo (SITEX) 2022 that concluded on Monday gathered business worth Rs 250 crore, according to the Southern Gujarat Chamber of Commerce and Industry (SGCCI), which organised the event along with the Southern Gujarat Chamber Trader and Industrial Development Council. The exhibition of India and Europe made textile mega hi-tech weaving machines and ancillaries commenced at the Surat International Exhibition and Convention centre at Sarsana on January 8. It was inaugurated by Union Minister of State for Textiles and Railways Darshana Jardosh, in presence of state BJP president CR Paatil. Sources in SGCCI said that over 75 exhibitors from Surat and other parts of the country took part in this year’s SITEX with machines made in European countries, as well as China and Japan. Buyers were registered from across the country. The centre of attraction was the latest hi-tech machines like the double rapier weaving machines, dobby rapier loom machines, and 1000 rpm high speed Air Jet loom machines. SGCCI chairman Ashish Gujarati, said, “The exhibitors got more inquiries and orders on the latest textile machinery. In three days, exhibitors did business to the tune of Rs 250 crore. We also expect capital investments in terms of installation of new machinery for the next four to six months will be to the tune of Rs 1,300 crore.” “Earlier China was a major supplier of polyester bed-sheets for hotels and hospitals across the world, now the majority of such orders have come to Surat. This has resulted in a combination of man, machine and skills, for which updated machinery is required… hence this exhibition has played an important role.” he added. Talking to The Indian Express, Ashok Advani, distributor of China-made machine brand in India, said, “In this exhibition, we have come up with the latest hi-tech updated technology high-speed weaving machines. We are expecting a business of around Rs 20 crore through this exhibition.
Source: Indian Express
In view of the continuously increase in prices of yarn, the exporters of apparel in Gautam Budh Nagar, Noida wrote a letter to the Ministry of Textiles on Monday, highlighting this issue. They have urged the authority to decrease the yarn prices as the current prices are adversely affecting the garment industry in the district, as per media reports. The President of Noida Apparel Export Cluster (NAEC), Lalit Thukral who is also an executive member of Apparel Export Promotion Council (AEPC) said that INR 130,000 crore is the total export value of the apparel sector in India out of which INR 40,000 crore revenue is generated alone in the state of Uttar Pradesh. Noida accounts for approximately 3,000 garment export firms generating early INR 32,000 crore revenue through apparel export. “Exporters enter into a price agreement with the buyers at least six months before the supply of apparels. Now, as the mills have been increasing the prices frequently and arbitrarily, the buyers or importers are not willing to increase the prices as well,” Thukral said, adding that this has made the situation worse for the Indian exporters, especially those in Gautam Buddh Nagar. The Apparel Export Promotion Council (AEPC) is an autonomous, nonprofit body dedicated to promotion of exports, The, popularly known as TEXPROCIL has been the international face of cotton textiles from India facilitating exports worldwide.
Source: KNN India
The country earned record export revenue in 2021 but it is still far from its ambitious target of $100bn Egypt is aiming to double its export revenue to $60 billion by 2025 as part of its plan to eventually reach $100bn, its Minister of Trade and Industry said. The country is on track to reach an initial goal of $60bn owing to the government’s support for exporters during the Covid-19 pandemic and increased local production, Nevine Gamea told Al Arabiya television station. Egypt's export revenue surged by a record 22.5 per cent annually to $31bn in 2021, according to a statement from Prime Minister Mostafa Madbouly. In 2020, President Abdel Fattah El Sisi had set an ambitious target to reach $100bn in exports over the next few years, without specifying a concrete deadline. Hani Berzi, chairman of the Food Export Council, told The National he believes the $60bn target is achievable and the $100bn target could follow by 2030. "We are on the right track. Our exports will continue to grow. Especially when the situation worldwide normalises post-pandemic and the supply chain is back to normal, I think we will achieve even better results," Mr Berzi said. Despite the pandemic, Egypt’s gross domestic product rose 3.3 per cent in the 2020-21 fiscal year that ended on June 30, according to the International Monetary Fund. Economic growth is expected to reach 5.6 per cent in the fiscal year that ends in June 2022 and the draft budget for the 2022-23 fiscal year is targeting 5.7 per cent growth, the finance ministry said earlier this month. Last year Egypt said it would embark on a three-year structural reforms programme to support private sector-led economic growth and develop key sectors. These include manufacturing, agriculture, and telecoms and IT. The Export Development Fund disbursed 23bn Egyptian pounds ($1.4bn) in subsidies to exporters in 2021, Ms Gamea said. Government support helped to grow exports significantly in 2021, including the payments of arrears that had been delayed for years, Mr Berzi said. Small and medium-sized enterprises have also been key to the sector's growth. “The more small and medium-sized exporters that will move into the system, the more our exports will grow," he said. In addition to government support, the growth in exports can be attributed to the fact that local production did not stop during the pandemic. Some international markets shifted to Egyptian products due to the availability and lower cost. The country’s top 10 export sectors include chemical products and fertilisers; building materials; food products; engineering and electronic goods; agricultural crops; readymade clothes; printing, paper and packaging; spinning and textile products; furniture; and medical products. Exports value in the chemical products and fertilisers sector grew between 43 per cent to 45 per cent last year, according to the trade ministry. The food sector exports grew 18 per cent last year to around $4bn, Mr Berzi said. The agriculture ministry reported that the volume of agricultural exports rose 9.5 per cent to a record 5.6 million tonnes in 2021, led by citrus fruits, beets and potatoes. At the Egypt Economic Summit in December, Ms Gamea said “to reach the $100bn goal, we must increase local production first”. As part of Egypt's efforts to boost exports, six new industrial parks have been built and the trade ministry has simplified procedures for the private sector to obtain licences for industrial projects, she said.
Source: The National News
Trade is one highly significant part of Africa’s story. Its pre-colonial, colonial and postcolonial transitions are all marked by trade. But for many years, African trade has struggled with several challenges: poor infrastructure, high transaction costs, opportunism and unfriendly policies. So when President Bill Clinton signed the African Growth and Opportunity Act (AGOA) in 2000, African countries were given a competitive edge by providing unilateral duty-free exports for 6,500 products from Africa to the United States. But that reality is changing for some countries. On January 1st, 2022, the US officially barred Ethiopia, Guinea and Mali from accessing the AGOA. The move comes two months after president Joe Biden told Congress that he plans to cut off the three countries from the program over coups and alleged human rights violations, which put them in violation of the program’s eligibility requirements. A lot of groups and individuals have condemned the US government’s decision. Ethiopia’s Investment Commission described the sanction as disappointing and very regrettable. Meanwhile, other groups such as the American-Ethiopian Public Affairs Committee (AEPAC) have tried to lobby the White House to reconsider, but all to no avail. Why these countries were barred This is not the first time the US is delisting countries. As of 2020, 38 countries were eligible for AGOA benefits. The requirement for eligibility is that the countries involved must establish conducive environments for democracy and human rights. Mali is getting the stick for the second time. The first time was when President Obama removed it in 2013 over a coup. Ethiopia has been in the midst of a civil war since November 2020, which has already left thousands of people dead and displaced more than 2 million. In Guinea, military officer Mamady Doumbouya has been running the country as an interim minister since October, after he led the country’s armed forces in a coup the previous month. And in Mali, Assimi Goïta, a military officer, has been serving as interim president since May 2021, when he led the army to a coup. Why does it matter? In 2019, African countries exported goods worth $8.4 billion to the US under AGOA. The agreement has helped participating countries develop products for US consumers, grow industries, and create jobs. For example, it helped to create a huge textile industry in Ethiopia. From 2000 to 2020, the country exported garments worth $722 million to the US duty-free, including to major American fashion labels such as Calvin Klein and Tommy Hilfiger. By taking advantage of the AGOA, Ethiopia’s poverty dropped by 42 per cent in the same period. Mali has also benefited from exporting arts and antiques to the US, and Guinea has benefitted from aluminium exports. The removal of the three countries from the AGOA program and the tensions in the countries threaten economy-driving industries which employ thousands and will likely rattle investors. Already, the global clothing company PVH Corp, which includes brands such as Tommy Hilfiger and True & Co., has said it is closing its manufacturing facility in Ethiopia due to the crisis in the country. PHV Corp, which entered Ethiopia together with other American companies because of the Ethiopian government’s drive to build industrial parks to make apparel and footwear for export, announced its decision two weeks after Biden’s statement in November. The AGOA decision will cause these countries to start cultivating markets elsewhere. China has already announced new investments in Ethiopia since the US announced the country’s delisting from AGOA. So it’s very likely that Africa’s largest creditor establishes a new market.
Source: Ventures Africa
COVID-19 has changed the world over the last two years. Years 2020 and 2021 will be remembered for their far-reaching effects on social, economic, cultural, and psychological life. This feature analyses impact of these changes on global fashion and re-imagines its new face in 2022 and beyond. According to IMF’s October 2021 forecast, global economy is projected to grow 5.9 per cent in 2021and 4.9 per cent in 2022 in contrast to 2020 growth of (-)3.1 per cent. The expanding economic growths signal positive outlook going forward. The positivity weighs even more in the light of past two years of COVID-19 pandemic that disrupted the lives of millions of people across the world sabotaging their livelihoods, while interrupting international trade, travel, economies and consumption patterns. Fashion, being discretionary consumption, was hit even harder. How fashion was disrupted Starting from China in 2020, COVID-19 virus spread slowly but steadily throughout rest of the year and in 2021 it released new variants generating fatal waves after waves. Its existence led to continued series of lockdowns, travel restrictions, social distancing and other COVID-appropriate behaviours in various parts of the world. The circumstances left retail industry, fashion segment in particular, in complete disarray impacting sales, profits, inventories, jobs and the entire ecosystem. Global fashion industry, valued at $3 trillion, constitutes 2 per cent of the word’s GDP and when such an industry is impacted the results are far-reaching. The disruption in global fashion started when people were asked to stay at home as precautionary measure to contain the spread of the virus. To rule out any possibility of their coming out, markets, shopping malls and retail stores were also shut down. This disallowed outside shopping for months forcing the consumers to switch to online shopping. To further worsen the things, the authorities’ world over, allowed online purchase of only essential items, restricting sale of non-essential items, that also included fashion, for a later time. Consequently, fashion sales declined and inventories held up throughout the supply chain. Orders were either cancelled or reduced or diverted to arrest additional losses. Simultaneously, constrained global freights and transportation jeopardised supply chain logistics worldwide. The goods transportation to their destination markets faced challenges and those which could make their way out could move only with increased cost, eating up profit margins. Overcoming all these challenges, when fragmented fashion supplies opened up after sizeable gap the demand for fashion items had taken a 360 degree turn with ‘need’ replacing ‘aspiration’. Luxury and aspiration fashion was not needed anymore and the fashion demand, otherwise widely diverse, narrowed to only essential wearables. Work from home cut down sales of formal wear; no outing dented active wear category; social distancing too restricted fashion, requiring very few options that already existed in the wardrobes; home confinement needed only lounge and comfort wear as new buys; curtailed festivities, celebrations and public gathering suppressed beauty, fashion accessories and occasion wear demand for a long time; and, school uniform sales also touched the bottom due to online schooling that compensated for school shut downs. Not only the consumption side suffered immensely but supply side had its own sufferings too. Global fashion hubs in Europe, Asia and America had to either suspend or delay forward-looking and business-building activities of fashion shows, trend forecasts, new expansions, brand launches and other growth plans. Big fashion players suddenly started looking at other aspects of their existence – charities, donations, human welfare, medical supplies, sustainability, social responsibility and human well-being knowingly and global well-being unknowingly. What changed in 2021 2021 began with good news of availability of various vaccines to fight COVID-19, speeding large scale vaccination programmes in many countries. The development brought back some relief and markets throughout the world began opening up, reviving hindered businesses. Although new variants of the virus continued raising their heads in many countries, the overall fashion sentiments gained life. The fashion players innovated, adapted to new realities, incorporated new strategies and began building upon new learning enforced by unprecedented times. Whether it was product development, tracking consumer and shopping behaviour, re-working supply chain, switching to new operational models to keep businesses running, adopting new technologies, reworking marketing and distribution approach in order to meet uncertainties of unknown future, everything progressed with purposeful agility. Among plethora of developments, fashion revived with short-term as well as long-term changes as the year 2021 approaches its end. As this feature goes in print the year-end estimations are out. A joint report by McKinsey and The Business of Fashion estimates the global fashion sales to surpass 2019 levels by 3-8 per cent with strongest recovery to be seen in China and US markets, followed by Europe. The fashion industry recovery will be V-shaped as performance in the first half of 2021 pointed to a possible return to profitability by 2022. However, the recovery is expected to have a flip side too. A combination of material shortages, transportation bottlenecks and rising shipping costs will inflate input costs at estimated average of 3 per cent, forcing increased prices for consumers. This will call for businesses to re-look at their supply models and focus on making these as flexible and resilient as possible to navigate the years ahead. Luxury fashion & consumerism Despite luxury retail hit hard in 2020 due to lockdowns and travel restrictions impacting wealthiest of consumers, it revived back in 2021 to some extent. As the year progressed, markets around the world kept opening up and by the end of third quarter, many luxury brands reported a good turnaround. According to a Bain and Company study done in association with Altagamma – the Italian luxury trade foundation, global personal luxury goods sales will end 2021 with €283 billion ($324 billion). The projected figure will be 1 per cent increase over 2019and 29 per cent increase over 2020, though earlier projection did not expect recovery anytime before well into 2022. Projecting forward, Bain has predicted the personal luxury goods to continue its upward trajectory through 2025, advancing between 5-9 per cent CAGR to reach €360 to €380 billion ($412-$435 billion). Millennials or Gen Y, as Bain terms them, and Gen Z consumers will account for nearly two-thirds (63 per cent) of personal luxury goods sales in 2021, up from 44 per cent in 2019. By 2025, they will make up over 70 per cent of the total market as Gen X and Baby Boomers’ will influence and spend less. Noting that the COVID-19 pandemic and recovery has fast-forwarded structural changes in the luxury market that will set the pace for the coming decades of its evolution, luxury brands will continue to redefine themselves, expanding their mission beyond creativity and excellence, becoming enablers of social and cultural change. On the other side of spectrum, the secondhand luxury market is expected to end 2021 with €33 billion. The rapid growth in the secondhand luxury market is evidence of the next-gen consumers’ values shift wherein traditional luxury exclusivity is giving way to inclusivity. Under this trend, the consumers are adopting luxury brands as a ‘badge of values’ as opposed to earlier ‘badge of wealth’. If this trend builds then it will require transformational change for brands in the first-hand luxury market; this is how luxury’s future can be summed up. International tourism and with it, the luxury brands are expected to fully revive back by 2023. Therefore in the mean time, to compensate for the loss of international shoppers, involved brands must engage with domestic and local consumers and add domestic market share to their existing markets. Way Forward 2022 If 2020 unleashed numerous challenges, 2021 accelerated the future strategies inspired by the innovations undertaken to meet those challenges. The most effective and productive innovation of these times have been the unprecedented usage of technology. Irrespective of where one is placed in the fashion value chain, the need of technology has never been as compelling as it is today. Be it the area of fashion manufacturing, distribution or retailing, no player can resist the edge which technology offers. Year 2022 is going to see exponential growth in tech usage and development in fashion industry revolving around artificial intelligence (AI), virtual and augmented reality (VR & AR), blockchain and mobile commerce. Artificial Intelligence AI will become future state of all fashion things. The fashion industry is geared up to use AI in various areas of its functioning ranging from manufacturing, marketing and selling products to understanding consumer behaviour, creating awareness, product development and tracking demand. In the coming years, the technology will maximise users’ shopping experience, improve sales systems and enhance the sales process through intelligent automation. Chatbots and touchscreens are being used in stores to improve customer experience and customised product suggestions. It is becoming a common sight to find some form of AI chat technology on fashion websites that’s being used to enhance the customer experience. A great successful fashion requires right combination of designs and patterns to design a costume, making it attractive among customers. AI is capable of doing that besides detecting demand trends and projecting the new trends while reducing the forecasting error. The future product design will be so much driven by AI that it would emerge as the designer itself. AI in retail is set to be worth $19 billion by 2027 and pandemic has been the opportune time for the companies to speed up its adoption. Virtual & Augmented Reality The boom in online shopping during the pandemic times has enabled retailers to leverage their online operations and integrate it well with their in-store offering. Omnichannel has gained more importance and as a result of this the focus has now shifted to improving combined shopping experience across both the channels. This is where the use of AR and VR is becoming very popular. One widespread use of VR is enabling fashion customers to virtually try on outfits offering greater fit-accuracy before the purchase. The technology uses customised measurement functionality, fulfilling virtual shoppers’ genuine need of trial-before-buy. The outcome is customers’ engagement and their long-time retention and when backed with awareness creation on ever-expanding social media the technology assumes a prominent status in fashion retail. The market is and will continue to witness the emergence of many tech-service providers in coming years that will elevate fashion brands’ online and in-store experience which may feature digital styling getting personal too in future. The technology is also being used in clothing as Louis Vuitton designed ‘skins’ for League of Legends characters and Drest sold digitised versions of Fartech inventory. Ralph Lauren collaborated with Bitmoji to enable customers to create their own Bitmoji look with the new mix-and-match wardrobe from Polo Ralph Lauren. Such collaborations demonstrate the irresistible power of the e-wardrobe. Blockchain The other revolutionary tech in future fashion is going to be blockchain which may find effective utilisation in back-end operations involving supply chain and product development as it can prove to be a great tool for transparency, traceability, and efficiency in retail value chain. It allows all its members from vendors to retailers to be connected and able to exchange information securely. Thus it can be used efficiently to trace and record fashion merchandise in the supply chain through track-and-trace technology and inventory management. The tech creates every product’s secured ‘physical-digital’ identity link and record it on the blockchain by which it can track each movement of recorded product in the supply chain, thereby preventing entry of counterfeit products and any attempt to divert the recorded ones. Alongside, experts also see front-end operation applying RFID at large scale for online verification, automation and integration. Mobile commerce An estimated 6.4 billion people use smartphones the world over. Between 2016 and 2021, this number has grown by ~74 per cent and is expected to reach 7.5 billion by 2026. The World Advertising Research Center further projects over 72 per cent of all internet users will be accessing web pages via smartphone. These figures vouch for the growing mobile market which is being driven by advancing technology every day. The mobile commerce market is going to witness a huge growth, largely because of using smart phones for online shopping as well as for making payments for retail purchases. In fact, another study says that 2 out of 3 millennials prefer to shop online than in-store. Another large usage of mobile is social media that facilitates brands’ presence on their customers’ favourite channels with a fully integrated digital commerce offering. This provides them greater visibility and opportunities to make a sale. Markets report that fashion apps like Vinted and Depop are replacing traditional avenues like eBay and Gumtree in selling secondhand fashion. In coming times, therefore, mobile commerce will continue innovating and making its presence felt in the fashion industry. Digitisation has challenges too Digitisation is big and will only get bigger in 2022 with fashion consuming it with increased appetite. But even digital world has its own challenges, major one being the protection of constituting data which may be vulnerable to cyber attacks. This makes cyber security a growing need among fashion retailers and e-commerce players as the internet usage and penetration grow with time. Today businesses face more threats of cyber attacks and risks of improper data handling than ever which demands better digital security management. This can be achieved by fashion players only if they urgently start investing in protection of their digital assets and data therein. Sustainability Today’s fashion consumer is more inclined towards sustainable fashion and the inclination has only grown post-COVID. This has made fashion creators including designers, product developers, buyers and merchandisers opt for eco-friendly and sustainable fashion alternatives. Although non-sustainable fashion will still continue to dominate the overall fashion offerings in 2022, brands will be more wary of continuing with such undesirable products for long. They will have to own the responsibility of saving planet sooner or later. Reuse and recycling of garments and accessories is going to be more common going forward. Since not even 10 per cent of textile market is composed of recycled material at present, the industry-wide investments will be required to scale up closed-loop recycling technologies and processes. So, a significant development can be expected in this area. In fact many businesses have already ramped up investment in closed-loop recycling solutions to reduce environmental impact. Learning from COVID times marred with lockdowns, the designers are moving away from creating multiple seasonal lines throughout the year to designing timeless pieces that can stay with consumers for years. This means a reduced pressure on fashion manufacturing, processing and transportation. As rapid production runs create excessive textile waste, lots of apparel end in landfill and harm both factory workers and the environment. This is the reason why more fashion consumers and brands are turning to the concept of ‘slow fashion’ characterised by shortened and economical manufacturing process. As a result, more brands are opting for sustainable production and more consumers are choosing conscious brands over fast fashion. Buying second hand clothing through consignment and thrift stores is another sustainable practice which is getting increasingly popular. For instance, one clothing site Re-Fashion sells second hand designer clothing at affordable prices and also accepts donations for free. Likewise, many emerging brands are making moves to align with this shift in consumers’ behaviour. Brands like Cuyana are urging their customers to buy “fewer, better things” while some like Hackwith Design House are making clothing out of dead-stock fabrics. All these developments show how sustainability is pushing business decisions as well as reshaping the online market. Product development To counter the spread of coronavirus, fashion industry innovated and introduced antiviral products which could not only protect the wearer from contracting the infection but also remain sustainably long-lasting. Though such initiatives commenced in 2020, their greater realisation, acceptance and effectiveness gathered pace in 2021. During the initial wave of COVID-19, many global fashion brands came up with antiviral masks, PPEs and clothing items. Soon the compulsion became a norm and many fashion companies began to integrate antiviral products into their collections. Italian denim brand Diesel launched its first antiviral jeans for the F/S 2021 season using Polygiene’s ViralOff finish. Result – Polygiene’s sales reported 141 per cent jump in the Q1, 2021 driven by continued demand for ViralOff. Likewise, denim brand DL1961 and Warp姧 teamed up with HeiQ to give all future denim models HeiQ Viroblock – an antiviral treatment which even menswear Italian supplier Monobi Fashion used for its jackets and jumpsuits. Since virus has the capability to stay on textile surfaces for more than one day, risk to the health of their handlers, including sales staff and customers, needs to be eliminated. To serve the purpose, HeiQ turned its ‘Viroblock’ into a spray which the brand could use in its stores to clean products after their touching or trials. As these sprays can adhere to all textile surfaces besides clothing, their applications extend far beyond the apparel industry – from automotive interiors to mattresses, bedding, curtains, and tablecloths in the hospitality sector too. There are several more examples of similar product developments from many markets. However, this raises a pertinent question – how long would these product developments last? Looking back at history over the last few centuries, the future recurrence of infections and pandemics is inevitable. So, the only way for fashion is to get battle-ready. The world will probably get used to living with future virus threats, thereby enforcing faster adoption of protective clothing as part of daily lives. With increasing number of brands taking a serious notice of this reality, the addition of antiviral protective gear to their offering is becoming a given. But this is not as simple as it seems. The different legalities in different countries hinder a broader international roll-out of antiviral fashion as not every product is approved internationally. For instance, Toray’s Makspec V antiviral finish to be used in uniforms of the services and hospitality industries is approved in Japan only. This calls for a global effort in embracing the protective and saviour technologies for the sake of human lives. This leads us to the fact that coronavirus has stimulated growth in the design and material industries by creating new security expectations, experimenting with new inventions, and brought together different stakeholders. Conclusion Technology will continue influencing every level of fashion development in 2022 benefitting the customers. The people’s reliance on technology will only increase owing to pandemic experience and this will breed more fascinating inventions in the future. 2021 passed on many learnings to fashion industry before merging into 2022 – a yet another year which is going to be a mix of challenges and opportunities, hopefully more of the latter. Each step taken forward by the fashion industry in the New Year must be a calculative one. The fashion players will have to manage demands of digital, sustainability and the supply chain. Customers are expected to stay pliant as they had been throughout the past two years. In the recovering economies, fashion demand will only grow in 2022 and beyond. Hence, fashion companies will have to focus on unlocking growth, engage with customers, understand changing needs and intensely concentrate on building profit margins.
Source: Fibre2 Fashion
Some of the structural weaknesses in the economy today are clearly the result of the rapid trade liberalisation policies pursued by the ANC from the mid-1990s to the early 2000s. The subsequent failure to adopt a labour-intensive reindustrialisation policy has saddled the economy with the highest unemployment rate in the world. The gradual loss of growth momentum in the South African economy, which resulted in a real per capita income decline since 2014, is threatening to endanger the country’s developmental aspirations and worsen the already glaring income and wealth inequality. From youth unemployment rates hovering well above 70% among the 15-24 age group to the inexorable decline in savings and gross fixed capital formation rates, most indicators of future economic performance are displaying red flags. Eunomix Research has recently projected that in the absence of a vigorous structural transformation of the economy, South Africa is at risk of falling back to lower-middle-income status by 2028. While the structural aspects of the weak economic performance have been extensively discussed by various researchers and policymakers, the influence of economic policy uncertainty on the loss of performance has received much less attention. It is, for example, frequently reminded that the narrowness and shallowness of the structural foundation of the economy constitute a major constraint on its growth potential. They also underly the country’s inability to overhaul the exclusionary production and allocation system left in place by the apartheid regime. What has been less often highlighted is the role that inconsistent policy response and pervasive uncertainty about long-term economic policy planning have played in the loss of control over the growth trajectory. Economic policy uncertainty results from the lack of clarity and predictability of future government policy orientation or regulatory frameworks governing economic activities and entrepreneurship. Since private investors and business leaders make their investment decisions based on expectations about the future economic policy environment, decreased predictability of policy decisions makes it risky for them to plan for future operations. That risk prompts many of them to delay investment spending, thereby slowing economic expansion. Policy uncertainty also causes changes in the spending behaviour of private households, which can result in adverse demand shocks and slumps in the country’s aggregate production. Whereas many of the factors affecting policy uncertainty have only a short-term effect on production decisions, prolonged ambiguity of future policy decisions has a lasting impact on capital investments and, ultimately, on an economy’s long-term growth prospects. In a recent study based on a sample of 26 countries, variations in economic policy uncertainty were also found to come together with an increase in necessity entrepreneurship (the urge that individuals feel to set up their own small businesses in response to employment loss or loss of other sources of income). In many instances, a drop in employment opportunities pushes people to resort to precarious entrepreneurial activities as an alternative source of income, but with limited prospects of stability. The results of the study also show a sharp decrease in entrepreneurial activities in the period that directly follows the rise in policy uncertainty. This apparent reversal in entrepreneurial activities has important implications for a country grappling with high youth unemployment rates, as is the case in South Africa. The slump in the entrepreneurial drive as uncertainty begins to wane may suggest that entrepreneurial ventures set up to escape the distress of losing one’s job during periods of heightened risk tend to be ephemeral. It would therefore be imprudent to rely on them as a source of longterm self-employment generation. Empirical results of previous studies have shown that firms tend to adopt more prudent borrowing and investment policies when economic policy uncertainty is high, because a rise in uncertainty also increases borrowing costs. By reducing firms’ capacity to invest in capital accumulation, increased borrowing costs can have an adverse effect on labour productivity, lead to weaker employment growth and, in the end, result in bleak growth prospects for the entire economy. Available data show that the World Uncertainty Index for South Africa, which is highly correlated with the corresponding economic policy uncertainty index, has considerably increased after 2014. Existing research on the effects of economic policy uncertainty on growth performance provides ample empirical evidence to suggest that the co-occurrence of heightened policy uncertainty and the loss of growth momentum of the South African economy is not coincidental. Despite the political stability of South Africa with the same ANC remaining in control since the advent of democracy in 1994, only a few observers would consider the successive economic policies pursued by the ruling party as having given a consistent development orientation to the country’s economy. The recurrent shifts in growth strategy, compounded by the open factional divergence in ideology within the ruling party, has contributed to increasing confusion instead of providing the assurance of strategy coherence that entrepreneurs need to make long-term investment decisions. The hollowed state capacity for policy implementation constitutes an additional risk factor for many economic operators in search of predictability of the growth trajectory. While the global economic conditions that affect all integrated economies are inherently unpredictable, it is ultimately the consistency in policy and the adherence to a clear development strategy that helps mitigate the adverse effects of uncontrollable external factors. Some of the structural weaknesses observed in the economy today, such as the collapse of the textile industry and the concomitant premature industrialisation, are clearly the result of the rapid trade liberalisation policies pursued by the ANC from the mid-1990s to the early 2000s, as noted by many South African economists. The subsequent failure to adopt labour-intensive reindustrialisation policy has saddled the economy with the highest unemployment rate in the world, yet no credible plan has so far been put forward to solve this thorny problem. But even as the current peak in uncertainly exogenously generated by the pandemic has worsened an already bleak outlook for the economy, the official policy response (based on the discussion document drafted by the ANC’s economic transformation committee) has done little to reduce policy uncertainty as it remains vague on the party’s actual capacity to marshal the necessary human and financial resources to make the desired transformation possible. The striking incoherence between the chosen capital-intensive industrialisation options and the insufficiency of human resource stocks required to pursue such a growth trajectory has already been pointed out. To avert the ominous scenario in which the economy continues to disintegrate before our own eyes, the ruling party ought to go beyond the rhetoric of economic transformation and design convincing policies, with concrete budgets and human resource mobilisation capable of inspiring optimism and trust in a better future. Prof Alexis Habiyaremye is senior researcher at the DST/NRF SARChI Chair in Industrial Development based in the School of Economics, University of Johannesburg. Dr Indu Khurana is an associate professor of Economics and Business at the HampdenSydney College, Virginia, USA.
Source: Daily Maverick
Following the launch of its new bold brand campaign encouraging consumers to ditch fast fashion, Rent the Runway’s senior vice-president of brand marketing Jess Burns gets candid about pandemic-related trials and tribulations, 2022 trends in fashion and retail, and the brand’s vision for transforming the industry – one rental at a time. The US Environmental Protection Agency estimates that each year, landfills take in 11.3m tons of textiles – making up some 7.7% of total municipal solid waste landfill space. At the same time, the rate of clothing and apparel production continues to skyrocket. On a mission to break this cycle of waste is direct-to-consumer (DTC) designer fashion rental company Rent the Runway. Last week, the brand unveiled its new ‘Fast Fashion Free’ campaign, featuring bold messaging and visuals developed by creatives at YummyColours encouraging consumers to ditch unsustainable fashion in favor of rental designer wear. The campaign also entails a partnership between the company’s New York headquarters and Green Textiles through which consumers can recycle unwearable fast fashion that will then be recycled to create insulation. But the brand says this is just the beginning. Here, the company’s senior vicepresident of brand marketing Jess Burns talks brash marketing, 2022 trends and why she believes the future of fashion is rented, not bought. Tell us about the inspiration behind the new Fast Fashion Free campaign. This campaign is really about living our purpose. A lot of brands will kind of scramble to try to figure out where they should focus on purpose ... or they lean into some flash-inthe-pan social impact program because [they think] it will make them more authentic. But this is really at the core of what we do. This campaign isn’t just an ephemeral strategy– this messaging is a core fiber and focus of our business. And as we think about communicating the value prop of Rent the Runway, being a more sustainability-focused company is a key consideration for us, but also for customers as they look to re-evaluate the brands that they choose to invest in. We decided to launch this campaign [this month] because it was a very timely strategy, given that everyone is re-evaluating their behaviors and bad habits [at the start of the new year]. As we think about consumers being more conscientious during this time, we felt like it was really timely to introduce Rent the Runway as a way for customers to dress in a way that’s ... healthier for the environment. The campaign was intentionally provocative, and you’re going to see a lot more of that from Rent the Runway. We want to be very clear on what we stand for, and we want to be a bit louder on how we do that. With this campaign [we wanted to emphasize that] fast fashion is garbage. It’s ending up in landfills. It’s time for people to reconsider their habits when purchasing fast fashion. We were also very intentional about the media channels we chose to invest in. We worked with Seen Media and LinkNYC [to launch] out-of-home (OOH) activations – [including] both wild postings and digital billboards right outside of fast fashion retailers. We want to stop people at the last moment of truth before they go into a fast fashion retailer and [encourage them to instead consider] investing in a subscription to Rent the Runway. What’s the brand’s sustainability vision, writ large? How are you thinking about changing behavior more broadly? Sustainability is at the core of our mission, business model and our financial model. [We want to educate consumers that] increasing the number of times that the clothes in our closet and [from Rent the Runway’s] cloud are worn improves positive environmental impact and financial outcomes. Earlier this year, we invested in a study called the Life Cycle Assessment study, and what we learned is that when a customer rents a garment from our closet in the cloud, the result is net environmental savings compared to purchasing clothing ... and those are net environmental savings across water usage, energy uses and CO2 emissions. You know, when you look at other retailers, they kind of have to tack on a sustainability or social impact program. Our business was built around this. Right now we are in a position to be able to communicate that very confidently – that we are one of the very few players in this industry that are telling people to buy less, but they can effectively wear more. That is what we think is a really exciting solution to fast fashion. Our chief exec Jen Hyman said: “We exist to put fast fashion out of business.” Before Rent the Runway, there weren’t many solutions to really combat that. Through a lot of the studies that we’ve done, we've learned that 89% of our subscribers say that they buy less clothing altogether [since joining Rent the Runway]. 83% specifically say they buy less fast fashion when they have a subscription to Rent the Runway. When we scale the value of Rent the Runway to millions of women, [these statistics] will really appeal to them. We are going to be releasing our sustainability goals in March ... so people really understand what we’re striving for. We are one of the very few players that are very vocal, and I think very fair and clear on what we actually mean when we say we are a more sustainable business. I think we’re really setting the tone for the industry overall. The sustainability movement in fashion appears to be in the early stages still, but we are seeing brands and retailers increasingly leaning into and promoting sustainability – such as Levi’s ‘Buy Better, Wear Longer’ initiative. How does Rent the Runway plan to carve out a competitive advantage and grow its business? The industry as a whole has a lot of work to do. One of the data points that always startles me is that if our industry stays the way it is with no changes, an estimated 115m tons of clothing will be in a landfill by 2050. [But] I’m encouraged that more retailers and more fashion and apparel brands are starting to re-examine how they can be more sustainable businesses. We were one of the first players in the space to really understand that. The job to be done for us is really to continue to scale the relevancy of renting. There’s more work to be done there. As far as competing with other players coming into this space, you know, we’ve been doing this for 13 years, between building the operations around our rental business and building the relationships with 750-plus designers. We’ve been doing it for a while now ... I would hope that [other players in the space] would look to us for some of the ways that we’ve been able to make it relevant to customers ... and done it successfully. Talk to me about the impact that the pandemic has had on your business. It’s been widely reported that fashion and retail players including Rent the Runway have struggled in the face of stay-at-home orders and decreased social activity. How have you approached these challenges and what is 2022 looking like from your vantage point? A lot of consumer behaviors have shifted during Covid, but we actually saw them as beneficial to our business. Obviously, customers are having more conscious conversations around sustainability and wanting to live sustainably ... so Rent the Runway provides a valuable solution to them. A lot of other trends we’ve seen are around access versus ownership. You look at other business models such as Airbnb or Spotify – these business models are continuing to be more important for customers. We are very much aligned with that. Another key trend that we have been seeing during the pandemic is a focus on more financial savings, and a business model like ours [enables consumers to] get, over the course of a year, thousands and thousands of dollars in value from a subscription that is a pretty low investment per month. So, it’s just a smarter choice. [The overarching] trend is seeing customers make smarter decisions because of the uncertainty and volatility out there right now. [Another] thing that is really encouraging for our business is the continued growth in e-commerce, and people continuing to spend their dollars online. All [of these] trends are really powerful tailwinds in favor of people supporting Rent the Runway’s Closet in the Cloud. We can expect to become more relevant throughout the year as the world continues to open back up. [A misconception we want to dismantle is that] Rent the Runway’s Closet in the Cloud isn’t about dressing for special occasions – it’s really about dressing for every day, [whether it’s] wearing a really beautiful top on your work Zoom call or ... deciding to invest in more loungewear through our subscription platform. When it comes to scaling the relevancy of Rent the Runway and making it more tangible to millions of women, the focus is on our subscription business. We want to hijack this buying mindset ... and change customer behavior into more of a renting mindset. [Right now], it’s getting colder and when women are thinking, ‘Oh, this is a new season, I need to get a bunch of new coats.’ It’s really about stepping into that thought process and getting [every woman] to think about a subscription to fashion as a solution for when she needs clothing for new seasons and for moments large and small. We’re excited about solving for this challenge in the next couple of years as we continue to invest in brand marketing. We’re a disruptive brand, and we’re going to continue to invest in disruptive marketing to make sure customers are aware of renting as a solution. Moving beyond the company’s core focus on sustainability, how is Rent the Runway focused on innovation at this moment in time? We’re evolving the end-to-end experience for our customers ... to make it easier and even more fun to pick garments on Rent the Runway but also ... from a [supply chain and logistics] perspective. We’re evolving ways to be able to drop off your garments. We’re evolving ways for them to be picked up at your house. We’ve already launched at-home pickup where you can not only pick from all 750 designers and get multiple garments sent to you on a monthly basis, but also have them picked up as well. We’re thinking about the end-to-end experience and making sure it’s streamlined and delightful and a more fun shopping experience than traditional DTC e-commerce. From the brand marketing perspective, what is your vision for 2022 and beyond? You’re going to see more of us out there. It’s really exciting to think about ways to clearly communicate our value proposition over the next year, not just when it comes to sustainability – although that’s a core focus – but really in demonstrating to customers the value, and how much more fun Rent the Runway is for everyday dressing. We’re investing in full-funnel [initiatives]. You’re going to continue to see more brand marketing campaigns over the course of the next year. We’re going to think about how to evolve our brand strategy to make this subscription to the Closet in the Cloud more relevant to millions of women out there. We’re going to invest and test channels that we can use to most effectively reach our target customer where she’s at. This sustainability campaign is really setting the tone for how we want to communicate to customers going forward.
Source: The Drum
