The apparel industry has a dirty secret: Its supply chain innovations and rapid growth are devastating the environment. Fast fashion startup Reformation is disrupting the status quo by becoming the “Tesla of clothing”— a white-hot brand that happens to be environmentally friendly. It remains to be seen if its tactics will work at scale.
Quick & Dirty Fashion
Global clothing production doubled from 2000-2014  and is expected to rise an additional 63% by 2030 . Rapid industry growth has been fueled by increased consumer spending and the rise of “fast fashion,” an innovation in clothing production that shortens the time required to bring styles to market. For example, mega-retailers Zara and H&M each offer between 12-24 clothing collections per year, compared to 2-4 seasons offered by traditional retailers .
These trends result in massive waste from producers and consumers alike. The apparel supply chain consumes significant water, chemicals, and fossil fuels; for example, the production of 1 kilogram of fabric generates an estimated 23 kilograms of greenhouse gases. On the demand side, consumers now cycle through 60% more clothing per year and keep each item for half the time than in 2000 .
As seen in the figure below, these practices will have a significant incremental impact on the environment by 2030 .
L.A.-based retailer Reformation attempts to (literally!) reform these wasteful practices. Since its founding in 2009, the company has drawn inspiration from electric car maker Tesla by emphasizing both environmental friendliness and cutting-edge design. In particular, Tesla inspires two key tenets of Reformation’s strategy :
(1) Put great products first.
The motto says it all: “Reformation [makes] killer clothes that don’t kill the environment.” The company sells edgy, fashion-forward pieces created from sustainable fabrics: Over 50% of its garments are made of Tencel, Viscose, and recycled materials, which consume less water and other resources than cotton, and another 15% are made of vintage or deadstock fabrics that would have otherwise gone to waste .
The company also sits firmly within the fast fashion category, bringing new styles from concept to stores in one month and using analytics to inform merchandising decisions (for example, new products are initially manufactured in small batches, with production expanded if they perform well online) . However, Reformation is significantly more sustainable than its larger peers due to a vertically-integrated supply chain. The company manufactures 70% of its products in its wholly-owned Los Angeles factory , a 33,500 square-foot building that houses design, manufacturing, and fulfillment operations under the same roof . This facility is powered by renewable energy, and Reformation purchases offsets to remain fully carbon-neutral .
While the company did not initially offer details of its eco-friendliness, it is increasingly educating consumers via its website and social media channels. Product pages now include a “RefScale” rating, an internally-generated score (verified by a third party) calculating the per-item water usage, CO2 emissions, and waste relative to a comparable product from a competitor .
(2) Reimagine the in-store experience.
E-commerce remains the heart of Reformation’s business, but the company’s long-term objective is to build out a complementary brick-and-mortar presence (it has opened 8 stores to date). Inspired by Tesla’s retail locations, Reformation maintains a simple in-person shopping experience that supports its sustainability goals. For example, each store minimizes the number of items it has on the floor to reduce clutter and inventory wastage. To do so, Reformation only offers its most successful items based on online purchasing activity, as 80% of sales come from 30% of its SKUs .
In February 2017, the company opened its first next-generation store in San Francisco, supported almost entirely by technology. Shoppers use a touchscreen mirror to order items, which are delivered directly to the dressing room through a magic wardrobe. Reformation utilizes the order data on the back end to track the number of store visitors and SKU performance, further improving its inventory management . The company expects to open additional technology-enabled stores going forward.
Reformation’s desire to scale will put pressure on its sustainability mission. The recent launch of Ref Jeans illustrates this tension: The company is outsourcing production of jeans — an environmentally destructive type of clothing, with 1,500 gallons of water used per production cycle  – to a third party. Management should view this step as an opportunity to educate the industry in its best practices, but it should also invest in tools and technologies to ensure compliance and tight supply chain management
(1) How should Reformation further engage its consumers in promoting sustainability? For example, only 20% of clothing globally is recycled . Can or should the company launch a recycling program?
(2) While the RefScale is a meaningful step towards introducing transparency to fashion retailing, are there better ways to communicate this information? Should Reformation push the industry to adopt a single standard?
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 Nathalie Remy, Eveline Speelman, and Steven Swartz, “Style that’s sustainable: A new fast-fashion formula,” October 2016, https://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/style-thats-sustainable-a-new-fast-fashion-formula, accessed November 2017.
 Global Fashion Agenda and The Boston Consulting Group, “Pulse of the Fashion Industry,” May 2017, p. 8, https://www.copenhagenfashionsummit.com/wp-content/uploads/2017/05/Pulse-of-the-Fashion-Industry_2017.pdf, accessed November 2017.
 Remy, Speelman, and Swartz, “Style that’s sustainable: A new fast-fashion formula.”
 Global Fashion Agenda and The Boston Consulting Group, “Pulse of the Fashion Industry,” p. 10.
 Elizabeth Segran, “Can Fast Fashion Be Ethical? Reformation is Rewriting the Rules,” February 9, 2017, https://www.fastcompany.com/3067776/can-fast-fashion-be-ethical-sustainable-reformation-is-rewriting-the-rules, accessed November 2017.
 Reformation, “Our Stuff,” https://www.thereformation.com/whoweare#fabric, accessed November 2017.
 Tracey Greenstein, “Sourcing Is Key to Reformation’s Ethical and Sustainable Manufacturing,” August 3, 2017, http://wwd.com.ezp-prod1.hul.harvard.edu/business-news/technology/the-reformation-sustainable-manufacturing-10955994/, accessed November 2017.
 Hilary Milnes, “‘Mannequins freak me out’: Inside Reformation’s new techie San Francisco store,” February 14, 2017, http://www.glossy.co/store-of-the-future/mannequins-freak-me-out-inside-reformations-new-techie-san-francisco-store, accessed November 2017.
 Greenstein, “Sourcing Is Key to Reformation’s Ethical and Sustainable Manufacturing.”
 Reformation, “Sustainable Practices,” https://www.thereformation.com/whoweare#refscale, accessed November 2017.
 Milnes, “Mannequins freak me out’: Inside Reformation’s new techie San Francisco store.”
 Kari Hamanaka, “Reformation to Bow in San Francisco With Tech-Savvy Space,” February 13, 2017, http://wwd.com.ezp-prod1.hul.harvard.edu/business-news/retail/reformation-to-open-tech-savvy-san-francisco-store-mission-district-10799114/, accessed November 2017.
 Hilary Milnes, “How Reformation tackled faster, affordable denim sustainably,” October 24, 2017, http://www.glossy.co/sincerity-sustainability/how-reformation-tackled-faster-affordable-fashion-sustainably, accessed November 2017.
 Global Fashion Agenda and The Boston Consulting Group, “Pulse of the Fashion Industry,” p. 59.