How does a manufacturing-based industry like fashion reconcile growth with sustainability?
Halide Alagöz: Let’s start with this. Because when we were building the framework, the way we approach sustainability, there were a few recognitions we had. One was that we built it around three main principles — stewardship, integration and impact.
We said stewardship because there is only one Earth and we borrow it from the next generation so we better take care of it. Our industry uses a lot of resources from nature so we have to do better.
The second one was integration. You cannot approach sustainability as a parallel initiative. It has to be a part of who you are, it has to be integrated with the way you think about business. There, we have an opportunity because we are all about creating timeless style. Our business model is built on creating timeless style; Ralph creates products for people to love and wear forever and hand over to the next generation. It cannot really be timeless if you are not taking care of the world that we are living in.
The third piece is impact. Because there are so many things we can do, we just have to be smart and careful about where we want to create an impact and build our strategies around those impact areas.
When it comes to impact, we have been looking into our inventory management and our supply-demand match. We have been looking into how can we plan better so we don’t overproduce, so we don’t have a lot of excess to get rid of. We have realized that we can really tune in to what the consumer wants, build the line that she wants, and put the right quantities at the right times around that. You can actually control your inventory, the way you buy, how much you buy, when you buy and what you buy. We’ve seen a drastic reduction in the excess inventory.
WWD: In three years since at Ralph?
H.A.: Yes. And we have all the numbers. So for the last three years we’ve been working on that Way Forward plan first and now our Next Great Chapter. You can see in the numbers that our top line and bottom line are growing but the number of units we’re producing is less. So it’s really not about producing more; it’s about producing the right things in the right quantities at the right time. So this is one tangible example of how manufacturing or production and sustainability and better business can be combined in one.
WWD: You said it’s about focusing on what the customer wants. Do you find that the customer is interested in the company’s sustainability efforts?
H.A.: Yes. More and more, we’re seeing that consumers are more engaged. This is what all the data and reports suggest. But also as an individual consumer, I want to know where my products are being produced, whatever I’m buying, not only for apparel but for food or whatever I’m consuming.
So we see that and part of our strategy will be about how should we tell our stories better and our narrative better to our consumers. The consumers are an important stakeholder, one of the many. We have approached different stakeholders, from consumers to NGOs to partner businesses to employees, and then we ask what they expect from Ralph Lauren. And we’ve been going through a materiality analysis with a partner.
WWD: A materiality analysis?
H.A.: You go to those main stakeholders that you identify and ask, what do you think Ralph Lauren should stand for when it comes to sustainability? [The analysis] lists a group of priorities and asks them to prioritize for Ralph Lauren.
So we received those analyses back and then we started grouping them — this is where everybody expects us to create an impact; these are the table stakes and they want us just to take care of them; these are the things that they just want us to keep an eye on.
WWD: What if the stakeholders aren’t sufficiently informed on the issues to make those calls?
H.A.: Our employees are a big stakeholder. They are very well-informed about what’s going on in the industry and they’ve been leading this conversation with their questions. There is a lot of engagement within the company. The moment my hiring was announced, I started receiving hundreds of e-mails — how about this? What are we doing about this material? What are we doing about tracking and traceability?
WWD: So employees are deeply engaged.
H.A.: Yes. They really care about that engagement, and together with Katie [Ioanilli, global corporate communications head], we have to create a type of engagement communication for our employees. How do we listen to them, to their ideas, what do they care about, and also to educate them, to keep them updated about technical details they may not know but are curious about.
WWD: How do you deal with the triple bottom line of social, environmental and financial impact? How is Ralph Lauren prioritizing that?
H.A.: Our framework is built on three main promises. One is about the way we design our products through the lens of sustainability. There, we are looking into the materials, the supply chain, the chemicals we use. The second piece is the environment, the carbon footprint, the water, not only the consumption but the contamination. And the third one is what are we doing about our people, not only our own employees but the employees of the factories, and what type of engagements we are building with our communities.
So our framework addresses all three areas. We are in the process of setting short- and long-term goals. Hopefully we will be transparent along the way. We are learning how to talk about [sustainability], and we are also understanding how important our voice is to this industry.
WWD: And sustainability efforts will maintain the quality of the brand?
H.A.: Just a simple example: we are looking into sustainable packaging. There are many ways of reducing the amount of packaging you use when you deliver things to consumers, when you pack things from the factory. Now we are filtering all these options and trying to pick the most brand-appropriate, the one that will elevate the consumer experience when she receives the box, whether from online or in a store.
We won’t just throw it in a simple box and send because that’s not a real Ralph Lauren experience. It really pushes us for innovation. We are looking into existing materials and sometimes, those don’t answer the emotional quality piece we need as Ralph Lauren, the hand, the touch and everything. So we’re working a lot with our innovation team, setting those priorities.
WWD: The goal is to integrate sustainable practices into the overall Ralph Lauren experience.
H.A.: Correct. So it’s not like, let’s design a beautiful product and start thinking about sustainability. Rather, when we are designing that beautiful product, how can we think through the lens of sustainability? That’s the integration that we’re talking about. And that will then create both the functional quality and the emotional quality.
WWD: Ralph Lauren is into so many product categories. Doesn’t the drive to grow stress the environment, no matter how strong the sustainability efforts?
H.A.: With every industry we explore, we are learning…Sometimes you just check the industry, you find the best practice and then you follow it. Sometimes, the knowledge doesn’t exist. Then, we maybe give it to our innovation team as a “what if” question: What if we do beautiful crystal without lead in it? Our innovation team worked on that for six or nine months and at the end we created the crystal that we are all happy with, with the right chemicals in it.
WWD: Without lead?
H.A.: Without lead. And as shiny and as beautiful. And there are a few products that we’re still not happy so we keep on working on it. But the moment we find it and our design team or Ralph says “yes, this is great,” we start [to produce] it.
WWD: That’s great. How important is collaboration to all of this?
H.A.: Collaboration, yes. It’s one area where we can all do better. Our industry is kind of built on that exclusivity and secrecy.
WWD: Can you talk about that a little bit?
H.A.: We are exploring different types of partnerships with NGOs, with universities, where people can bring knowledge to us. We’re also looking into what can we do with our peers in the industry. We can create awareness, we can create those collaborations. What innovations we develop, we can share. We are looking into those things to elevate the impact.
WWD: Do you foresee a point at which the Ralph Lauren brand might have to decide to lessen growth expectations in the interest of sustainability?
H.A.: I don’t see it connected to sustainability. We don’t think this is a [threat to growth] or a risk. We think it’s a value proposition to who we are, to our consumers.
Our purpose statement says, “to inspire the dream of a better life through authenticity and timeless style.” You can only do that on a road that is well taken care of. We think it’s our promise to consumers to provide solutions to existing problems and to be a part of the innovation. We want to be part of the solution…I don’t want to overpromise what we are doing. What we are saying is, even if the answer here is not today, we are just exploring what we can do.
WWD: You came from H&M. Fast fashion is often cited as an environmental villain.
H.A.: I think we all have a role to play in this. Fast companies have the benefit of their size and scale. So once a company really believes in doing well, they can actually help us move forward with their volumes and we can help with our approach and with who we are and with our DNA.