PURPOSE IN THE FASHION SEGMENT

(Summary of the Bachelor Thesis by Chiara Steinmetz written for the BA Thesis in Jan. 2021 with Prof. Dr. Bodo Kluxen, Hochschule Fresenius, AMD, Duesseldorf, Germany)

Purpose is the topic of our time and this bachelor thesis deals with it. The term Purpose and the topic behind it can mean something different for everyone personally. Society, the people who live in it and especially Generation Y and Generation Z have reached a point where they are questioning previous behavior patterns. They want to make a contribution that, if possible, positively influences society, the environment and their own surroundings. The particular relevance of this topic for the economy stems from the fact that generations Y and Z, as the future employers and employees, are interested in creating sustainable things, working on meaningful projects and developing valuable products.

These influences, among other things, the consumer behavior, job choice and communication of this generation.

With regard to the importance and relevance for the future, this bachelor thesis deals with the topic: "Purpose in the Fashion Segment". Within this thesis, the question arises whether a purpose in the luxury segment is a trend or rather a stumbling block. 

In order to be able to give a well-founded answer to the question, four interviews were conducted with various experts. During my research, I noticed that the experts were not only distinguished by their well-founded specialist knowledge but were also professionally and privately involved with the topic of purpose.  The aim was to find out about the intention and the ways of implementation from a professional point of view and to analyse them from different perspectives.

First, as a basic preparation, the terms: 

- Corporate Purpose, 

- Fashion 

- and luxury were defined.

Corporate communication is of essential importance, especially when it comes to purpose. Good internal and external communication is essential. In the course of digitalisation, completely new possibilities are opening up for communication. 

Communication develops and carries the reputation of a company, and it should be noted that poor communication is worse than no communication at all. 

The status quo of luxury fashion in terms of purpose was also examined. Within the research of different luxury companies (Chanel, LVMH, Prada, Hermés and Off White) no defined and integrated purpose could be found. However, all companies can demonstrate activities in the area of Corporate Social Responsibility, but this was often outsourced to subcontractors or foundations. 

This preliminary work created the basis for the consideration of a purpose in the fashion industry. I have structured the paper as follows:

- the objective

- a concept phase

- the results from the interviews 

- and the conflict between a "long-term corporate goal" versus "fast-moving fashion cycles".

Goal setting deals with the methods that a company can use to select a suitable purpose. A clear and well-communicated agreement on objectives is important, because it helps to integrate stakeholders and shareholders. 

Continuous monitoring of goals helps to react to conflicts or changes and to adjust goals if necessary. 

The concept phase is divided into

- a SWOT analysis

- Analysis of the importance of a purpose for stakeholders and shareholders

- communication strategy

The results of the interviews with various experts can be divided into 5 categories. These categories represent: 

- the understanding of Purpose, 

- the purpose within start-ups and established companies, 

- an advisory approach, 

- the communication of Purpose and 

- the possible criticism of Purpose.

Illuminating the conflict of a long-term corporate purpose versus fast-moving fashion cycles of the fast-fashion industry has shown that the two do not go together. A Purpose must be defined as a long-lasting corporate goal, while the fashion industry is based on fast-moving trend changes and short fashion cycles. Both together, within one company, would appear untrustworthy and not be purposeful.

The core of my work consists of a guideline for companies that want to approach the topic of purpose. It contains some preparatory measures, steps for finding and formulating a purpose and its further development. 

The preparatory measures include the description of customer needs, the market analysis, the analysis of the product programme, the development of a customer communication and a feedback channel.

Conducting a SWOT analysis should help a company in its preparation to find fields of action and/or strategy development in order to use the right potentials and to recognise dangers, as well as to intervene if necessary. 

The term and the topic of the VUCA world are always in context when it comes to Purpose. Once a term coined by the military in the 1970s, the principle of the VUCA world developed into a term that the business world made use of. VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity. VUCA perfectly reflects the uncertain and uncertain times in which we live and work today. Purpose can provide a certain security and steadfastness in this context.

For a successful definition and implementation of a purpose, a holistic approach is necessary. The purpose must pass through all stages within a company, only then can a company, as well as its stakeholders and shareholders, be sure that it has been fully grasped and is lived by all aspects and departments. 

Implementation starts with sourcing. A company must also be guided by its own purpose or values when selecting suppliers. Ideally, values, goals, visions and missions should match.

For production, the choice of location and form of production is important and must not contradict the purpose. 

If necessary, the distribution structure must be adapted, because a company often opens up new distribution channels by integrating a purpose.  

When setting prices, any additional costs that may arise due to the integration of a purpose must be compensated. This additional expense can arise within sourcing, production and distribution. Depending on the individual purpose, logistics must also develop or adapt. One step in this direction would be the optimisation of a transport mix. Finally, a company must think about recycling. Especially in the fashion industry, clothes are often burned instead of recycled. In addition, used clothing floods 3rd world countries and damages local handicrafts. 

An optimised approach would be to encourage consumers to buy less but of higher quality.

In the course of the action statement and the preparatory measures, as well as the holistic approach, a company must ask itself the question: can my company and my product live up to my self-chosen purpose? If a company answers this question in the negative, it has the option of improving its reputation by engaging in CSR. It can also set itself apart from the competition by setting up foundations or obtaining seals and certificates.

This is followed by the formulation approach: "We exist (to).". There should be personality in the formulation for a purpose, it should speak to what moves society and must not be too corporate. Making reference to issues that move society and taking megatrends into account can help to define a good purpose.

In addition, the stakeholders must not be ignored. If a company once again pays special attention to the needs of all, it can hardly go wrong. Here it is important to know that stakeholders have different needs, which should be respected and brought together.

Constant monitoring, with the help of KPIs and feedback channels, also serves to ensure that the right things are being done. Successes and change are measured regularly. 

The importance of communication is emphasised again and again, as it is here. In the course of taking action, a company should define a unified communication strategy, provide the necessary resources and live it continuously. Storytelling has proven to be a good communication tool and can be used here. 

Stumbling blocks that arise in the definition and integration of a purpose must be actively sought and avoided. 

Stumbling blocks in this context can be: 

- Cultural sensitivities, 

- statements and promises that are not kept, 

- and greenwashing.

Finally, the concept of the VUCA world comes up again. Here, the constant development of the Purpose is addressed. A good balance between steadfastness and further development is a "must". A company can observe future megatrends and generations and make cautious adjustments.

A forecast for the future of the Purpose theme is best viewed with reflection. In 2011, public interest was first aroused by the article "Creating Shared Value" by Michael Porter and Mark Kramer, which was published in the Harvard Business Review. In this article, both described the importance of purpose and created a link between economic value creation and the promotion of the common good.

10 years later, in 2021, it turns out that both authors were right and the importance has even increased. Studies prove that companies that have integrated a purpose have developed better. The competitive advantage is based on the following factors:

- Innovativeness

- Productivity 

- recruiting and retaining talent more effectively 

- Stable stock market value 

The importance of purpose for society and the economy in the future can be seen in the generations Y and Z. For young (future) employees and employers, purpose is becoming increasingly important. For young (future) employees and employers, purpose is becoming increasingly important. 

As Generations Y and Z grow older, Purpose will evolve with them.

Despite the promising future, it is important to recognise that the concept of Purpose is still relatively young and in the early stages of its development. This allows for a development in different directions, which cannot be determined exactly. However, it is not only the further development of Purpose that is uncertain, but also the future. This uncertainty is favoured by: 

- Globalization

- natural disasters 

- digitalization 

- overpopulation. 

In this context, the smallest change in one area has a major impact on all areas. 

This makes a reliable forecast impossible.

Within the bachelor thesis, two facts clearly stood out: firstly, Purpose is still relatively young, but already shows a great positive influence on the economy and society and will continue to be important in the future. Secondly, communication is a significant factor within the construct of Purpose. Without specially adapted communication, Purpose would not function or develop its positive effect. 

Purpose in the luxury segment - trend or stumbling block. 

In conclusion, it can be said that there is no purpose in the luxury fashion segment. Yet it would have great potential to unfold. Perception would improve, because the term luxury still has negative connotations, and integrating a purpose would open up new groups of buyers. Internally, the purpose would also have a positive influence on a company. Especially in the luxury segment, there is the possibility of absorbing additional costs more easily. 

A purpose should be like the roots of a tree, the branches the product.

CSR, in comparison, is just a blossom on a tree. The roots of a tree give it

ensure that it is firmly anchored even in stormy times and allow it to grow.

grow. Just like a purpose does in a company.