Future of Sustainability Is Collaboration
Insight by Oliver Chen
In this episode of TD Cowen’s Retail Visionaries Podcast Series, Martijn van der Zee, Chief Merchandising and Sustainability Officer of C&A speaks with Oliver Chen, Retail & Luxury Analyst about key advances in apparel manufacturing sustainability, consumer insights, and expectations for progress in the industry.
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Transcript
Speaker 1:
Welcome to Cowen Insights. A space that brings leading thinkers together, to share insights and ideas shaping the world around us. Join us, as we converse with the top minds who are influencing our global sectors.
Oliver Chen:
This is the ESG Retail Visionary Podcast series about visionary ideas and people. My name is Oliver Chen, I’m Cowen’s new platforms, retail and luxury analyst. In this episode, we’ll delve into the topic of sustainability and apparel, changing consumer tastes towards climate friendly shopping, and innovations in the apparel manufacturing space. I’m thrilled today to be hosting, Martijn van der Zee. He’s chief merchandising and sourcing officer at C&A.
Oliver Chen:
Martijn van der Zee has worked with C&A for over 15 years, serving various roles, including head of ladies, head of marketing, and most recently promoted to chief merchandising and sourcing officer for C&A, Europe. What is C&A? C&A is a leading multinational fashion retail clothing store, with 1400 stores in Europe, that offers trending apparel for women’s, men’s, and kids.
Oliver Chen:
Earlier this year of note, C&A announced the opening of its factory for innovation, in order to study and improve sustainability in apparel manufacturing. I believe Martijn’s really uniquely positioned as he’s a chief merchant, as well as in charge of sourcing. And he’s also very passionate about what sustainable ability means. So Martijn, thanks for joining us today.
Martijn van der Zee:
Yes. Thanks Oliver. Nice. And thanks for the invite.
Oliver Chen:
When did you start getting interested in sustainability in fashion and what does it mean to you?
Martijn van der Zee:
Well, actually I started roughly 12 years ago. At that time, C&A Europe was starting with Bio Cotton, and it was fascinating to understand. First of all, how do you come across with Bio Cotton? What is the crop like? And how can you do it in a better way? And to that moment, you really didn’t think about those things and you start to then realize, Oh yes, Bio Cotton is better than just normal cotton. And yes, especially since most last six years in the job, when I took over sourcing and you’re visiting all those factories all the time.
Martijn van der Zee:
It realize you, there is good and there is bad. And that over time you travel to the factories. It’s very clear to me that this cannot continue like that, big companies like us. We have our responsibility, we need to step up and change that industry.
Oliver Chen:
Martijn, what is Bio Cotton? And what do you believe are three things the industry should focus on that they’re currently not?
Martijn van der Zee:
Well, Bio Cotton is basically, you make sure that there are no pesticides going in the earth and you also help by the way, the farmer itself. So I was happy to visit those farmers myself in India, and really talk to the farmers. And unfortunately the life of a farmer is tough, it’s rough. And it’s not a lot of people that helping them, but really true that social environment of helping them and they have their own Ekelund.
Martijn van der Zee:
There is no actually pesticides on and they don’t need to spend a lot of money on it, so they can just aggregate it themselves. They have better income, and there’s a good community. So that’s really fascinating to see it, to speak to those people. Truly, they’re saying that. Now, what is actually coming to your question, Oliver, concerning that the industry. First of all, we need to be better at forecasting and demand forecasting, and actually get away from ongoing promotions. I mark that.
Martijn van der Zee:
Which is brought into the industry. I find it very strange that you buy and already, you want to mark it down, that’s not sustainable. At the same time, you have to really think about innovation and how do your clothes to loop, because at the end, you don’t want to use natural resources, but you really have to think, how can you reuse your resources once more.
Martijn van der Zee:
Also, the transparency and traceability is a big topic, which basically all retailers still face this on. How can you break through and in order to do so, it is also clear that you have to work together and not just everybody cannot just start their own blockchain. That’s also not possible. So how can we make work closer together? So real collaboration. In that sense, if you talk about real collaboration also, that would help if governments also support us.
Martijn van der Zee:
And that’s not always easy, what can you share, what can’t you share. And at the end, if you want to truly break through it is important that it’s a really working together game. And I would say even worldwide.
Oliver Chen:
Martijn, what’s your vision for traceability? What’s your advice and point of view on what collaboration might be most practical and might make the most sense?
Martijn van der Zee:
Well, I would say that would be very helpful if you start with governments. If, for example, America government together with the EU, would already start working together to say, Okay, how can we change that industry? Second, big companies across the world should then align up, and really start looking and taking this serious saying, Can we use one platform? Can we use one technology? Once you have that, then basically it’s plug and play, and it’s not so difficult to break through and that’s what I would recommend to do.
Oliver Chen:
The other thing you mentioned Martijn, was transparency. We believe this is a huge topic for generation Z and generation A. Can you elaborate on what does transparency mean to C&A and what should the industry think about?
Martijn van der Zee:
Well, transparency for me is that you really understand the whole supply chain end to end, but you do know where I actually, not only where you produce, but also where are your washing facilities, where is Yam coming from, where are your components coming from. So, really having complete visibility across your whole supply chain.
Martijn van der Zee:
Now, if you just look at your supply chain, and you say, Oh, my God, how should I do that? It is mission impossible. True, it is complex. So I give you one example, a couple of years ago, we said, Okay, how do we do this on a Yam? We have appointed two suppliers for all our Yams in Viscose. And basically we have now complete visibility on the Viscose on the plants, where it from et cetera. So it is really horizontal looking at supply chain nominating and making sure everybody is using this. And therefore hence, you can really break to one of those topics.
Oliver Chen:
Martijn, what’s also interesting about you, you’re both the chief merchant and your chief sourcing officer. How do those two role intersect what have been your learnings there and implications for the future and strategy?
Martijn van der Zee:
Well, I would say the interesting part is that sustainability sourcing and merchant all comes together. And the beauty of this, or the good thing is that, there is not anymore KPIs in the Vertical silo, but you really look across horizontal. And I’ve seen too many in the past, perhaps that sourcing get KPIs on, and then you do the same thing for sustainability, but it actually sometimes works against.
Martijn van der Zee:
And it’s not really helping break through holistically, of how can you not now set up a supply chain in a complete different way, and also designing to recycle. So, this is just not a topic which actually one silo can actually break through. It’s really a word to how to work together. And of course, I love great product, and we all in the fashion industry, we will of our products.
Martijn van der Zee:
And we very hopefully attached to that, which is also want to have a conscious to say, Where is it produced? And actually you want to do something good for the environment. So it is really making that holistic view. How can we now break through on those three elements? And not actually looking too much in the one pillar. And then actually at least for me not so complex to break through on those topics.
Martijn van der Zee:
Use slice it, you say, Okay, next 12 months, we’re going to focus on A, and then afterwards we have B, so you have a real plan and then you can solve issues. So any issues for me, depending what you wanted to break through.
Oliver Chen:
Martijn, that’s really interesting designing to recycle as well, and making that an integrated part of strategy and thinking. What does that mean? What will you do here? And what do consumers want?
Martijn van der Zee:
What we do here is really that if you start designing, that you have already the second life of the article in your mind. And the second life of an article for me is, it lands somewhere in a tile or somewhere in a construction building, because it’s based. That for me is, yes, of course, it’s also good for the environment, but it’s not actually helping the industry to, not actually start over and over again, to plant new trees or actually, or new crop of cotton.
Martijn van der Zee:
Now we want to reuse this the cotton many times. That’s why we really ask [inaudible 00:09:46] in the progress of, how do you design an article that you can recycle and you can use basically your raw material a second time or third time? And that’s for me really, truly holistically, how we should do things going forward.
Oliver Chen:
What do you think about the consumer? As you think about your customer. What do customers care about the most and how much are they willing to pay or not for sustainability?
Martijn van der Zee:
I think our general customers, of course, it’s important that they really want to know how is it produced? Is it ethically produced? It’s interesting for them very much, but at the same time, if you look at, from a sustainability perspective, it is now going on the land or not, it’s actually difficult. So from that cycle, there needs to be a behavior change also in the consumer and as a company, we to make it easy for the consumer.
Martijn van der Zee:
So don’t come with very difficult messages, which is very difficult to understand. Make actually, sustainability claims, easy, understandable, and digestible. And then, there is more interest of sustainability because people get, and then you get exciting because you see, you can do something good for the industry and also for the world and the planet. And that’s actually, you still would say, for the time being perhaps missing that the consumers are not really understanding it, getting one part of it, but misinterpreting those calls.
Oliver Chen:
Martijn, what about investors and others listening to this? What should be measured? What are your thoughts on what measurement may need to take place over time?
Martijn van der Zee:
First and foremost, it is, if you invest in something good in people and planet at this for everybody, it’s a good field vector. Next to that, I think it’s important that you measure on the progression, but also on the contribution. So is this now really contributing to improve basically sustainability and that can have many areas, right? So you can start looking at science based targets, but you can also look at your materials and you’re making sure that there is a horizontal one way, how you look into this.
Martijn van der Zee:
So, it’s really about standardization because otherwise, it’s very difficult for investors. But this company does it that way and the other company does it. I’m now better than you. And then you have that fire fight and that’s actually still happening in the industry because it’s not all aligned. Once you have that investors, it’s very interesting because you can clear gift targets on 10 year targets, five year targets, three year targets and there is also positive cases of earning money back.
Martijn van der Zee:
So the net return is actually positive on the majority of the cases. There is an upfront investment needed sometimes, while you’re saying the one to the first couple of years, while not really beneficial, but actually it comes back later as a positive.
Oliver Chen:
Martijn. What about pollution? Another topic, apparel, is a top polluting industry globally. What should we do here and what will happen and what can happen?
Martijn van der Zee:
Well, it’s always a discussion. How bad is the industry, of course, it is. Perhaps, it’s in the top three, I would say, on pollution. We can do a lot on that one. So, that’s also what I see as my function, how can we make sure that the fashion industry is seen positive from an environmental perspective.
Martijn van der Zee:
How are we going to do this all together? And that’s actually a big call for all people listening to here today. It’s like, we need help. We need to share, we need to use open source in order to break through, that you have a good conscious of buying fashion. And that’s actually, whether it’s now on materials, secondhand recycling, perhaps bringing the supply chain and more closer, where actually the customer is also from that one, you have less carbon footprints.
Martijn van der Zee:
But also this, for me, explaining to your suppliers that basically they can do a lot for the world and actually saving money by that. And that’s again, what I come back from the investment perspective, science based targets is like, Oh my God, this cost a fortune. It’s true. But if you think about the cash back and how easy are this in those countries, with a little bit of money and looking at for solar energy, which is anyhow, a lot of countries have a lot of sun.
Martijn van der Zee:
Solar energy, wind energy, and biomass. There is an X number of factors and we have done tests already now, and pilots that we saying, Once the supplier sees fantastic, great. I have an investment here, but I get a return there and I can actually have a competitive advantage. Then a lot of retailers want to produce in that factory. So they don’t see themselves. I should do it now. And not actually in three, four years.
Martijn van der Zee:
I could be leading in this industry and that’s why everybody wants to produce in my factory. I would say why we have to help the industry to understand and see that the investment is not always negative. It has a huge advantage going forward for those factories.
Oliver Chen:
Martijn, what do you mean by open source? And what is your message to the industry in terms of collaborating with factories? Why doesn’t this happen sooner?
Martijn van der Zee:
Naturally, open source means for me, we don’t have anything to hide. Open source is you can look today on the website, you know exactly where we’ve produce. It is all known in the past year, you would not even share that supplier with anybody. Ooh, I found a new supplier, it’s great, it’s my handwriting. Let’s take it to me. Today, you can know everything. You can know the fabric, the mills, the washing facilities.
Martijn van der Zee:
So I would say that’s for me very clear, but also how can you now break through on those size based target? And why should I now not share this information with my colleagues? And have colleagues doing the same thing and I’m sitting there and saying, Wow, that’s a great idea. I didn’t think about it. So let’s copy that and do it also in mind.
Martijn van der Zee:
So, the more you have that environment where you can’t just speak openly, and discuss about the difficult topics, I’m sure there are so many clever people in across the world, that you can build on each other and you break through much faster than actually dealing with all those critical, difficult issues on your own.
Oliver Chen:
Yes. In terms of crowdsourcing and working collaboratively, to rethink the supply chain. Okay. Over the summer, C&A announce the opening of your factory for innovation on textiles. What are you doing at C&A? And what are the goals for this program?
Martijn van der Zee:
First of all, it’s a totally exciting story when he said, they’re going back and produce in Europe, so for us, it was very important that we also start here again, with holistic view. The future is on the one side about digitalization, on the other side, it’s sustainability. That’s also by the way, from an investment perspective, what you see in the stock markets, where people jumping on them.
Martijn van der Zee:
Now, for us it was interesting to see if we want to have a factory in the state of art, on both sides. So we start with a 4.0 industrialization, where you have machine learning, and the machines can talk to each other and improve efficiencies. On the flip side, we are also using of course, all sustainable material. And we said, all material needs to come from Europe, so that we also have from a carbon footprint perspective, actually the least, but also strengthening your own economy again.
Martijn van der Zee:
And that was also how we looked at it. What is all possible across Europe? Now, then we say, once we start here, it’s a continuous improvement because you have factory up and running, we can then install robotics. And we also see that by collaborating with universities, they can do a lot, which we basically don’t know. And I give you one of examples, we are carbon free in that factory. And we have a whole plan, how we deal with electricity, but also with how you measure this, and how you do all of the things.
Martijn van der Zee:
We did not have an expert ourselves, but the university actually had a lot of professors, and helped us to break through on this one. Same as with robotics, you’re not an expert on robotics, and hiring all the experts on that side also not wise. So we are another university specialize in robotics, helping us. What is actually wise, how could you start? How can you connect the dot?
Martijn van der Zee:
And now we are working with a lot of companies to say, Okay, what can we install in that factory? How can we learn from it? And how can we improve efficiencies at the end? Either from an automation perspective or as from a sustainability perspective. And once we are, not once. We are doing the regular information sessions also to invite suppliers across the world, that they can see this, because it has huge advantages.
Martijn van der Zee:
What we know other people are also doing, because then you truly changing the world. So, that’s what also meant a bit, open source before. It’s not just a secret what we are doing here. We want to share. And also again, here, we have a lot of clever people, with which came up with fantastic ideas, which we also didn’t think about. And that’s my collaboration again, is critical also in the particular factory.
Martijn van der Zee:
Now, one last comment, if you don’t produce yourself, you always tell other people what to do, but you truly never do it yourself. It is difficult. Imagine you tell people how to drive, but you never drove a car yourself, it is not easy. And that’s why we also said, if we start again a factory, that certain things are not working. All the difficulties in a factory.
Martijn van der Zee:
And that’s actually first putting you a bit on the humble side again, but be also you break through much faster and you have that whole idea of, I start, I learn, I accelerate, versus I do this in the theory. No, I have a real in front of 40 minutes for whom the office here. I have a factory, I produce and I learn every day, and I make mistakes every day, but I learn in that way much faster than anybody else. And that’s actually also why we have done it.
Oliver Chen:
Yes. And you can share these findings with other people. So Martijn, last question. What are the most recent or innovations in the apparel manufacturing space that you’re most excited about in terms of reducing waste? And if you have any closing remarks or comments.
Martijn van der Zee:
On that side, this important that I’ve seen from innovation, that there is a lot of money in the last tow to three years across the world, investments going in this industry. And that’s also new in this industry. Don’t forget the industry was typically always with low budgets. You could open a factory very fast. It’s not rocket science. And basically you produce there and you have a workforce.
Martijn van der Zee:
And in a nutshell, that is actually what people have done over the years. And then you move from country to country, or you move where you see efficiency gains. Now what you see in the last couple of years, that, there is a lot of automation happening on just machinery. Second thing, what you also see that people are now breaking through on recycling. How can we really do this?
Martijn van der Zee:
And there’s many examples of recycled cotton across the world, and really making sure that this is now priority, where the look and feel is still guaranteed. Because let’s face it, nobody wants a bad product. Sustainable products should be great and fantastic.
Martijn van der Zee:
And that’s actually what I see currently happening, and also I must say on the whole science based targets, how you actually, once you start a factory new, I do see immediately that there’s a lot of good factories now being built and constructed. Where all those things are already in place from day one, and not an old factory where basically, you have certain parts are new, other parts are really old, but holistically, you never can break through in those factories.
Martijn van der Zee:
So, there’s a lot of willingness from the factory manufacturing side to invest. And it’s also, where I would say, as a call out also where the retailers have to change the mindsets and all of us together, that we want long term partnerships. You don’t want to help every month to a new supplier. You really want to work truly together, in order to break through in those targets.
Martijn van der Zee:
And then you see that in the willingness to invest is much higher because they also need to prepare. They also want of course, to forecast that actually, in the next 12 and 18 or, two, three years. They’re basically, the factory still filter, so that’s what I actually see a lot happening across the world.
Oliver Chen:
Martijn, thanks for your unique view. Congratulations on the progress. And I’m really excited for what you’re doing for the industry and also all the ideas around collaboration to help and make the world better and how this can intersect with the future of retail. Thanks for your time.
Martijn van der Zee:
Yes. Thanks a lot, Oliver, and thanks for the interview.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of Cowen Insights.