Three Major Themes From AAFA’s Executive Summit, From ESG to the Metaverse

New. Now. Next. That was the theme at this week’s American Apparel & Footwear Association (AAFA) Executive Summit in Washington, DC.

The two-day affair opened with welcome remarks from AAFA president and CEO Steve Lamar who took a moment to acknowledge the victims in the ongoing war in Ukraine and requested a moment of silence as he remarked, “Our hearts go out to those affected by the devastation in Ukraine. We’re witnessing an increase in concerns over what this conflict means next for the world. And now, like in 2020, it’s impossible to fathom how this crisis will evolve. We only know that it surely will, and that we must stay engaged so we can best address what comes next.”

Lamar added that the last two years were challenging, but have provided an insightful roadmap on how to react in the midst of crisis. “We’ve been engaged in a period of intense action and reflection during these last two year, and we as members have sought, among other things, to change our industry from the inside out and to do so with purpose and responsibility.”

Another crisis on Lamar’s mind was the supply chain. He encouraged everyone to have a “First Mile” approach to their businesses this year. “The last mile, which is what we are used to focusing on, determines whether our customers get the products, but that first mile determines whether they even want them in the first place.”

This is where Environmental, Social, and Governance (ESG) comes into play – the event’s central topic of discussion. Lamar said that today’s modern consumer wants to know a brand’s purpose as well as the product’s purpose before they even consider buying it. “While the last mile is still important, we need to effectively communicate where we stand on sustainability and social issues before we even start to sell product.”

Over the two-day summit, executives from New Balance, Gap, Ralph Lauren, Levi’s, and United Legwear discussed how their companies are addressing this topic and what comes next. Other sessions covered the Metaverse, DEI, and customer acquisition. Here, FN rounds up the top three themes that defined much of the event.

ESG is more than just compliance

As Laura Wittman, VP of responsible leadership and corporate compliance at New Balance admitted, when she started working in this field, it was all about compliance at its most fundamental level. Now, organizations are eager to work together as an industry to make a meaningful impact.

Multiple speakers, including Wittman, Celeste Burgoyne, president of Americas and global guest innovation at Lululemon, and Liz O’Neill, EVP and chief operations officer at Levi Strauss & Co., echoed the sentiment that their respective companies are small compared to the vast size of the apparel and footwear industry. Noting that even though they are doing their part to move to a more sustainable and conscious way of doing business, the industry as a whole has to do the same in order to affect real change.

An example on how brands are working together to make the industry more socially conscious is the implementation of Gap Inc.’s P.A.C.E. Program. Launched in 2007, the Personal Advancement & Career Enhancement (P.A.C.E.) program was initially created by Gap Inc. to support women in the global apparel industry and have since expanded the program to community settings and more countries to unlock new possibilities for women and adolescent girls around the world. Today, P.A.C.E. and Gap enlists other companies like New Balance to aid in the organization’s efforts to deliver community programs in multiple industries and settings around the world in partnership with local NGOs, governments, brands, and schools.

Sally Gilligan, chief growth transformation officer at Gap Inc., made the exciting announcement during the panel that the company has officially achieved its goal to reach 1 million women and girls through supply chain vendor and community partnerships by 2022.

The Metaverse is here to stay

Barry McGeough, group VP of advanced concepts and innovation at Wolverine World Wide, delivered a thoughtful presentation about what’s happening in the Metaverse and what’s next for the futurist concept. “I apologize in advance for what I am about to show you,” McGeough declares. “This information is already out of date, that’s how fast the Metaverse is moving.”

To the critics in the room, McGeough said that we are already living part of our lives in the Metaverse. “If you’ve ever used the Starbucks mobile app to order your drink and then go offline to the store to pick it up, you are in the Metaverse,” he said. “If you’ve ordered food online and it was delivered to your door, you are interacting with the Metaverse.”

While this is just the beginning, McGeough admits that the Metaverse is a viable business that will only grow from here. Banks like JP Morgan Chase have even gone so far as to declare that the Metaverse will become a $1 trillion market opportunity in yearly revenues in the near future, given that its virtual worlds will infiltrate every sector in some way in the coming years.

And as more brands like Nike, Adidas, Gucci, and more start to interact with the Metaverse, the challenge is how do these businesses protect themselves from intellectual property fraud and the like. Citing a recent lawsuit by Hermes, McGeough suggests that similar cases could pop up as more people start to create in the virtual world.

Diversifying your business strategies are the future

If the Coronavirus taught many business leaders anything, it was don’t put all your eggs in one basket when it comes to product, retail, logistics, and more. And if 2020 wasn’t enough, the same lesson was relearned just recently with the ongoing shipping crisis at our nation’s ports. Many businesses are now looking at alternatives to moving some production closer to home.

“Shipping something from Kenya, that then goes to Saudi Arabia, then Turkey, then Spain, then finally the Port of New York in a span of three months, is just not realistic,” said Chris Volpe, chief operating & financial officer at United Legwear & Apparel Co.

Both Volpe and Liz O’Neill from Levi’s mentioned that their respective companies have a fraction of their supply chain in the U.S. and are hearing that more businesses are following suit, with most of the growth in new factories and warehouses popping up on the West Coast. Nearshoring in Central and South America is also ramping up.

While these actions may spell relief, on audience member added fuel to the fire by mentioning an impending action in June that will presume that all goods mined, produced or manufactured wholly or in part from China’s Xinjiang Uyghur Autonomous Region are the result of forced labor and will prohibit entry into the country by U.S. Customs and Border Protection. While the effects of this on supply chain is still unknown, many speculated it could only add to the headache.

This along with the upcoming West Coast port negotiations are also top of mind as the AAFA and industry leaders urge Congress and President Biden to take more decisive action to mitigate the delays and subsequent rising costs.

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