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In Conversation With: John Thorbeck

Updated: Mar 25, 2021

John throwback, change capital Llc, man with glasses and blazer smart, ceo

As chairman of Chainge Capital LLC, a firm focussed on transforming the fashion business through process innovation, and with a wealth of experience in fast fashion strategy and marketing, John Thorbeck answers our questions on the changes needed in the industry in order to pave the way for greater sustainability.

BDA London have previously partnered with Chainge Capital LLC, working with brands to align and bridge teams from design to sourcing.

How did you get your start in the industry?

I was the first VP of Marketing at Timberland. I really thought then that marketing solved all problems – just make the sale and the rest is easier. While that was a great start to a global brand, it was also a limited understanding of what makes a brand great. Today, marketing is just not enough to be successful when everyone uses the same messages and media.

Do you think sustainability within the retail industry is seen as a trend, or something that must be embraced in order to survive?

Sustainability is the one overwhelming trend that can’t be ignored, and that marketing cannot minimize. The younger Gen Z customer really is different in values and habits, even from Millennials. Sustainability is the challenge of our times and fashion can’t exempt itself. Everyone is responsible for a better product and planet. Marketing tends to be customer-facing, but sustainability is inward to the DNA or soul of a business. You can’t fake that in a world of transparency. Your values define the brand above style, above price. The customer wants to believe in your brand, not just buy your brand, and spends accordingly.

In your recent podcast with BoF you explored how to build smarter and more sustainable supply chains. Do you think that we can reimagine and rebuild the fashion industry to be entirely sustainable? Are we too far along, or can we redeem ourselves?

Yes, I do, in spite of fashion’s slow walk toward its future. In a crisis, we are forced to confront ourselves, and that incremental or partial fixes are not working. While so many focus on better practices to be sustainable, the real fuel to accelerate change is capital. Where is the capital to invest in sustainability? It is in excess inventory and production. It is in the extreme uncertainty of a broken supply chain. That uncertainty is the reason for fashion’s low profit and low productivity. Our goal is to change both.

To what extent do you think trends play a role in encouraging a disposable society?

Fashion always wants to sell its way out of crisis, to catch a new wave, but the key is really to reduce high risks of chasing trends. Tastemakers at the top don’t lead our trends any longer, so the critical fashion capability is responsiveness. Fashion agility supersedes fashion creativity. Responsiveness makes fashion relevant. The resistance to disposable fashion takes many forms – like circularity and resale – but excess inventory is the overwhelming obstacle to make it accountable.

Consumers are becoming more aware of their spending power and are willing to spend more on consciously made products. As influential designers talk of reducing collections and getting back to true seasonality, where does this leave fast fashion brands who have become known for supplying consumers with constant newness?

All fast fashion is not the same: some are guilty of excess production, some are not. Inditex (Zara) is not guilty of exceeding demand, and it shows in their performance. Again, they demonstrate that supply flexibility is more valuable than trend and volume.

Brands across the globe constantly focus on increasing margin and decreasing expenses, do you think low cost labour and fast fashion brands will become a thing of the past?

This is a wonderful question and leads us upstream to apparel makers – the countries and workers in supplier communities. The endless chase to cheaper wages and materials is at an end; the “race to the bottom” is lost. That cost-pressure is an unfair burden to factories, so what is the alternative? It is to propose a different way to share and mange inventory risk. It is to replace finished goods price and volume with a more flexible approach closer to season and in season. That is achievable now, even if it is a cultural change away from pure cost and adversarial bargaining. The benefit of change is to unlock capital for both parties, not the retailer alone. There is no better alternative to lowest cost manufacturing since the next cheaper source does not exist.

Do you think established retailers will ever truly reform their processes in the interest of sustainability, or will the higher costs of more ‘conscious’ sourcing and manufacturing methods prove too much?

They have no choice. Sustainability is the consumer narrative, or you leave the market. Retailers are becoming aware that factory and country sources cannot be squeezed further in costs or payment terms. “Buyer power” to extract price for volume is not working. The new trade-off is flow for speed – I will flow my data to you in exchange for delivery closer to and in season. To achieve that performance, the design and planning cycle will need to change along with the order and production cycle. That more conscious approach to joint benefit is entirely achievable, and elevates sustainability to common cause over cost alone.

The fashion industry is flawed and highly unsustainable, how do you think we got here in the first place?

Textiles is the first and most globalised industry. It is actually the School for Globalisation, teaching us to chase the next lowest cost country: from artisan weavers in India, to mechanised mills in England, to slave labour in the Americas, to low wages in Asia. It is a deeply embedded mentality for cost, and must be replaced by process, data and design for speed and agility. It is a wonderful awakening for a distressed and inefficient industry. Textiles and apparel can be a new School for a fairer Globalisation, one that is reimagined to be a source of economic development, inclusion and advancement.

Do you think brands should take responsibility for being aware of working environments, conditions and the sustainability credentials of their supply bases, and do you think further regulations would make a difference?

I think regulation is a demand from society, and European values lead in consumer attitudes and in parliamentary standards. But the bigger incentives are profit and purpose, and both are sources as well as engines for value. Incentives such as these are demand-driven and carry us forward in a way that obligation and regulation cannot. Our goal should not be minimum standards and “do no harm” but rather what is high potential for a better, more productive industry.

Why do you think more brands aren’t making greater use of eco-friendly textiles and processes?

Cost, primarily, and perhaps designer skills of adoption. Organic materials, or sustainable farming, or chemical free fabrics are all exciting, and I cheer them all. My major concern is the capital to support them, to make them affordable so we accelerate their adoption. More capital, in this case, means more creativity for eco-friendly innovation. Creativity, after all, is what we value most.

What do you think the future of supply chains could look like amidst an era of uncertainty?

This is a very exciting question and answer. I think supply chains will no longer be the back room, or behind the curtain, but part of the human chain of cooperation. Our common humanity is what links us, as is our desire for a better life. That is the same in the UK as it is in Bangladesh. Our values are more than efficiency and output; it is the social impact of our choices. There is humanity in fashion, and in opportunity it creates in supplier communities worldwide. With 80% of purchase decisions made by women, and products that are 80% made by women, I believe a gender perspective brings great meaning to supply chains. The language for mechanisation fails us, but the humanity in shared value and values might unite us to be more sustainable and purposeful in what we make and buy.

Do you think there are retailers who are dishonest about how sustainable their products and manufacturing processes are?

Right now, we are incentivised to be dishonest, to hide our costs and practices in subcontracts. Disreputable suppliers are acting with logic, even if it is unethical. On the front end, it is too easy to greenwash or good-wash our stories. I don’t think these suppliers or retailers will get away from exposure in a world of transparency and accountability.

As loungewear, athleisure, and casualisation boom, do you think smarter product offerings will ever recover from such a dramatic decline?

The fashion pendulum swings, doesn’t it? Our fashion rebels must be heard, and we count on them to reinvent the trends of the past.

As the end of the year approaches and we are overwhelmed by sales, what do you think is the best way to approach discounting? Do you think specialised sale events such as Black Friday are necessary?

Discounting takes different forms – those planned, and those that are not. In seasonal volume buying, the cost of the latter is enormous – a twice-yearly bet of the whole business. The alternative is frequent order flows for factories, fresh store sets every few weeks versus months, previews and pre-orders for best customers, and limited markdown sales. This is a return to full price selling to replace high mark-ups and high markdowns. This is trend-driven selling that is matched to a supply engine aligned by speed and agility.

What are your thoughts on on-demand manufacturing? Do you think this is a viable alternative to mass-production for larger established retailers or something only smaller start-up brands could be taking advantage of?

Made to order is, in fact, being produced now in luxury goods and in sneaker categories. It attracts premium prices. Is it possible to scale this production to larger volume and 10-25% of a total business? Yes, it is. The roadmap to achieve it is process innovation aligned with 3D design, development and data science. The match of virtual to physical represents the most promising new capabilities for fashion right now. In nearly all fashion, why does manufacturing time of 4 hours take months to plan, price, order and deliver? The answer to that unnecessary gap in time leads us toward zero inventory, zero waste and zero friction.

How can 3D design and data science be embraced in process innovation? What advantages can they bring to retailers?

3D design enables a virtual development and sampling process. The elimination of time and cost is estimated to be a 10X improvement in productivity. It is also directly aligned with selling on iPads in store – in preview, pre-orders or custom manufacturing. This approach to design and sales – adapted from gaming and virtual movies – can be aligned to bills of material, bills of labour and bills of routing to anticipate physical production.

The role of data science is to manage uncertainty across tiers. The retail impact is to reduce upfront inventory risk; the factory impact is to stage capacity and hedge materials at proper levels; and the overall impact is to reduce markdowns, lost sales and working capital for each partner. This is an end-to-end perspective of total profit over costs of goods sold, and is the source of shared value and risk. It is the single largest B2B landscape untouched by advanced technology and is the basis to unlock fashion opportunity in supply flexibility. Data science and 3D design reduce the risk of a high risk business. The result is significant process innovation and advantage no longer dependent on lowest cost economics.


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