Emerging Materials Opportunities for the Apparel Industry

Cecilia Gee, Analyst

Tiffany Hua, Research Associate

Lead Analyst:

Contributor:

E X E C U T I V E S U M M A R Y

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The textiles and apparel market, though large and lucrative, is fragmented throughout the value chain and squeezed by key megatrends like sustainability, a shifting supply chain, personalization, and demand for differentiation.

Brand owners are uniquely positioned to pressure the supply chain and instigate change and should do so to not only meet their needs but also direct the industry toward good. Chemical companies should leverage their existing expertise into complementary functions in upstream to midstream products.

Near-term success in introducing new technologies will be predicated on a combination of ease of adoption and performance benefit; long-term success will be predicated on meeting sustainability trends and market challenges.

The advent of digitization is slow but worth noting; the growth of reuse and resale platforms can also help prolong the product loop and play to consumer personalization.

Executive Summary

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Textiles and apparel are a ubiquitous behemoth – and still growing

Fabrics and textiles are rooted deep in human history, with archaeologists discovering early signs of cloth weaving from the Paleolithic era. The textile industry today includes the design, sourcing, production, and distribution of cloth or woven fabric made by natural or synthetic fibers.

The World Trade Organization (WTO) assessed the value of world textiles exported as $315 billion and apparel exports as $505 billion for 2018; the growth rate was 6.4% and 11.1%, respectively – one of the highest rates since 2012.

Despite a huge market, low cost tolerance and fast product cycles make materials innovation a challenge. However, brands and consumers are increasingly demanding more sustainable products, differentiation, functionality, and cleaner manufacturing, creating new opportunities for innovation.

This report assesses the landscape of materials development for the apparel industry and considers:

• What technologies are ready to adopt in the near to medium term?

• What impact will these technologies have?

• Which players are active in the landscape?

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Four key drivers are affecting brand value, image, and the need for innovation

Competition among brand owners, demand for increased functionality, and the fast pace of change in the fashion industry put pressure

on groups to seek solutions that offer improved product performance, novelty, or a unique aesthetic.

Desired characteristics can include stain prevention, odor abatement, increased durability, pilling prevention, or smart connectivity through use of technologies like functional coatings, additives, smart materials, or sensors for smart textiles.

FUNCTIONALITY & DIFFERENTIATION

Sustainability and the circular economy are crucial themes impacting both companies and governments. While regulations can

help guide sustainability and consumers are more eco-conscious, it is brand owners themselves that are spearheading sustainable change across the value chain, from upstream sourcing and manufacturing to downstream reclamation and recycling.

This movement is executed both individually, as with Adidas or Patagonia, and cooperatively, as seen in Macron’s Fashion Pact, the U.N.’s Fashion Industry Charter for Climate Action, and Greenpeace’s Detox 2020.

SUSTAINABILITY

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Four key drivers are affecting brand value, image, and the need for innovation (continued)

Political climates, trade wars, and protectionist policies greatly affect the geographically diverse textile and apparel

network, and managing associated supply chain risk is increasingly important for the fashion industry. This concern arises from the complex and fragmented supply chain that involves multiple countries.

Of growing concern, particularly for the U.S., is that China remains the world’s largest textile and apparel exporter at $118.5 billion and $157.8 billion, respectively. Related issues include increasing sourcing cost and finding alternative exporters. Technology alone will not assuage supply chain woes –sociopolitics and networking will have a larger impact.

THE GLOBAL SUPPLY CHAIN

A slowly growing demand for personalizationis shaping how brands respond to and interact with consumers.

This relationship can be mutually beneficial, as the consumer receives a customized experience, be it through personalized digital sales and ads, mobile apps, beacon technology, targeted geography-based promotions, or engravings, and the retailer amasses consumer data to study and predict consumer preferences and behavior, driving further sales.

Brands and retailers must both keep abreast of the digital technologies that enable successful personalization and provide the customized material products and business models that consumers desire.

PERSONALIZATION

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Lux presents six materials and chemicals-focused innovations with broad-reaching impact

Of the highly complex textiles supply chain, Lux focuses only on materials- and chemistry-specific technology innovations in this report and not factors like automation or digitization. We chose four broadly impactful categories (material, processing, functionalization, and end-of-life) based on potential impact, timeline to adoption, commercial viability, hype, consumer and brand interest, and ability to meet industry challenges.

We dive deeper into the presented subcategories on the left with an overview, drivers for technology development, key players, challenges, opportunities, and evaluation of the timeline and impact for each technology type.

The following section provides a grading system and graph output to analyze these selected technologies. The technologies are presented in order of timeline to commercial adoption from near-term to long-term.

Material

• Fiber innovations

Processing

• Water-free dyeing

Functionalization

• Functional coatings and finishes

• Smart textiles

End-of-life

• Cellulosic recycling

• Polyester recycling

Key textile innovations

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Timeline and level of impact for key textiles innovations show large variation in opportunity

Timeline to commercial adoption

Low

Medium

High

Near-term (1 to 2 years) Medium-term (3 to 5 years) Long-term (5+ years)

Functional coatings and finishes

Water-free dyeing

Fiber innovations

Smart textiles

Cellulosic recycling

Polyester recycling

Timeline vs. impact of innovative textile technologiesTechnology impact (high to low)

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SMART TEXTILES

Materials companies have more opportunity than brand owners for development due to long development times

OVERVIEW

Smart textiles or e-textiles are a range of products that integrate electronic capabilities into common fabrics. Smart textiles can interact with the environment and/or the user; they can have sensors incorporated via weaving, printing, or integration of stand-alone sensors. The exact configuration and materials lead to a wide range of obtrusiveness, sensor function, flexibility, and washability.

DRIVERS

The main drivers of smart textile-based wearables have been health care (with products often developed by electronic device suppliers with little or no experience with clothing), sportswear (relatively sophisticated clothing brands with little or no experience in the electronics industry), and the military (a combination of the two).

KEY PLAYERS

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SMART TEXTILES

Materials companies have more opportunity than brand owners for development due to long development times

CHALLENGES

Washability, durability, and manufacturability are major challenges – most devices have removable electronic clips that cannot be washed.

Many startups have not yet demonstrated production capabilities at scale.

Startups have delayed commercialization due to mismatch between expertise and target markets (e.g., sensors competency but lacking in healthcare experience).

Healthcare as a target market is slow-moving due to regulations, limiting the rate of technology development.

OPPORTUNITIES

Sustainability

Visibility

USP

Disruption

Technology

Organization

Maturity

Drivers

IMPACT

TIMELINE to ADOPTION

Future innovations should seamlessly integrate components via printing and weaving rather than attaching stand-alone sensors.

While the current innovation is occurring in hardware, future innovation should move toward valuable analytics for end users.

Materials companies with complementary expertise should partner with and invest in startups to help them survive long development times.

Brand owners should not invest in this space until it is market-ready and can be quickly adopted.

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Innovation demands stem strongly from sustainability and performance needs

SUSTAINABILITY WILL DRIVE LONG-TERM INNOVATION

Sustainability is of critical importance for companies and society alike. However, transitioning toward a more circular economy has been historically difficult, with commercialization relegated to niche markets because of high material costs, poor performance, and low capacities. The six technology families detailed in this report tackle sustainability from multiple angles – each aspect of sustainability, despite any technical challenge, is necessary to reach improved practices across the value chain for the future, whether through sourcing, prolonging product performance, recycling, or otherwise. At present, major fashion brands are leading the charge on sustainability; chemicals and materials companies should respond to the market pull and partner with key brands to develop technologies that supplement the needs of the value chain.

NEAR-TERM SUCCESS IS PREDICATED ON EASE OF ADOPTION

Innovations that are easy to add on into the existing supply chain and provide benefit without disrupting a manufacturer’s process will see the fastest adoption. Functional technologies like hydrophobic coatings or drop-in additives currently have the best market penetration despite a lack of hype compared to innovations like smart textiles.

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Chemicals companies can invest in longer-term plays; brand owners can pressure the supply chain to adopt tech

CHEMICALS COMPANIES SHOULD SEEK COMPLEMENTARY AREAS

Chemicals and materials companies should target upstream and midstream sectors of the supply chain to translate and expand their expertise. They also have the leeway to make longer-term but impactful bets into areas like new material and process technologies. For example, focusing on sustainable chemicals, dyes, and finishes feeds into both textile processing and product functionalization; partnering with sensors startups could accelerate the maturity of smart textiles.

BRAND OWNERS ARE BEST POSITIONED TO INSTIGATE CHANGE

Brand owners are uniquely positioned to both pressure the supply chain to meet their needs and partner and be active in technologies along varying timelines. However, clients looking to differentiate themselves now should look to innovations on a more immediate timeline, ignoring longer-term developments until those are ready for upfront adoption. Further, brand owners should continue to form consortia and partnerships with other brands or governments and audit their supply chain to push for critical change across the industry.

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