Stitch Fix’s Thomas Heckroth: Data Driven Sustainability

Every industry in the world needs to focus on sustainability, but the $2.5 trillion fashion industry is, without doubt, one of the biggest polluters. According to the EPA Office of Solid Waste, Americans throw away more than 68 pounds of clothing and textiles per person, per year, and clothing and other textiles represent about 4% of municipal solid waste. Another major issue is that most of the fabrics in less expensive garments are synthetics and polyesters — derived from oil and petroleum production. Unlike wool or cotton, synthetic particles don’t biodegrade. So when clothing is dumped in a landfill, toxic synthetic fibers pollute water sources. Between 2000 and 2015, the fashion industry doubled production and the average shopper bought 60% more clothing, but kept each product for about half as long. Despite talk of shifting toward more sustainable production, the global fashion industry’s greenhouse gas emissions are on track to surge more than 50% by 2030 as the global demand for apparel rises.

Thomas Heckroth, Director of Strategic & Responsible Sourcing at Stitch Fix, is on a mission to change this trajectory.

Learn about how Stitch Fix is using data to drive sustainability, what sustainable sourcing looks like, key metrics which are a part of Stitch Fix’s sustainability strategy, and more. His key takeaways include:

• It is key to be able to tie the responsible sourcing, strategic sourcing, and quality teams all together: From my experience in sustainability, it’s a challenge if you’re not able to take your sustainability commitments or the work that you’re doing in responsible sourcing and tie that to the actual sourcing decisions. If there is a disconnect between those then it can feel like you’re doing a whole bunch of good work in responsible sourcing and it’s not translating through the product that you’re putting out. (1:18)
• Our company was founded with the intent to solve some of the biggest challenges in retail: We wanted to have a data driven inventory model to make sure it is highly efficient to reduce waste. Another thing that we think through is that sustainability is about the future — how are you building for the future and making sure that you can be a company that lasts. The more we are able to be more efficient with the resources we do use, the better off we’ll be as a company, the longer we’ll be able to operate as a company, the more value we’ll be able to provide to our customers and our clients, and the better off we’ll be for the world and the people who work with our product or make our product.  (2:45) 
• Sustainability is about doing more with less: We really feel that if by addressing sustainability, we’re innovating the space, we’re taking ethos innovation that we were founded on and building for a stronger future. That is the value we see in it overall and it really is the value a lot of the industry and a lot of other companies are saying too. It’s a matter of how you plan and build for the future. (4:30)
• Data is the foundation of the sustainability pillar we build everything at Stitch Fix off of: We know we’ll be more successful and our clients will see more value the better we get at predicting what they would like and what they want and need and delivering nothing more than the products they want or need. Our style algorithms really help us understand what clients want and predict the inventory needs with confidence so we’re able to sell through at higher rates than the industry average — which takes waste out of the system. The other piece in being focused on data also means that we’re really evidence based in our decision making so it helps us stick to the science of sustainability.  (5:15)
• Selecting a focus for your sustainability strategy really centers upon how a company can reduce its impact: We have to figure out how we reduce our impact in making or selling apparel in the world. That is the first frame. Where do we have the most influence and where do we have the most control. That’s the first low-hanging fruit you typically try to work with. We know we can decide who we work with for a factory base, for our private label work. We know we have pretty good control over what decisions we can make as far as what materials we use and the packaging we actually decide to use. All those things are decisions that we control it at its heart. And so, that’s where we’ve focused our initial work. Branching out of that, it’s just what’s the next level of influence we have? This is the way we try to expand and try to look at, what do we do next. (8:09)
• Assess your sustainability impact based upon the things you can measure: You manage what you measure, so we are only going to be as good as the things that we’re measuring. We are monitoring factory performance consistently on a monthly basis. We monitor the amount of orders going to our top factories, the amount of product that includes sustainable attributes, sets of materials that are using more sustainable alternatives to conventional material, etc. We know sustainability is a journey and we’re still on that journey. It never really ends, so there is no finish line. But we’re trying to continue each day and take new steps and build on what we did yesterday. (10:35)
• Sustainability only works if it permeates throughout the entire company: Sustainability permeates throughout the company, not necessarily because we required it to be that way, but because the people that we hire, the people that work with Stitch Fix are interested and committed to making sure we are a more sustainable company. Each team, whether it’s the packaging team or the operations team or the product development team, all have pieces of sustainability they are thinking about on a day-to-day basis. They know what they want to do and what the goals are in trying to get us to be more sustainable. We do have an opportunity to make the company more streamlined to make sure we are all rowing the boat in the same direction and not doubling up on efforts. (12:20)
• A number of factors will impact companies making larger investments in sustainability: You really have two things that are tying folks together and that’s the reality of the world that we live in and the business imperative now for the future. The greatest thing about sustainability — especially in the environmental space — is that it is not just a cost. You’re investing now for the future. It’s a much easier conversation to have with senior leaders about the trade offs but also the benefits to sustainability within your business now than it was before.  (14:28)

Watch the video or read the transcription below.

TRANSCRIPTION

Jennifer: Can you share your roles and responsibilities as the person leading the strategic and responsible sourcing part of the business? 

Thomas: Yeah. Absolutely. So, our, my title as you said, is director of strategic and responsible sourcing, underneath that I actually oversee three different teams in our company. So, the first is the responsible sourcing team which is essentially our sustainability team. And then I also have the quality team that I work with and then what we call the strategic sourcing team. So, for me, the real draw of this job, and I’ve only been on the job for a little over a year now, but the draw was being able to link those three things together to drive results. I think, from my experience in sustainability, it’s a challenge if you’re not able to take your sustainability commitments [2:00] or the work that you’re doing in responsible sourcing and tie that to the actual sourcing decisions. If there is a disconnect between those then it can feel like you’re doing a whole bunch of good work in responsible sourcing and it’s not translating through the product that you’re putting out. So, the thing that I loved about the way Stitch Fix was approaching this was that we were tying those things together and making sure that those decisions work in tandem. 

Jennifer: One thing that you mentioned was that Stitch Fix is kind of a little bit more recently being more public about your sustainability initiatives, how does the business see the value of sustainability today? 

Thomas: Yeah. Well I think we can start a little bit earlier and maybe towards the beginning of really when we were founded, and we were founded really with the intent to solve some of the biggest challenges with traditional retail. So, understanding and serving people as individuals and managing inventory to deliver on that promise. And we wanted to have a data driven inventory model to make sure its highly efficient to reduce waste. So whether or not Katrina Lake, whose our CEO and founder was thinking immediately about sustainability at the time, we were founded on, I would say an ethos of sustainability and trying to take some of the more wasteful pieces of retail out by being more efficient and using data to do so. So, I see us as being founded with sustainability in mind in the beginning. So I think that’s a great place to start from and I think that in the case, the value that we place on sustainability, I think another thing that we talk about and we think through and that I think through is that sustainability is about the future. It’s about how are you building for the future and making sure that you can be a company that lasts. And so the more we are able to be more efficient with the resources that we do use, the better off we’ll be as a company, the longer we’ll be able to operate as a company, the more [4:00] value we’ll be able to provide to our customers and our clients but also the better off we’ll be for the world and the people who work with our product or make our product. So, the value for us is really about being a valuable business as well. And again, I think the nice thing about that from my perspective is its really tying that business to the sourcing world with the responsible sourcing sustainability world. So just a final kind of comment here, I think a lot of times sustainability is about doing more with less, right, and that’s what I was trying to eliminate a little bit before, but so we really feel that if by addressing sustainability, we’re innovating the space, we’re taking that ethos innovation that we were founded on and building for a stronger future. So, that’s, I think, the value that we see in it overall and I think it really is probably the value that a lot of the industry and a lot of other companies are saying too. It’s a matter of how do you plan and build for the future. 

Jennifer: Yeah. That’s excellent. I think one thing that really caught my attention too as you’re sharing more about that is your focus on data. You mentioned that data is really important to Stitch Fix, how does that focus show up in your sustainability work? 

Thomas: Yeah. So, data is the, I would say, the foundation of the pillar that we really build everything off of here at Stitch Fix. And being a company based in San Francisco that can sound a little cliché, I suppose, at times but it really is the bread and butter for what we do. And we know that we’ll be more successful and our clients will see more value the better we get at predicting what they would like and what they want and need and delivering nothing more than the products that they want or need. So, we don’t want to be in the business of sending clients things that they don’t want, things that they’re unsure about. Because that just creates waste in the system and so our intent is to try to bring that out and be, again, [6:00] more efficient with our resources. So, our style algorithms that we use really help us understand what clients want and predict that inventory need with confidence so we’re able to sell through at higher rates than the industry average. Which, again, is that piece of taking waste out of the system. So, I think the other piece of this for us is really the, being focused on data also means that we’re really evidence based in our decision making, right. So that helps us stick to the science of sustainability and there is a lot of, I think, work that happens in sustainability that, I think, people get questions. Whether is NGOs or other outside groups trying to figure out exactly, is it really sustainable or is it just a talking point? And I think we really want to stick to the science and make sure that we’re making an impact there but we also, obviously, there are things that are trending that people are making decisions on and their lives and what they’re asking for, we’ll deliver on that too. But staying close to the science I think is really important for the sustainability space in general. 

Jennifer: That’s why there is also the trend of science-based targets and that’s showing up at some of the kind of new and next goals that are coming up for businesses as well. Just really rooting that in science and math. 

Thomas: Absolutely. And, yeah, I think that’s definitely where I would like us to get to and where we’re going to work toward as we continue to build out our program to really be aligned with that science based target initiative.

Jennifer: I also noticed is that you recently published a new social impact page. It featured your sustainability and responsible sourcing content. There were so many things that you highlighted, whether it was 100% of your main materials or more sustainably sourced by 2025, you had your whole tier 1 factory list, you had metrics about your factory audit process. There’s a lot of really kind of detailed information [8:00] there. How did you pick these areas to focus on as a part of your sustainability strategy? 

Thomas: Well, I’ll go back again to Katrina, our CEO, and she has talked about the fact that, you know, we are pretty sure people are going to be wearing clothes for the foreseeable future. So, with that in mind, we have to figure out, how do we reduce our impact in making or selling apparel in the world. And so that’s kind of that first frame, just how are we reducing our impact. And I think the areas of focus, its probably not too different than most companies, I mean, we’re looking at where do we influence. Where do we have the most influence and where do we have the most control. That’s the first, kind of, I guess for lack of a better term, low-hanging fruit that you typically try to work with. So, we know that we can decide who we work with for a factory base, for our private label work. We know that we have pretty good control over what decisions we can make as far as what materials we use. The packaging that we actually decide to use. All those things are decisions that we control it at its heart. And so, that’s where we’ve focused our initial work certainly. And then branching out of that, it’s just, alright, what’s the next level of influence that we have? Working with our factories, yes you can choose who they are, but you also want to try to influence how they perform or make sure that they keep up with your expectations and the industry expectations so we have a little bit more influence there. So, I think that’s the way we try to expand and try to look at, what do we do next. But there are some things, certainly that our clients or potential clients are asking for or looking for in a company and looking for in their apparel. So that will, being a customer centered business as well, that will dictate some of the work we do too. If people are really asking for it or demanding for it, we have to deliver on what they need. That’s our business model. Find out what people need and want and make sure that we are able to deliver on it. So that’s, I think, where we really [10:00] look at as just…our internal operations are pretty manageable, some of the external stuff we have pretty good control or influence over and some we don’t. So how do we just keep building that influential pyramid, if you will. 

Jennifer: As you’re setting these goals and seeing your progress met against that, how do you measure your sustainability progress today? Do you have a team scorecard, or what does that look like? 

Thomas: Yeah. So, we measure on a variety of different things and it goes back to the Old Aegean, I’m using a whole bunch of clichés this morning, I apologize. But you manage what your measure, right? So, we’re only going to be as good as the things that we’re measuring. So, we’re monitoring factory performance consistently on a monthly basis. We review that. Certainly, audits and things come in, we monitor the amount of orders that are going to our top factories, the amount of product that includes sustainable attributes, set of materials that are using more sustainable alternatives to conventional materials as we talk about in the website. So that’s what we’re looking at now and really trying to provide cohort and guidance to the rest of the company on how we’re performing there. But I think, in all honesty, we have an opportunity to get more in depth in what we measure and really tying, again, our work to science-based targets. I think those are a real opportunity for us to really dig in some more and so the thing that I always try to specify in this space too is that we know sustainability is a journey. And we’re still on that journey. It never really ends, there is no finish line really. But we’re trying to continue each day and take new steps and build on what we did yesterday. So, I’m really happy with the foundation that we’re building, and looking forward to what steps and big steps we can taking going forward. 

Jennifer: How does sustainability [12:00] show up across the entire company at Stitch Fix? I think oftentimes you see sustainability teams being very small within an organization because for it to work it really has to be persistent across the entire company and through every employee. How is sustainability integrated across departments? 

Thomas: Well, I get really excited about this question, in all honesty. So, you are absolutely right. Sustainability only really works if it permeates throughout the company and we do have a small team. The responsible sourcing team is myself and two other folks. Tremendous teammates. But we aren’t big. We aren’t a 30-person team or something and so the great thing about Stitch Fix is we are a pretty flat organization. And people are encouraged to take ownership of your own work and to make sure that it includes that things that we need in order to be success. So that’s a long way of saying that the sustainability that permeates throughout the company, not necessarily because we required it to be that way, but because the people that we hire, the people that work with Stitch Fix are interested and committed to making sure we are a more sustainable company. So, each team, whether it’s the packaging team or the operations team or the product development team, they all have pieces of sustainability that they are thinking about on a day-to-day basis. They know what they want to do and what the goals are in trying to get us to be more sustainable. But again, going back to this kind of journey, I think we do have an opportunity to make that more streamlined. To make sure that we’re all kind of rowing the boat in the same direction if you will and that we’re not doubling up on efforts. But, I think, the great thing about Stitch Fix is you don’t have to convince anybody right now. It’s a matter of just, people are really excited to take this work and do it and make sure that we become a better company [14:00] or continue to grow as a company. 

Jennifer: Sustainability is all about the future, so what is your thought around what you think its going to take for more companies to make larger investments in sustainability in the future, regardless of where they are in their journey today? 

Thomas: Yeah. So, I think there are a couple factors here. I think first, throughout my career, as I mentioned, I’ve tried to tie good sustainability performance to business success or good business performance. I think its easier for senior leaders to have buy in when they see that clear data. And so that I think is, we’re now able to, I think, show that pretty clearly. Environmental performance or just sustainability performance in general leads to better outcomes on the business side too. So that triple bottom line that we kind of started early 2000s and 90s talking about kind of got us into this world. But I also think that business aside, there’s a reality that’s setting in that when you look outside, if you’re in California, the fires that have been raging, those are getting worse and worse each year. That’s a function of climate change. We know that to be the case. You see floods and the derecho that swept through Iowa, where I grew up, just weird weather patterns that are sticking around longer or being more severe. So, there’s a reality there that says we have to change and to succeed as a business, to continue to be around as a business, I think lead us to understand that we have to change. So, there’s the business success side that I think is encouraging people to make more investments, but there is also the reality, the imperative, that we have to change how we’re operating in order to succeed. And I think the greatest thing about sustainability, [16:00] especially in the environmental space, is that its not just a cost. Like, we have to get over this idea that, I love that you framed the question as investments, because that’s what they are. You’re investing now for the future. There is an immediate cost, but there’s a payoff in the end. And I was just watching a video from McKinsey and the Global Fashion Agenda, a short, like, 5-minute video, but they were talking about how the fashion industry needs to take out about 1.1 billion tons of CO2 over the next 10 years in order to basically be on track with the Paris accord. But 55% of the efforts, or the work to do that, would actually save money for companies. And so, it’s a much easier conversation now, I think, to have with senior leaders about the trade offs but also the benefits to sustainability within your business. So to circle back a little bit, you really have two things that are tying folks together and that’s the reality of the world that we live in and the business imperative now for the future that I think, you’re only going to see more engagement. And as we said, hopefully that’s engagement throughout the company, not just the sustainability team. 

Jennifer: Excellent. Well, Thomas, thank you so much for sharing all of your insights in this conversation today. Definitely the highlight of my morning and I bet it will be the highlight of everyone’s day when they watch this as well. 

Thomas: Well, no, thank you, Jennifer. This is terrific and a terrific opportunity. I thank you for hosting the series. It’s really important to have these things kind of out and be able to talk about these topics consistently.