FROM OUR FEBRUARY ISSUE: THE DIGITAL PRODUCT PASSPORT | WHAT EVERY RETAILER NEEDS TO KNOW

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With its roots in EU legislation, the mandated Digital Product Passport (DPP) for apparel and accessories is coming, bringing significant implications and opportunities for American retailers. Designed to boost authentication, transparency, and sustainability, this initiative requires both retailers and brands to adopt technologies for storing and sharing detailed product information. Pending and existing legislation will necessitate disclosures on carbon and environmental footprints, durability, recyclability, repairability, content of recycled materials, supply chain traceability, and compliance certifications. Private-label products sold in the EU will also require DPPs, with proposed U.S. legislation echoing similar sentiments.

“The first fundamental step here is the idea of the apparel industry being a regulated industry,” says Cyrus Gilbert-Rolfe, Chief Commercial Officer of Kezzler, a connected products platform managing digital product identities and life cycle events. More than 30 billion products carry a Kezzler code. “Other industries like pharmaceuticals and alcohol are tightly regulated. The apparel industry is far bigger. This is a big deal.”

The Green Claims Directive is clear: “If you don’t have data, don’t make a claim.” Questions like “How many washes can this garment withstand?” and “What’s the environmental impact of washing?” are pressing for the industry. Additionally, labels must include information about disassembly, recycling, and disposal, a shift from the traditional linear supply chain mindset. This change reflects international mandates already present in Canada, France, and Germany.

“There will definitely be compliance issues for retailers,” Gilbert-Rolfe notes. “Retailers won’t be able to knowingly sell items without a valid DPP. Market surveillance authorities will ensure compliance, requiring systems to store and access information.” However, benefits include better communication of sustainability credentials, enhanced consumer experiences, and opportunities for early adopters to position themselves as sustainability leaders.

What is a Digital Product Passport?

A DPP is a structured collection of product information accessed via a unique identifier, such as a QR code. This technology allows consumers to retrieve detailed information—like user manuals or product provenance—by scanning a barcode or QR code with a smartphone.

Regulatory Landscape

The EU’s Ecodesign for Sustainable Products Regulation (ESPR) introduces requirements for circularity, durability, repairability, recyclability, and DPPs, while banning the destruction of unsold goods in textiles and footwear. Non-compliance fines range from €50,000 to €8 million for companies earning under €400 million, and up to 2% of revenue for larger companies. Germany also enforces exclusions from public business for up to three years.

In the U.S., the proposed Fashion Sustainability and Social Accountability Act would require brands with over $100 million in revenue to map 50% of their supply chains and verify sustainability claims, with penalties of up to 2% of revenue. The FABRIC Act would promote supply chain transparency, ethical production standards, and offer tax credits to U.S.-based manufacturers.

The Smart Product Evolution

Before DPP mandates, early adopters leveraged “smart products”—goods with digital identities enabling applications and insights throughout their lifecycle. These products offer engagement touchpoints, generate valuable consumer data, and enable new business models. From manufacturing and supply chain management to e-commerce and sustainability, smart products cater to diverse consumer needs while providing brands with insights into consumer behavior.

For example, food and beverage companies used QR codes on packaging to connect with end consumers. Diageo Brazil’s “Raise a Glass to Dad” campaign used QR codes on whisky bottles to deliver personalized video content, reaching 1 million Facebook fans and 880,000 followers via celebrity tweets. Similarly, fashion brands like Ralph Lauren and Levi’s utilized QR codes to verify product authenticity, combating counterfeiting and providing consumer data regardless of the sales channel.

“Authenticity in the supply chain is crucial for fashion brands,” says Gilbert-Rolfe. “Counterfeit products damage reputations and bottom lines. Digital IDs ensure authenticity, offering peace of mind for brands, retailers, and customers. Brands can quickly identify counterfeit sources and protect their reputation.”

According to the 2022 McKinsey State of Fashion Report, two out of five fashion executives had adopted or planned to adopt product passports, citing traceability, counterfeit protection, lifecycle transparency, and digital consumer engagement as key use cases.

Empowered Retailers and Consumers

Smart products create richer shopping experiences by transparently sharing product journeys, fostering brand loyalty, and aligning with consumer values. They empower consumers and businesses to compare sustainability credentials, facilitating better purchasing, repair, and recycling decisions. For example, a retailer can advise a consumer on repairing a garment, extending its life.

Gilbert-Rolfe highlights post-sale opportunities: “Brands like Patagonia and Nudie Jeans sell second-hand garments empowered by DPP authenticity. Automation will soon enable easier uploads of garments to resale platforms, getting unused garments back into circulation.”

At the July 2023 Première Vision show in Paris, l’Institut Français de la Mode (IFM) reported that 52.6% of U.S. men bought second-hand clothing in 2022, up from 49.7% in 2019, driven by price and sustainability concerns. When disposing of garments, 44.4% opted to resell online, and 42.1% chose thrift stores. Information on durability, repairability, and recyclability ranked highest in importance for U.S. consumers, surpassing traceability and material information.

The Future of Fashion

The DPP represents a transformative shift, promoting transparency, sustainability, and consumer engagement. By providing detailed product information, brands and retailers can meet regulatory requirements while creating deeper connections with consumers. As demand for traceability and environmental accountability rises, the DPP is poised to reshape the industry toward a more digital and sustainable future.

When asked how environmental labeling laws might affect consumption habits, 55.2% of respondents said they’d prioritize products with lower environmental impact. London-based department store Selfridges has embraced circular models through its Project Earth initiative, focusing on resale, rental, repair, and refill. By 2022, resale revenue grew 4.5 times, rental revenue grew 3.1 times, and refill revenue grew 4.6 times. In 2023, the initiative achieved a 280% revenue increase, with resale and refill models leading growth.

Josh Scacheri, Design Director at Gieves and Hawkes and founder of sustainable brand Love Hero, sees DPP benefits extending beyond compliance. He envisions the DPP shifting responsibility from supply chains to consumers. One example of this—bespoke Savile Row garments could carry customer profiles to future generations, preserving legacy through transparency and traceability.

Gilbert-Rolfe agrees. “A lot of responsibility today is focused on the supply chain. With the DPP, the shift can be on the consumer.”

Using the 2017 Grenfell Tower fire as an example, he explains the importance of linking products to consumers. The fire, caused by a recalled refrigerator the owner hadn’t registered, resulted in 72 deaths. “The idea that I can discard something environmentally destructive without accountability will likely disappear,” he says. “Apparel might follow suit. Abandoned garments could be traced to their owners, marking a societal shift toward accountability and sustainability.”

The DPP initiative underscores a pivotal change in the apparel industry, aligning with consumer expectations and regulatory demands. As brands and retailers adapt, the future of fashion becomes increasingly digital, sustainable, and interconnected.