Sustainability in a recession: lala Berlin's bold longtermism helps it navigate the squeeze

“We try to make the best choices for our business”, says Livia Lee, CEO of designer womenswear brand lala Berlin. 

Despite the change forced on the retail sector through the pandemic, the German brand wasn’t too affected by its onslaught, keeping top-line growth and strong performance throughout. But it still made brave decisions to ensure its survival and future. And the process of continuing to work remotely since has brought its own challenges, inspiring a rethink of brand strategy. 

Now operating more actively on social media, continuing to cut collections by 50% and reducing manufacturing garments in Asia as a way of mindfully watching costs, lala Berlin has introduced cutbacks that allowed the brand to work smarter, put sustainability front and centre and refocus on philanthropic projects.

With a 20-year history and a number of loyal customers to please, lala Berlin’s robust team proved its strength during turbulent times. With the world moving into an economic recession, the brand is preparing to respond more to consumer needs and forecasting more conservative spending, given how volatile the market has been and how cautious shoppers are with their money.

“Some of these challenges are out of our control,” says Lee. “But we’re still running a business and figuring out how to do it best.” 

Effect of crisis and pandemic on sustainability

Retailers are working hard to revive their physical retail spaces following closures during the pandemic. As a result, retail sales are growing, but the European sector is still down 15% on its pre-pandemic sales. This is why lala Berlin is exploring new markets, scoping out physical spaces in North America following a successful online launch. 

“We’re a small brand,” says Lee. “It’s not difficult for us to gain more visibility in existing markets and expand elsewhere. However, we don’t want all our eggs in one basket; we want to spread out the risks as we see all territories respond to the threat of war and its limitation on resources.”

Being agile and able to pinpoint opportunity has allowed lala Berlin to avoid external pressures and focus on progression. With clothing production now taking place in Europe and accessories in Asia, the brand is establishing suppliers across continents so that “we have the best-case scenario and can shift depending on what’s happening globally.” 

This tough economic climate has affected consumer purse strings, as they are harder up on essentials due to rising heating and petrol costs – which has led to sustainability being deprioritised among consumers and brands struggling to keep their heads above water. 

Our clients today are more concerned about price than social responsibility or sustainability,” says Lee. “It’s a difference between the heart and the wallet. The onus is on brands to do what’s right because customer demands drive all retail business, but when they’re not asking for change, it becomes something we need to focus on to transform our business more responsibly.”

Taking a long-term sustainability approach

lala Berlin has leant back on one of its core pillars, established five years ago: ‘To produce less but better and commit to creating a sustainable future.’ 

To counter surplus stock, the brand consciously reduced its collections before the pandemic as a way of being purposefully responsible. “There’s no need as a premium luxury brand to produce such vast collections; we’re not a supermarket where there’s a need for 50 different versions of products. We provide customers with a focused assortment of items and ensure that everything has long-lasting wardrobe viability.”

Furthermore, this approach gave credence to the rate of innovation expected of the brand’s design team and protects their creativity long-term, firmly placing value on quality over quantity.

And reducing collections by 50% didn’t affect lala Berlin’s top-line sales. Lee admits that the brand saw instead revenues grow by 20-25% since making this reduction, with revenues continuing to increase despite the shorter lines. 

 

Of late, the brand has unveiled its resale platform, supported via its website, which allows customers to sell and return branded items, encouraging a circular culture. This means they can shop and throw out old clothes more sustainably while appealing to prospective customers through the lowered purchase point.

“It’s an opportunity for us to sit in front of new clients and give our existing ones a chance to participate in fashion responsibility,” says Lee. “This way, our customers can support the planet without feeling pressured to participate.”

Intentional manufacturing

With 60% of the brand’s products produced in Europe and partnering with suppliers across the continent, Lee stresses that lala Berlin consciously chooses where and how it works, including increasing its use of natural fibres. However, it still produces most accessories in China.

“There’s a negative connotation to producing in China,” says Lee. “But for us, it doesn’t matter where we produce. We have long standing relationships with our vendors on both continents and have produced with our Chinese counterparts for over 14 years. It’s about knowing your partners and what they’re doing, including where the products are coming from and who’s producing it.” 

lala Berlin has developed its ESG strategy with Deloitte to be more transparent about its production process and understand the sustainability factors behind each product. Since launching this strategy in November 2021, the brand has developed a roadmap for the next three years in which it aims to foster an environment of passion and accountability that prioritises people, products and the planet. This has resulted in further investigation into its carbon emissions to seek to cut down on them. 

“Our collections are made with intelligence and thought goes into every fabric that’s chosen,” says Lee. 

“No company is free of mistakes,” admits Lee. “But we’re learning and constantly implementing change. Nothing goes to landfill.”

 

By continuing to seek sustainable solutions even when consumers aren’t asking for them, lala Berlin is clear on the pillars that built the brand and is working on communicating this clearly with its audience. By focusing on scaling up sustainability through its strategic and research efforts, Lee is hopeful that the brand will continue to make the right decisions for the brand at the right time.