Digital Product Passport as a Transparency Tool for Sustainable Fashion Retailing: Benefits, Barriers, and Strategic Implications

ABSTRACT Transparency is increasingly recognized as a critical factor in advancing the sustainability of production processes and products, particularly in fashion retailing. In response, the European Union is developing standardized transparency mechanisms, most notably the Digital Product Passport (DPP). Despite its imminent adoption in the fashion industry, research on the DPP remains scarce, especially from the perspectives of its direct stakeholders: retailers and consumers. This study examines how retailers and consumers perceive transparency tools like the DPP, focusing on the key drivers and barriers to its adoption. Using signaling theory and the Unified Theory of Acceptance and Use of Technology (UTAUT/UTAUT2) framework, the research involved a qualitative analysis of retailers' perceptions followed by a mixed‐method exploration of consumer views. The findings reveal that although retailers as signal strategists can enhance product oversight and discourage unethical practices through the DPP, benefiting from signal observability and credibility, they face challenges due to signal cost (implementation costs) and signal observability (standardization issues). Consumers, on the other hand, recognize that the DPP can improve their decision‐making and increase awareness of sustainability in a pleasant way, thereby enhancing their purchasing experience. The benefits of the DPP may help mitigate cultural barriers and skepticism about green initiatives by providing comparable information. This paper advances theory by using signaling theory to interpret stakeholders' qualitative perceptions of the DPP as a transparency signal, while applying UTAUT/UTAUT2 to examine consumers' intention to use DPP. It offers guidance for retailers and policymakers on overcoming adoption barriers and maximizing transparency benefits.