Where do we go from here?
The fashion industry is challenged with this question for a few years now, with no answer just yet.
Here is where we are now:
- Globalization and technology changed the supply chain.
- Fast fashion companies disrupted the market and created new standards of speed to market. A company like Zara can now get from idea to product in the store in just 3-5 weeks (as a comparison, for most companies it takes 6-9 months).
- Brick and mortar and shopping malls are declining in performance each day, online shopping is taking over and growing every minute.
- As a result of the e-commerce growth, the direct dialog/connection between brands and their customers is stronger which gives the customer the power to dictate what they want to buy and how quickly they want it.
- The wholesale model as we knew it simply broken. Retailers are forced to manage their cash flow and inventory very closely, their orders per style/color are smaller and they barely take any risk with something new. Even the traditional way of buying has changed, the tradeshows are seeing less and less traffic.
Mind you, all the above didn't just happen last week. I remember seeing this shift starting to happen almost 10 years ago.
So what's next?
Despite what some may say, It's not the end of the fashion industry because the last time I checked we are all still buying and wearing clothes. So it isn't that the buying power of customers is declining but it's how, where and what they are buying that is changing.
These big changes forcing anyone who is part of the supply chain and retail re: fashion brands, retailers, factories etc. to adapt, which really means testing new ways of doing business in search of the next way.
However, what I find exciting is that the next way could be tailored specifically for each company because one thing that technology and globalization can offer is more freedom for companies to create their own ways of doing business. No more textbooks! The textbooks for How to build a fashion brand is out the window.
If for all these years it was a game of margins, it's not so much anymore. Today it's about speed to market and flexibility.
What does all that mean for us who are part of the industry?
And although we see big companies like Amazon taking bigger bites of the market share, these changes, in my opinion, can be especially exciting and rewarding for small and medium-sized fashion brands.
The future belongs to the young generations! Those who grew up with technology around them can identify better innovation opportunities, and technology will help them to adjust and move quicker.
It is going to be a lot harder to change the habits of a grown-up as opposed to teaching newborn new habits.
In an industry forum that I attended last week, the guest speaker was Li & Fung's executive director Rick Darling, and his words enforced that:
"The reality is, while that's (the changes in the market) happening and retailers buy less product and they need to do it faster and they need to do it in smaller quantities, none of us, and I will say none of us—including Li & Fung, who's supposed to be the supply chain leader—really has a supply chain that's been built for that."
This is why I think that this is the time for smaller companies and entrepreneurs with a vision to find the gaps in the market and own them.
Which is what we see already.
On the retail end, we see more and more companies who are going direct to the customer as well as companies like Stitch Fix, Le-tote and Rent the Runway who are completely disrupting the retail business that we know. We see fashion brands who experimenting with the concept of having part of their collection from the runway available to buy immediately. Virtual showrooms are replacing the traditional tradeshows and Augmented Reality is giving fashion designers new and exciting ways to present thier fashion products.
On the product end, we see new technologies offering 3D virtual sample rooms to speed up the development process, factories that are changing the way they're set-up in order to accommodate brands who are in need for smaller frequent production runs. Just recently the first fully automated factory (full cut and sew) machine was introduced and although for now, it can only make a simple T-shirt (btw, Adidas will be producing tees using this right here in Arkansas), there is no doubt it will be able to produce much more complicated items a few years from now in a much cheaper and quicker way.
And there are probably more innovations that are in the work as we speak.
So do I know where do we go from here? Not exactly.
But what I do know is that the immediate big winners are the consumers, brands are listening to them more than ever before.
And on the business end, the companies who will be able to design their supply chain to be able to accommodate their customer's feedback are going to be the big winners of the future.
So whether you are an existing fashion business or just thinking about starting one this is the one aspect that I would focus on.
Need help evaluating your supply chain to match your business strategy? Get in touch and let me help you.