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Top Trends Affecting Fashion Retailers

Tue, Jul 15, 2014

Digital Retail

Increasingly, fashion and lifestyle brands are establishing retail channels, including stores and e-commerce, to sell direct to consumers, instead of working through multi-brand boutiques, department stores, or other third-party wholesalers. The business benefits are compelling, including increased profit margins, greater control over how products are marketed and sold, and fostering a closer relationship with customers. Even in the age of online shopping, physical stores remain an important part of the experience for today’s omnichannel customer.

An Overview of Retail Industry Trends

However, unlike department stores and mass merchandisers, fashion retailers have to manage their entire supply -- from the farm to consumer -- and in most cases need to design, plan, procure, produce, and deliver (for sale) months in advance of demand. Those factors add layers of supply chain complexity, making it more challenging for fashion brands to keep tabs on what’s happening along the way. Addressing this challenge requires visibility and alignment across the entire value chain, covering all suppliers and functions -- many of whom rely on multiple factories throughout different regions to handle various aspects of production.

Historically, those challenges have remained “behind the curtain” for fashion brands and retailers. Today, that is no longer the case, due to the dramatic changes in the information landscape with the Internet and social media. Thanks to Twitter, Facebook, LinkedIn, Snapchat, and other social platforms, what happens anywhere in the supply chain can now damage a fashion brand all the way to the store or e-commerce website.

There have been several recent notable examples of this new challenge, ranging from conditions uncovered at the production facility to product quality mishaps. Media coverage has been exponentially amplified through social channels and fueled a more lasting public discourse on important topics such improving supply chain visibility, worker safety, and regulations.

Whether it’s proactively provided or not, the public demands greater transparency and this is an important consideration for fashion retailers. More than ever, their success depends upon the ability to gain visibility and control over their supply chain.

Fashion retailers look to the future of technology

The good news is that analytics, mobility, big data, and forecasting technologies are now being applied to the fashion supply chain to provide greater levels of visibility. While some of these developments are in the early stages, everyone -- from the fashion brand’s CEO office to the factory floor and even to the farm -- will soon be using these technologies on a daily basis. Some of these include:

  • Quality inspection solutions. Mobile applications make it possible for inspectors to walk the factory floors and make on-the-spot reports of potential defects that can be tied to purchase orders and traced to finished goods. Such quality applications are valuable in helping the factories and the fashion brands identify and fix issues earlier in the process, before they end up in the store -- or the twittersphere.

  • Executive dashboards. Much of the talk around analytics has been focused on understanding shopper behavior, but new developments enable fashion brand executives to obtain a global enterprise view, from farm to consumer, with real-time insight into critical information such as the current number of purchase orders assigned to a factory, supplier history, current and predicted levels of production, and real-time business results. Instead of outdated spreadsheets, these dashboards improve the communication and collaboration between the fashion brand and its suppliers, leading to better business results.

  • Forecasting demand. In the past, forecasting demand was seen as more art than science. Advances in predictive analytics, mobility, and big data are helping to make data-driven forecasting a reality. New “silhouette” mobile applications are being developed that digitally and visually build a garment so brand managers can meet with factory managers, in person or virtually, to walk through the visuals and discuss the components -- such as embossed material, unique cut, or other variable -- while simultaneously generating a calculation of the costs and resources involved. Similarly, solutions now exist to measure semantic data, for example, translating Facebook “likes” into demand signals. That capability provides greater accuracy in forecasting and real-time support for negotiating the appropriate order.

  • Enterprise integrated mobile POS. While mobile POS solutions are not a new concept, there are new solutions on the market aimed at fashion retailers that provide much deeper integration directly into their enterprise systems. This integration gives sales associates and store managers instant access to high value information, such as individual customer preferences and purchasing habits, as well as insight into global inventory levels and stock location. Additionally, mobile store reports empower store personnel to respond to shopper demands and daily changes in the business.

Today’s fashion and lifestyle retailers have to be more vigilant than ever. What happens at the retail store cannot be separated from what happens on the factory floor. By leveraging advances in technology that can support their unique requirements and deliver greater visibility into their supply chain, fashion brands have an enormous opportunity to successfully compete with any other channel in providing their value to shoppers around the world.