What can Seven-Eleven Japan teach the fashion industry?
A lot, when it comes to how supply chains and sales information, used intelligently, can rev up a business, said Stanford University professor Hau Lee, who offered insight in fast-food mode.
The convenience store was just one example of how apparel brands and retailers can learn from firms that sell everything from fresh food to computer games, but have similar supply chains.
"We are dominated by three major drivers," said Lee, the Thoma professor of operations, information and technology at the university's Graduate School of Business. "The three drivers that make life difficult, and some of you are losing hair because of that."
These drivers are: increasing uncertainties in demand and supply, changes in technology and markets and the need to partner with companies along the supply chain.
On that last point, Lee said: "Very few companies are totally integrated vertically. You need your partners — you need your supply partners, your manufacturing partners, your logistics partners, your retail channel partners — and we are depending on all these partners, but these partners have different interests."
To meet these challenges, Lee said companies must be agile and adaptive enough to deal with changes.
Seven-Eleven Japan manages to pull in sales of about $23 billion annually by reacting to who is in their stores and when, he said.
"They are just a responsive company," said Lee. "They master information knowledge, knowing what people want and they build their logistics system. They deliver three times a day, they change their shelves because their stores are so small."
By knowing what school kids want in the morning, what housewives want in the afternoon and what their husbands pick up on their way home from work, the company became the country's number-one seller of fast food, batteries and pantyhose.
In the case of pantyhose, careful research kept the retailer from making a misstep, said Lee.As sales of pantyhose rose, executives considered expanding the high-margin cosmetics area, but by recording who was buying what, they realized that it was middle-aged men on their way home from work who were buying up stock, no doubt for their wives at home.
Accordingly, Seven-Eleven moved the pantyhose closer to the beer section.
"Agility is about smart information," said Lee.
He also preached diversity, noting supply chains can be broadly understood by answering two questions: Is the production done by the company or outsourced and are the goods made near the market or far away?
"First question is, 'Are you on or are you off?' [and the] second question is, 'Are you in or are you out?'" he said.
In the case of Crocs, the successful shoe company, the answer is 'Yes,' since they do a bit of each in both cases.
"This combination strategy is a powerful one," said Lee. "You do not want to have a one-size-fits-all supply chain."
Supply chains, he said are like people and have two personality types.
Type A is responsive and flexible, but costs more.
Type B is cheaper, but may be slower.
"So what you do is combine the two," he said, noting successful companies have a bit of each.
"Why? Because they want to have their cake and eat it, too," said Lee. "They want to have the cost efficiency and they want to have flexibility, responsiveness and speed."
Breaking: @cushnieetochs’ co-founders @carlycushnie and @ochsmichelle are parting ways. After a 10-year run, Ochs is leaving the brand. Get the full story on WWD.com – link in bio. #wwdnews #wwdfashion
@maybelline’s Kanako Takase had snow bunnies in mind when creating the beauty look for @philipppleininternational. Playing off of the bedazzled snowboards in the collection, Takase mixed two highlighters together for a luminous sheen. #wwdbeauty #nyfw (📷: @jilliansollazzo)
“There’s a huge gap between the old way of doing things and today. It takes the youth to help evolve that. You have to count on the kids today to help lead you into the future. A lot of these retailers are stuck in the past. Communication is the biggest thing,” said @ronniefieg of @kith on the youth’s role in retail. On Monday night, Jeff Staple moderated a keynote session with Fieg and @syresmith at Assembly - a series of workshops, talks and keynotes addressing topics or issues in the apparel industry. Head to WWD.com to read more advice from Fieg and what Smith thinks of his dad @willsmith’s Instagram account and sustainability (📷: @weston.wells)
@joansmalls closed the @michaelkors fall 2018 show in black sequined pants and a varsity T printed with 19 on the front and 81 on the back. 1981 – the year Kors went into business. #wwdfashion #nfyw (📷: @giovanni_giannoni_photo)
“You think your life is going to be a certain way, and nothing you thought would happen ends up happening. Never in my wildest dreams did I think I’d be designing clothes and working with Mickey Drexler, and building something I’m deeply proud of,” said Jenna Lyons. Nine months after leaving @jcrew, Lyons is exploring the meaning of happiness. Read the interview, where Lyons talks about reinvention and more on WWD.com – link in bio. #wwdfashion (📷: Farrell) #jennalyons #jcrew