In a just-released Speed to Market and Consumer Insights Special Report, which was conducted by WWD with support from McKinsey & Co. Inc., fashion and retail executives polled acknowledged that they face long product development and supply chain lead times while being saddled by “limited digitalization throughout the process.”
One-third of those polled said they have lead times on fashion of six months or longer. The survey included just over 100 c-level fashion industry executives.
The long lead times are making it challenging for executives to meet the demands of the market — ones that require shorter lead times as well as leaner and better-managed inventories, and more in-season fashion options for consumers. Or, when a cold snap hits several regions at once, such as the one last week, the ability to have enough inventory of outerwear to meet consumer demand.
Despite these shortcomings, respondents ranked “supply chain improvements, investments in related technologies and capturing consumer insights as a high priority in their business today.”
“Eighty percent of c-level executives see the role of consumer insights as critical to decision-making in their business today, while 64 percent rate improving speed-to-market and supply-chain efficiency as a top priority (with 17 percent ranking it the business’ highest priority),” authors of the report said.
There are other dimensions of doing business today to be considered — such as the in-store experience. Larry Grischow, senior vice president of supply chain and procurement at Abercrombie & Fitch, acknowledged in the report that the fashion space has been transformed rapidly by changes in consumer behavior, noting that, “Getting customers, delivering an experience and product to customers the way they want it, where they want it certainly has elevated the game, and has made it more complex.”
The researchers of the report said the distribution landscape has rapidly changed, “with physical retail fighting for footfall, traditional multibrand retail and department stores losing share, and fast-growing online pure-play retailers are leading the pack.”
The authors of the report said new business models continue to emerge and are “being accepted by consumers, such as consumer-to-consumer platforms and rental and subscription models, stealing share of wallet. At the same time, market growth has significantly slowed since the early 2010s, while the pace of fashion and trend adoption has accelerated.”
There are tools and tactics that can be deployed to help navigate the complexity of the market across the supply chain. But keying into the needs and wants of consumers is essential. Data and web analytic solutions help. Nineteen percent of those polled said they are using it in their daily decision-making.
Ari Hoffman, U.S. chief executive officer of Scotch & Soda, said in the report that knowing this business, “people don’t have large teams to do [data analytics, like] Google or Amazon, or Facebook. With e-commerce, it’s something very digestible, so…e-commerce [is] a channel of truly direct feedback and that’s where we get the best criticism, or the best comments, or the best feedback.”
One fashion designer with three decades of experience who sells products at major department stores and via e-commerce said in the report that her “web site is the best place to garner feedback from shoppers” and when coupled with data on consumers and what they’re buying, “it creates insights that you can act on. At the heart of fashion apparel is meeting the emotional needs of consumers,” she added. “But to do that, you need the data and the technology to act on it. Which is also why CRM plays such an important role.”
Nathalie Remy, partner at McKinsey & Co., has developed a tool called “Rapid Design 2 Consumer” that aims to help brands and retailers make better informed decisions. In the report she said today’s retail market is extremely challenging, but without data and consumer insights along with a clear strategy, “companies will turn into followers instead of leaders.”
Remy said the Rapid Design 2 Consumer solution “helps to consolidate multiple sources of data and highlight the resulting insights to pay attention to. The development of the tool is based on feedback from our clients — who acknowledge this is a real challenge for them.”
Jennifer Schmidt, senior partner at McKinsey, and Remy also noted in the report that “data segmentation helps companies deploy product segmentation strategies, which involves brands and retailers offering seasonal and trend-right fashions while also maintaining a core of basics.”
In a research interview for the report, an executive from an international apparel retailer said for his company, “product segmentation means offering ‘fast fashion’ on a short lead time while the brand’s basics business can take months. He also said his company is using more than one calendar.”
Although the researchers of the report said it takes time and money to align the product development and supply chain processes with retail and online distribution models that key into consumer behavior preferences, the market is not waiting for laggards to catch up.
“As executives think about their investment dollars as it relates to speed-to-market and consumer insights, there are three levers that can be pulled to deliver impact,” the authors said. “First, acquiring data, creating a unified systems infrastructure, and visualizing the data in an easy-to-understand way. Second, wiring the insights into the business, starting small and ensuring they are used in a focused, actionable way tied to specific decisions being made.”
Third, “focusing on speed enablers to get products to market as fast as possible in an economical way, including segmenting the supply chain to ensure lead times for given products fit business needs and priorities, building testing capabilities for product ideas with the most uncertainty to reduce the level of risk, and assessing where digitization can plug in to further speed the process up.”