The financial types think instant fashion is a disruption that the apparel industry needs.
Analysts contacted by WWD all felt the market had shifted abruptly and that designers and retailers had no choice but to give consumers what they want. The ones who figure how to deliver in-season looks the quickest and who execute it the best are expected to be successful, while those insisting they can’t change their lead times lose the ability to compete for sales.
“Wall Street loves performance and loves to see change and excitement,” said Brien Rowe, a retail analyst with D.A. Davidson & Co., a financial services company. “It loves to see consumers chasing demand. It’s not generating a stock price change, but for the brands that can evolve, it will pay off. From a macro perspective, Wall Street and the investing public are excited to see what’s happening.”
He pointed out that social media has driven the consumers’ need for immediate satisfaction. “It’s the great democratization of fashion,” Rowe added, “because it is taking power away from the tastemakers.” He also pointed out that apparel brands were caught off guard by the fast-fashion players such as H&M and Zara, but they now have a chance to gain back some of the ground they lost. If brands can adapt to this need for immediacy, Rowe believes, then they will be able to neutralize competitors. If the fast-fashion players lose their speed advantage, they will have to develop a different angle.
“You have to capture the consumer’s attention while you have it,” said Camilo Lyon of Canaccord Genuity, which specializes in wealth management and brokerage in capital markets, noting it is incumbent on the brands to be more efficient with their supply chains.
“We know demand can be satiated immediately because fast fashion does it well,” Lyon said. “The satisfaction element, or satisfying what the consumer needs at that moment, is critical for brands going forward.”
Lyon specifically called out department stores for being stuck on their old calendars: “The margin of error is zero for department stores,” he explained. “They place orders in February for fall and hope they get it right.” He insisted that the stores have to switch to placing orders closer to need. “They have to do this in order to survive.”
Oliver Chen of Cowen & Co., which offers investment banking services, agreed.
“Everyone needs to adapt to the way consumers are changing,” Chen said. “If demand trends are changing, then the burden is on the retailers to adapt.”
The analyst said it would be a painful transition for retailers who have to rethink the way their organizations are structured. “The decision making has to be more streamlined,” Chen stated.
The trend could also bring more manufacturing back to the U.S., as brands aim to streamline their sourcing as well. Better inventory analytics are expected to help retailers figure out what is selling and where and help them keep up with trends.
Ultimately, it looks like some kind of change had to come. As Chen said, “The Instagram generation is here to stay and it can’t be stuffed back into a box.”