The retail and apparel industries are not changing quickly enough to keep up with the world around them.
From President Trump’s ever-changing political moods to developing technology, many companies in both sectors are struggling to simply stay aware of what’s changing — getting ahead is a distant second thought, if a thought at all.
This year’s theme at the American Apparel and Footwear Association’s annual executive summit, “Reboot, Reimagine, Reinvent,” hinted at the distance traditional retailers and apparel manufacturers have to go before catching up, but various speakers at the conference drove the point home.
Rachel Mushahwar, Intel’s general manager of retail and consumer packaged goods, tossed out the fact that 65 percent of retailers that were open in 2008, the year after the first iPhone came out, no longer exist today. “We’re in a time of unprecedented change,” Mushahwar said.
She pointed out that a number of today’s most successful retail-related companies that managed to survive the last decade, like Amazon and Apple, spend many billions of dollars more on research and development than the average retailer. Both now spend more than $12 billion a year, she said.
“How much did your company spend on R&D — around shoes, fabrics, your supply chain?” Mushahwar asked rhetorically. “The top 250 retailers, their combined R&D spend is less than Apple. When you’re investing in R&D, what you’re telling your employees, what you’re telling your consumers and what you’re telling Wall Street is: ‘We know the future is here and we want to be part of the next wave.’”
It’s obvious that the “next wave” in retail and apparel has a lot to do with technology, not least because the number of connected devices in use, from watches to laptops, is poised to hit more than three per person on Earth by 2020.
From autonomous vehicles, which will make fully marketable passengers out of drivers, to on-demand manufacturing, change in the industry isn’t set to slow down.
The idea that Marleen Vogelaar, founder of Ziel Inc., which offers on-demand and custom athletic apparel manufacturing to brands, operates with only 20 base fabrics seemed to truly surprise an attendee at the conference.
“Yes, that’s really it,” she said when asked about it again.
A similar mix of awe and curiosity came in response to Mariano Deguzman and Kevin Sladek explaining Nimbly, the tech-forward company they cofounded that offers custom knitting for brands like a “microfactory” but on an on-demand basis. While they admitted that Nimbly, like Ziel, has a higher manufacturing cost compared to the overseas model that is still widely used in apparel manufacturing, they said the benefits like sustainability and the ability to limit if not avoid overproduction altogether, is worth it.
“It’s certainly not so expensive that it doesn’t work.” Sladek said.
Vogelaar added that when you compare the cost of goods sold to the cost of manufacture, “You’ll get a totally different picture.”
But some other changes are not so drastic. Stitch Fix, which brands its subscription-based online apparel business as a “styling service,” is one company that’s been learning technology is not everything.
Daragh Sibley, a lead data scientist at Stitch Fix focused on buying and design, said although the company relies on algorithms, machine learning and artificial intelligence, all buzzwords in tech and subsequently consumer-focused industries, humans have proven to be very valuable to the company.
“We had one blouse and we kept getting the same comment from customers we sent it to: ‘Clown,’” Daragh said. “Our algorithm just had no concept of bright polka dots on a blouse and what that might look like and we inadvertently designed a clown-like blouse.”
Now human stylists can override any selection an algorithm makes for a subscriber, because “the human contextualizes” where an algorithm cannot.
“We’ll always want humans there,” Daragh said.
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