McKinsey & Co. reported its latest findings on consumer behavior and primary drivers that affect profitability and growth in the fashion industry this week.
The conclusion? Faster product development coupled with more consumer insights are the key attributes of today’s market leaders.
“The world is changing and changing fast, and of course, consumers are changing too,” said Nathalie Remy, a partner at McKinsey & Co. Remy described the emergence of the industry’s “new consumer,” which fits the profile of a digital native: a visual, well-informed, more volatile and time constrained shopper that seeks connectivity and authenticity. And increased expectations have shaped this consumer to anticipate instant gratification, personalization, fulfilling experiences, emotional connections, meaningful dialogues with brands and a return on the time spent with brand engagement, according to the firm.
Remy also noted that the industry is under tremendous pressure from increased competition, a disrupted distribution landscape and a slow down in fashion sales growth and profitability, which has led to the introduction of “winning” successful business models that better incorporate the needs and desires of the “new consumer.” According to the data, competing brands must supply either “useful” or “entertaining” content to attract and continuously engage their client base.
McKinsey defined four specific challenges for fashion brands: a requisite shift in mind-set from “design” to “data driven”; the creation of a taxonomy for brands’ infinite amount of “incomparable products;” a uniting of fragmented data sources; and a solution for access to consumer data, which has been an impossible feat for many wholesalers. And Remy emphasized the need for a digitized supply chain, which will increase speed and efficiency and might incorporate 3D design and virtual prototyping as well as tech-enabled logistics and digital showrooms.
Advanced technologies for improved consumer engagement is also of import, as Remy said “the next horizon could be [for brands] to anticipate desire” through mediums such as natural language processing, visual processing, predictive analytics and machine learning.
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