3 Takeaways from the 2019 Lead Innovation Summit

lead-summit-blog-banner-webcastEarlier this week I had the pleasure of attending the 2019 Lead Innovation Summit, an event where the entire fashion and retail innovation community converges to explore what comes next for the industry. This flagship event, hosted by The Lead (a research firm focused at the crux of where fashion, retail and technology markets converge), aims to bring together brands and retailers, digital natives, recognized tech start-ups, analysts, real estate operators, enterprise tech leaders, creatives, and academics to discuss some of the most pressing topics around how innovation is shifting behavior and constantly creating new business opportunities within retail.

Because of our latest recognition in The Leading 100, an annual list that recognizes break-out technology start-ups, Celect was invited to participate in these conversations, especially as a cutting-edge technology company uniquely positioned in the legacy retail industry to solve a very distinct problem. The unique problem, for Celect, is providing retailers a reliable way, through patented artificial intelligence and machine learning (AI/ML) technology, to anticipate consumer demand at a hyper-localized level and make smarter, more profitable decisions throughout the inventory life-cycle. Ultimately, we want to help retailers make more informed inventory investments catered toward a true understanding of customer demand.

That being said, it’s important to take part in the broader discussion around issues and trends affecting the retail industry as a whole – most of which influence, directly or indirectly, key inventory strategies used to meet mounting consumer demands. Interestingly enough, one of the primary industry trends that overshadowed much of the conversation at the summit focused around sustainability in retail. Retailers and brands alike, from big-box to digital native start-ups, recognize the growing importance of sustainability to many consumers and how it’s impacted almost every aspect of the business. From issues around over-production to dealing with returns, it’s just another drop in the bucket of reasons why there’s such a focus from many retailers on getting a more accurate view of demand and aligning inventory to that demand.

Research shows nearly half of consumers say they prefer to buy clothing from companies trying to reduce their impact on the environment, and that rises to 60% among under-24s. These new realities have shifted the responsibility to retailers in a way like never before. Leading a sustainable business model, which was once leveraged as a competitive differentiator, is now the status quo for everyone in the industry. This is especially pertinent in areas, which I touch on in more detail below, around using sustainable materials, reducing over-production, and streamlining returns and fulfillment.

1. Using Sustainable Materials

Many of the brands and retailers in attendance discussed using more environmentally-friendly materials to develop their products. For example, Rothy’s, a relatively new sustainable footwear retailer, shared how their company developed out of an idea to turn recycled, single-use plastics into something both beautiful and useful. Three years in, Rothy’s has taken over 30 million plastic bottles destined for landfills and repurposed them into timeless, durable shoes.

Similarly, Allbirds co-founder, Tim Brown, shared how he runs a business built on environmentally-friendly materials. Brown highlighted how the company merged both sustainability and product teams to work together so an environmentally-conscious thinking is embedded in every product designed and developed. While it’s really all about creating a great shoe, sharing these new sustainable approaches to doing so is vital for the industry as a whole. According to Brown, “what is the point of finding a different way if you’re not willing to share it?”

Additionally, other companies like Walmart and Li & Fung also shared their initiatives focused on using more environmentally friendly fabrics. It’s clear the use of sustainable materials is shifting among the industry as retailers seek new and creative ways to ensure products are developed with the environment in mind. 

2. Reducing Over-Production

Data shows the fashion industry has a reputation for high waste-producing activities – much of which can be attributed to over-production. At the summit, Li & Fung, a sourcing company, shared their efforts to improve supply chain processes utilizing the right technology to reduce lead times and get to more accurate quantities. They’re looking to leverage trend analysis and market insights so their customers can essentially better quantify demand and reduce over-production.

Likewise, Walmart shared that they no longer think about a “supply chain” but rather a “demand chain.” Their focus was on sourcing faster and smarter to reduce both lead time and quantities. They also see digital design and simplifying complex process as a way to reduce waste.

On that same note, if you can recall around this time last year, news of H&M’s $4 billion worth of unsold clothes broke headlines and revealed the true cost of investing in the wrong inventory, which only emphasized the issue of overproduction by tying a dollar figure to the problem, in addition to the obvious environmental impact from waste. At the summit, H&M shared how they’re beginning to apply AI to better quantify demand and the inventory needed to fulfill that demand to avoid over-production. What is especially interesting about their approach is how they’ve managed to use AI to understand how social influencer trends impact market demand, from which they claim to have seen positive early results.

3. Streamline Returns & Fulfillment

Lastly, retailers are aware of the environmental impact on packaging, specifically around returns and fulfillment. While the overuse of plastic weighs heavily on consumers’ minds, it’s not the only concern retailers have. Instead, a new focus on streamlining the fulfillment and returns process to make the best use of inventories to avoid excess waste is also top-of-mind.

As far as online order fulfillment goes, reducing the number of split shipments means less packaging, plus options for buy-online pickup in-store (BOPIS) virtually eliminate the packaging component. Many digital native brands at the summit shared how they were seeking partnerships with traditional retailers to provide the consumer a simpler way to return goods or opening up their own brick-and-mortar locations to help facilitate the seamless returns process consumers desire. Ultimately these options help retailers reduce materials for packaging, as well as other costs associated with returns (transportation and store transfer costs).

AI: The Answer to Inventory Decision-Making

Topics: retail technology, artificial intelligence, inventory optimization, brick-and-mortar retail, machine learning, advanced analytics, innovation

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