Speed is the name of the game.
The see-now-want-now mentality isn’t going away anytime soon. While convenience and access continue to drive the consumer desire for immediacy, the gap between customers and retailers expands even more steadily.
The number one problem on every top retailer’s mind is this: What can we do to shrink this gap?
“What’s been made very clear in recent years is that the entire supply chain is being disrupted because of consumers’ see-now, want now mentality, because of e-commerce and the convenience it offers, and because of new business models coming from startups that aren’t bogged down by remnants of the old days and ways.” – Sourcing Journal
At the end of the day, leads times cost. The old days of showcasing designs months in advance before delivering to stores are long gone. The speed to market issue is where the problem lies – and slight improvements year over year are not enough at the rate consumers are going today.
We’re Living in an Ultrafast Fashion World
Trends are incredibly short-lived.
When we think of “fast fashion,” names like Zara and H&M come to mind. Their retail models were built around quick fashion turnover, which has challenged retailers of all types in ways they never imagined. Several years ago, these fast fashion models were disrupting every corner of the apparel space – with unprecedented speed and astonishingly low prices.
Today, it’s getting even faster. New ultrafast fashion retailers recently entered the field – like fashion startup Choosy, who leverages social media to spot trends that influence on-demand product design and production (in as little as two weeks!).
Talk about placing even more pressure on traditional retail models to speed things up.
“Traditional fashion cycles no longer reflect consumers’ demands for immediate gratification, and industry changes follow growing consumer desire to purchase collection pieces straight from the runway instead of waiting for six months. Consumers lose interest the more time passes between product viewing and delivery. Nowadays, consumers can order and receive meals, movies, transportation and various services at the click of a button, and are increasingly expecting instant consumption from fashion.” – Coresight Research
Clearly, there’s much room for improvement. Players in the fashion space need to find ways to be more efficient than ever before or risk irrelevance in a market that demands product differentiation and speed.
Areas of Opportunity to Improve Speed & Accuracy
The solution for keeping up with consumer purchase patterns and behaviors doesn’t necessarily mean you need to become an “ultrafast” or “fast fashion” retailer.
That’s not for everyone.
However, it is about capitalizing on areas where there’s room for improvement.
For example, retailers like Vera Bradley, Inc. jumped head first into the fast-fashion pool only to learn the hard way that:
- Some of their brand’s patterns have a longer shelf life than expected
- As a result of this realization, the pace at which they were introducing new styles were resulting in more markdowns – when customers might have still paid full price for them.
While speed is important, accuracy is just as crucial. Both of these go hand-in-hand when we think about the areas of improvement necessary to make better merchandising investments and decisions.
So what’s the solution?
If there was a way to have an accurate understanding of future demand, there would be fewer mistakes (i.e., reduced markdowns, less excess inventory, less need to move product around, etc.).
As such, the first step retailers must take is to solve for this uncertainty between supply and demand, as it’s a huge part of the challenge retailers face to deliver the right product efficiently and quickly.
To put it in perspective, the cost of a bad merchandising decision with an unclear understanding of demand can leave you with $4.3 billion worth of unsold clothes.
That’s a pretty big missed opportunity.
Luckily, there are ways to make better merchandising decisions to make the process more efficient and accurate.
Employing advanced analytics to leverage your data can help paint a clear picture of demand and provide insights to truly understand what’s going to sell – at the right time, place, and price. While a less glamorous part of the process, leveraging a data-driven plan, buy and allocation can help you make better investments in a quicker, more efficient manner across stores, product class, and attributes.
Getting the product right will ensure products in the market are meeting the needs of their customer in terms of content and availability.
Isn’t this what we’re aiming for?
For an even deeper discussion on improving retail decision-making using data and analytics, join us and AlixPartners for our upcoming webcast on June 21st (see below!).