The struggle between retail titans and industry disruptors is in the news more and more often. We are all well-versed in how companies such as Etsy and Rent the Runway, both of which were named to CNBC’s Disruptor 50 list, have successfully exploited a niche within the marketplace.
There are disruptors changing the rules of the game and titans who are reinventing themselves on a daily basis. Disruption is daring, while reinvention is daring but also extremely difficult and exhausting. Some days, pushing water uphill feels easier.
So, what is the new normal? The United States is arguably the most hyper-competitive retail market in the world. With exponential growth being seen in emerging regions like India, Brazil and especially China, the US market will continue to face oversaturation from domestic as well as international competition. Going outside US borders to seek growth is tempting.
As Mickey Drexler, CEO of J. Crew, once said, “There are too many retailers. There are too many brands. There are too many designers. There are too many discount stores, and the predator online companies are selling discount like crazy.”
What is frightening is that this oversaturation is becoming ubiquitous worldwide. As a result, a sort of depressing sameness has settled across major and medium-sized cities around the world, even in the world of fashion, which should have the highest levels of distinction in the fastest moving consumer goods category of all.
The sea change shift is that rather than simply expanding geographically—which has been the classic approach to growth—new business models are quickly evolving … because there is no other alternative.
Competing to win in the fashion market requires that companies do not go back to traditional retail basics to find solutions. Customer service, great prices, fast delivery, brand awareness, an authentic brand—these are no longer enough. In fact, they are the tickets to entry in this fast-paced marketplace. With all the omnichannel, e-com, customer-experience hype, we seem to be forgetting one key thing—the product. Let’s be honest: what do people actually get when they buy something? Garbage, even when sold as part of an amazing customer engagement process, is still garbage.
A new paradigm is required to be innovative and sustainable. For fashion, modern companies are returning to the future, focusing on these three foundational elements:
1. Newness and Unique Design
Fast-fashion is no longer a new concept; it is a business model that has changed the fashion industry forever. Fast-fashion has pushed companies to increase the number of drops through continuous replenishment. But in a seasonless market where everyone has access to the same trend forecasts, couture and ‘street’ photos and paparazzi snapshots, designers can no longer stay within the safety zone of following ‘predicted’ trends. As a consumer, if I see variations of the same trend over and over, and retailers are running with the herd and not giving me other choices, only price becomes a strong influencer. This is really a shame because uniqueness, creativity and design can be core strategic retail benefits to customers. And even more of a shame is that the US has both easy access to technology that can elevate creativity, as well as easy access to sheer creative talent. But are we levering this access? US fashion schools offer some of the best, most balanced programs in the world, yet many foreign students come to the US to learn, and then go back home to their native countries to apply their learnings (as competitors!).
It’s not going away. In fact, it’s more important than ever before. With more and more companies operating on a global scale, combined with the fact that morphologies vary greatly, coming up with an optimal size range to match fit remains elusive. This is one area where technology is really helping. Virtual fitting rooms and fabric libraries simulate the look of different materials; style and fit can also be simulated, adjusted and approved before a prototype is even made. Moreover, a virtual avatar can be simulated across size ranges and morphologies to accurately capture the nuances of today’s consumer. (Plus, avatars don’t get tired, need bathroom breaks, or change size and they always show up on time!) According to fitsme.com, online garment sales alone have an average return rate of 13%, 77% of which is due to bad fit. This represents a massive potential impact on immediate sales as well as long-term brand loyalty.
3. Supply Chain
The supply chain is becoming the product engine. Brands, retailers and manufacturers are all rethinking their strategies to determine if greater vertical integration and proximity sourcing make sense for them. This can be seen especially in China and Mexico where traditional manufacturers are now developing their own brands. A lean approach to fashion development and manufacturing is an excellent opportunity to reduce cost, reduce time to market and boost innovation. Companies can gain greater control over the product itself, how it is developed, when it is available, and its price.
Three fundamental strategies: design, fit and the supply chain. Focusing on these key elements is critical for both disruptors and titans. Such is the opportunity and the new normal – and it’s there for the taking.