The need for speed: Capturing today’s fashion consumer
Top
performers are using data analytics and consumer insights to stay ahead of the
pack.
Being on trend no longer guarantees sales and profitability in the
fashion sector. In minutes, consumers can spot, own, and share a trend on
social media, from any corner of the globe. As a result, hits can sell out
rapidly, while misses do not move, even with heavy discounting.
The traditional product-development model
is too slow. How do fashion brands outpace competitors?
When we looked at differences between top and bottom performers, we found that
top performers routinely use consumer insights very early in the product-design
process and can have products ready for purchase in weeks, not months.
But established brands have great
difficulty doing either well. This needs to change, as up-and-coming brands are
breaking the rules and resetting consumer expectations.
Winners
take all
Fashion has become a winners-take-all
business, where size or heritage matters little. Over the past decade, the vast
majority of fashion companies have battled to barely break even, while the top 20 percent have delivered all of the industry’s economic profit. What
accounts for their success? They are more diversified and can weather category,
channel, and consumer changes. They also operate core functions better than
their peers. Our survey research, conducted with Women’s Wear Daily (WWD),
found two other striking differences:
·
Top performers use data analytics when developing concepts and planning lines—the heart of
the creative process. Underperforming companies tap data
much later in the process, only after they have developed the product.
·
Top performers make
speed to market a top priority and get faster and faster. Top-performing companies can deliver product to
market in less than six to eight weeks. The typical lead time in the industry
is more than 40 weeks—far too long to stay ahead of consumers.
Understanding
versus action
Most fashion companies understand the need
for speed and data-based decision making. Almost two-thirds of survey
respondents said improving speed to market was the highest priority or a top
priority for their company. Likewise, 80 percent of the companies surveyed said
that generating consumer insights was important to them. But few are taking
advantage of the broad insights across their business, and many rely on a
single source of insight, such as sell-through data or product rankings.
Top-performing fashion companies have
adopted a more sophisticated model based on understanding what the consumer
wants. This model allows them to incorporate what has been selling and respond
quickly to what is generating early sales.
The next-generation model should be based
on anticipating what the consumer wants. Powered by predictive analytics and
artificial intelligence, this model would proceed from design to delivery in
close to real time.
Divining
what the consumer wants
Companies often complain that they are
stuffed with data but starved for insights. Fashion companies can tap the
following online data sources to deepen their understanding of what the
consumer wants:
·
Search data. Top performers collect and analyze consumer
research. They explore what topics are trending on major search engines and
track the search rankings on peers’ websites.
·
Social media. Retailers can use advanced visual recognition
tools to identify styles and colors trending on social-media sites.
·
Competitor scans.These scans provide a view of product choice in the
market, by attribute and price. Heavy weighting in certain areas signals an
opportunity for a brand.
·
Product ratings. Aggregate product ratings by attribute, price, and
style—either from the merchant’s own site or from retailers’ sites—can provide
insight into what is trending with a specific type of consumer.
Digitally native companies lead the pack
in harnessing the power of these sources. These companies have digital
platforms and teams of data scientists equipped to optimize a different model.
Ultimately, these companies have less to lose. The broader fashion industry
needs to follow their lead or continue to see recurring losses.
Building
a faster, more flexible supply chain
Winners have significantly reduced time to
market, but they also recognize that not every product requires a speedy supply
chain. Leading fashion companies have divided their product lines into the
following supply-chain segments, based on sales predictability:
·
Long cycle for basics. Long lead times of six months or more are
acceptable for basics and never-out-of-stock items. Optimized sourcing gets the
best value for money on these products.
·
Shorter cycle for the
core seasonal collection. Retailers can use
advanced visual-recognition tools to identify styles and colors trending on
social-media sites.
·
Express cycle for new
in-season products. An even shorter cycle of three to
six weeks from design to delivery allows brands to inject novelty or innovation
within a single season.
·
Read-and-react model for
new and untested products. Close monitoring
of these items during the season (for example, for trending prints and colors)
ensures fast replenishment of top sellers and easier cancellation of slow
movers.
·
Test model for the
riskiest products. Launching virtual or small test
batches of a sharply trending item provides insight into the consumer response
before committing fully to a product.
Getting
agile to get going
Digitization of concept, design, and
sampling can cut many weeks from the typical process, which is often slowed by
multiple handoffs and overdevelopment. While a digitized model may not be
comfortable for designers and merchants, it needs to become the new way of
working in fashion.
To get started, we suggest taking a page
from the book of agile technology development. Completely upending a well-oiled
process is daunting and often meets resistance. The agile model launches a new
process by doing and refining, rather than mapping and rewiring.
Companies make rapid progress by putting a
top team in charge and demonstrating that they can design and deliver at speed
in a single season. Their energy and success should inspire the organization to
find a repeatable process that is lightning fast to market and steeped in consumer
insights.
By Elizabeth Hunter, Sophie Marchessou, and Jennifer Schmidt
https://www.mckinsey.com/industries/retail/our-insights/the-need-for-speed-capturing-todays-fashion-consumer?cid=other-eml-alt-mip-mck-oth-1803&hlkid=96a9c9a826494fdd944c8459bf0e77c8&hctky=1627601&hdpid=744b31c8-6256-4cc7-b95a-acdf4a45fe6b
No comments:
Post a Comment