Our team attended Sourcing Journal’s Summit in New York City last week. CEOs and CSCOs of global fashion brands shared how they’re tackling some of the most pressing pain points and biggest opportunities in retail today. The overarching message: Despite the difficult, uncharted landscape the industry finds itself navigating today, it’s an exciting time for retailers — with tremendous potential for innovation that can pivot these firms toward a bright future. We’ve compiled a few of the most interesting trends and takeaways for teams in this sector.
One main theme permeated throughout all sessions: retailers that want to survive need to change. Consumers like change, and they adapt well to new trends, technologies and ways of doing things because change has become ingrained in their day-to-day lives. Businesses, typically adverse to change, need to mirror this agility and meet consumers where they are. It’s a modern version of survival of the fittest: the way retailers are expected to reach customers will continue to evolve, and the industry needs to constantly adapt and innovate the business model to keep up with the consumer.
What this looks like in practice will be different for every organization. The key is to be open and willing to change, and to do it before you’re too late.
There’s a surprisingly big gap in income between the millennial generation and their baby boomer counterparts. This means today’s market is much more conscious about where they spend money. They tend to spend on experiences over products, which makes retail a tough place to do business. The retailers breaking through are the ones offering incredible value.
Retailers need to invest in the first mile of the supply chain and focus on producing on-trend, high-quality product at an attractive price point. This is the triple threat of product development and is quickly becoming both the industry standard and expectation of the consumer. Social media has forever changed the concept of supply and demand, with consumers telling retailers what they want, rather than designers and brands creating demand by pushing trends out to the market. With the rise of social influencers and fashion bloggers, what’s on-trend can change in days, leaving retailers to meet demand at insanely fast speeds. The consumer expectation is that what Beyoncé wears tonight will be on the shelves tomorrow, and retailers need to figure out how to shorten the supply line and get quality product out the door quickly if they want to take advantage.
Bonobos’ CEO Andy Dunn summed it up perfectly when he advised early-stage companies to make hiring a CSCO a priority. It may seem natural to start with hiring an executive in finance or marketing, but if you don’t have a strong supply chain from the start, it can create disruptions that cause serious financial and reputational problems – especially for e-commerce companies where the entire business model relies on the value chain. Being agile and meeting demand starts with a well-run supply chain, and teams in this function need to understand the important role they play in the organization’s success.
Investors are overall still bearish on retail, but there are bright spots. Apparel brands are trending better than traditional retailers since they have several options for distribution and more agility to compete with ecommerce and disruptive start-ups. Hardlines – companies like Home Depot — are delivering on omnichannel strategies and footwear and apparel companies are redesigning their supply chains to adapt to market demands, both of which are encouraging for investors.
Fashion is driven by the next big thing, and retailers need supply chain efficiency to deliver against this mandate and bring new, innovative product into stores. If they can do that, the future looks bright for retail.
Looking for more on supply chain? Discover how supply chain strategy can lead to a competitive advantage.