The fashion industry is supposed to be run by those designers who dominate fashion weeks in New York and Paris. However, in the last couple of years, the biggest changes on the catwalk haven't been the styles, but how they're presented — namely in season and ready for purchase today.
The same forces that are pushing high fashion into conformity with consumer demands are wreaking havoc on fast fashion and big-box retail. Consumers’ style preferences haven't radically changed to favor one store over another, though e-commerce is becoming a preferred shopping method. Instead, it's simply the variety of style choices, speed with which new styles can be produced, and affordability that are causing an exodus of shoppers from the brands that have run the fashion industry for the last two decades. This is the "see now, buy now" era of consumer behavior.
A March 2017 report by Goldman Sachs identified agile supply chains as the No. 1 competitive advantage in fashion retail, driving LFL sales growth 15 percent to 25 percent higher than traditional companies. “Short lead time supply chain models are delivering rapid market share growth vs. the more traditional long lead time models,” the report says. “Notably in Europe, retailers with flexible/short lead time models are the only ones delivering any material LFL sales progress in the last year.”
The industry that's emerging as a sequel to fast fashion is being termed "agile retail," a reference to its responsive supply chain, e-commerce sales approach, and reliance on big data for trend forecasting. Taken together, these traits make the industry more than fast; they make it agile.
Consumers are looking to a wider array of sources for their fashion inspiration. A Kurt Salmon report found that 52 percent of 18-24 year olds in the U.K. use social media for fashion inspiration. Social media influencers, who represent boutique designers, not Fashion Week heavyweights, are now sparking trends that traditional retailers cannot identify and respond to quickly enough. Fast-fashion companies claim they can produce an item and have it ready for sale within 25 days. That's two weeks slower than the 10-day response times of agile retail companies.
Part of getting products to market rapidly while also ensuring product/market fit requires intelligent trend forecasting. Big data, which can be pulled from search engines, social media and in-house data sources, is at the core of agile retail companies. Used properly, this data empowers them to do more than react to trends — it empowers them to predict trends. For my company, Lesara, intelligent supply chain management is only possible with data. We simply couldn't move quickly if we were running a traditional in-house fulfillment operation. In a market where the winners are picked by who can deliver the product first, forecasting is as important as supply chain efficiency.
Of course the emerging agile retail industry will face formidable challenges from the entrenched industry leaders. H&M and Zara are aware of the issues with their models and will undoubtedly make moves to fight the innovation curve. What we can expect is an influx of companies in the agile retail space which will play on specific niches — shoes, outerwear, etc. The segmenting of verticals is a natural outcome of growth in any market. Taken together, these factors suggest an exciting year of development in the world of fashion retail.
Roman Kirsch is the founder and CEO of Lesara, an online fashion and jewelry retailer.