Fashion firms are continuing to wrestle with the challenges of taking decisions quickly and meeting deadlines – and admit they are struggling to speed their go-to-market processes to keep up with fast-moving consumer buying behaviour.
Digital and social media mean today’s shoppers discover trends on social media, buy clothes using their smartphones – and expect to have the latest pieces delivered almost instantly to their door.
Yet barely any traditional fashion producers are managing to keep up with this particular trend, according to a new study from management consultant McKinsey.
Its research finds only the best have organised their processes so it takes a maximum of seven months from designing the collection for the clothes to reach (online) stores (go-to-market).
The go-to-market process is key to how well the goods sell: the faster that on-trend clothing reaches consumers, the more pieces can be sold at full price. As such, 98% of experts in the fashion industry are now making it their top priority to improve go-to-market processes.
However, 92% of those surveyed at major fashion companies also reported that they face challenges with taking decisions quickly and meeting deadlines.
More than 70% of fashion companies admit they are fully to blame for the fact that new products arrive on the market too slowly, as well as for their distinct lack of the requisite digital tools and skills. Other challenges include robust planning and reliable trend forecasts.
These are the key findings in the study ‘Measuring the fashion world,’ which interviewed managing directors, chief supply chain officers, and chief merchandising officers around the world who are responsible for go-to-market processes and for a total US$110bn in revenue.
Speed lowers the risk of “misses”
“Speed is so vital to the go-to-market process because it cuts the risk of offering up the wrong products or possibly even neglecting a trend completely, which can lead to poor sales and more markdowns,” says Achim Berg, a senior partner at McKinsey and fashion industry expert.
The less time that passes between planning and development and delivery, the lower the risk of wrongly predicting consumers’ wishes and bringing the wrong product to market. An efficient go-to-market process allows for rapid responses to trends that emerge mid-season, followed by appropriate production or repeat runs.
“‘Time is money’ in the fashion industry since the longer go-to-market processes mean that employees at fashion companies are working on different collections at the same time, which creates inefficiencies.”
Vertical companies (that is, those with no wholesale arm) are 36% faster than their competitors: they need just 28 weeks – not 44 – to get from sketch to store. Above all, non-wholesale providers are faster in the design and development phase. On average they take less than half the typical time: 11 weeks rather than 24.
One reason for processes being slower at companies that sell to wholesale is the extra coordination processes that exist with their various business partners.
Comparing speeds in the two price segments, it’s clear that affordable luxury fashion and premium goods have a slower journey to market (46 weeks) than products in the middle price category (35 weeks). Producers of low-cost and discount fashion only need 27 weeks, and are especially fast during the design phase, which they complete in just one week.
“These differences are not that surprising given that companies in the lower price segment often adopt a fashion-follower approach, meaning they are quick to reproduce successful designs and sell them at very low prices in their own stores,” says Miriam Heyn, McKinsey partner and study author.
The segmentation trend
Today’s fashion companies often take a segmented approach to manufacturing their products. These so-called “tracks” pursue different objectives or define specific business models:
- The seasonal collection process. The fundamental business model in most companies, where products for a specific season are developed at a regular speed. This track produces three-quarters of products.
- Read and react. In-season replenishment allows companies to quickly order repeat runs of pieces that are selling well.
- Fast track. Companies can respond quickly to trends they have missed and have the chance to design and manufacture new products.
- Never out of stock (NOOS). Core products that are available over longer timeframes.
Around half of those surveyed had not yet established “read and react” or “fast track” concepts. Nevertheless, 90% of respondents believe that using the other tracks would have a positive impact on their company’s performance. “The trend is clearly heading toward segmentation in product creation, because it’s not always worth being fast for every product,” says Felix Rölkens, the study’s co-author.
To speed up the go-to-market processes that are so essential to sales, companies need to rely more heavily on digitisation and analytics. Digital tools can improve the customer experience, brand strength, process efficiency, financial performance, and every single step in the go-to-market process. “The future of the fashion industry lies in the fusion of the designer’s ideas and analytical science,” adds Heyn.