Todays customers are more demanding, more impatient, and more spoilt for choice than ever before

Today's customers are more demanding, more impatient, and more spoilt for choice than ever before

Collaboration between retailers, brands and their suppliers is a mission critical element in developing a slicker and more cost-effective supply chain. But in today's complex fashion environment, putting it into practice is still a considerable challenge – as Siobhan Gehin, managing director, Kurt Salmon part of Accenture Strategy, explains.

Some ten years ago, a young supply chain expert from Kurt Salmon, part of Accenture Strategy, gave a presentation to a group of fashion industry leaders and had the temerity to suggest the way forward was through collaboration. Her words fell on deaf ears.

Fast forward to today and my colleague had her views soundly confirmed by global fashion executives interviewed for our 'See Now, Buy Now: How ready are you?' report, and attendees at the World Retail Congress in Dubai.

Collaboration is now a mission critical element of a successful supply chain in today's complex fashion environment. The model is being driven mainly by younger customers who have a "see now, buy now, wear now" mentality that requires suppliers to deliver faster. It also applies as the fashion industry sees a slowdown in purchasing with pressure on margins – so there's a real and enduring need to develop a slicker and more cost-effective supply chain.

Balancing higher production costs with the need to reduce shipping times was cited as a major economic challenge by 63% of the executives surveyed. As well as near-shoring, we know that production can be cut by flexible fabric finishing and using dual or multiple sourcing to spread manufacturing and reduce overall production time.

Importantly, the industry has also recognised the significance of maintaining good supplier relationships with key producers to ensure "customer of choice" status so that orders are given priority.

Several of the global retail CEOs interviewed for our research said they were, however, looking to rationalise their supplier base and develop closer partnerships with a core group.

Significantly a third of the interviewees also put developing strategic supplier partnerships as a key factor in improving speed to market. There is now also more of a trend to push work on basic styles to factories in their downtime and developing ship to store models.

Putting it into practice

While retailers and brands working more collaboratively with suppliers is theoretically sound, putting it into practice is still proving considerably challenging given the increasing complexity of the supply chain.

Fast fashion retailers have also focused on digitising the customer experience from the point of receiving the product in their warehouses. To be fully agile, they now need to work on digitalising the rest of the supply chain right up to the supplier and raw materials manufacturer.

As such, the challenge is to reduce the number of options and be more responsive rather than prescriptive to consumer demand. This in itself requires businesses to change their cultural working processes so they have a flatter and more flexible management structure to speed up decision-making. It also requires investment in technology that will, on the one hand, help provide data about consumer buying preferences and, on the other, to finesse product development.

Over the past few years, manufacturers have been working hard to reduce the speed to market.

Patrick Bousquet-Chavanne, executive director of customer, marketing and M&S.com, at Marks & Spencer, says that in four years the retailer has gone from 15 months to five months to bring a product to market, and capsule collections can be in-store in six to ten weeks if needed.

However, newer businesses – particularly pure plays (such as German brand Lesara) – can take as few as ten days from decision making to getting product onto their website.

While not every retailer is targeting the millennial shopper who wants instant gratification, retailers recognise they need to regularly replenish basic or seasonal lines that follow traditional product cycles of six months or more with trend injections. These fast moving, short product run styles capture the mood of the moment and excite younger consumers.

A now well-established tactic is to take limited stock and test lines in-store or online to gauge consumer reaction to a proposed new fashion. Typically, that production could be 200 SKUs followed by scaling up to 10,000 units or more if the item proves popular. This sort of test and scale is used by almost half of the retailers interviewed for our report.

However, this tactic though requires a very rapid sourcing model to maintain supplies while the line is at the peak of its appeal.

Price and technology

And it is not just about getting the product fast, it is also about getting the right product identified and priced well. Our consumer insights research revealed that we definitely live in a world of disposable fashion as price is often the key factor guiding purchasing choice, particularly among younger shoppers who may only wear an item half a dozen times.

According to responses from CEOs interviewed for our research, there is a whole new mindset around placing orders. In some instances, retailers are only buying product for the next two weeks, so initial orders are smaller. There is no over-stocking and some are now taking the view that when it's gone, it's gone, meaning no repeats and/or costly markdowns.

However, retailers are putting pressure on their suppliers to offer prices for these smaller runs more akin to volume orders.

To achieve this and ensure continuity of their garment manufacturers, retailers and brands are increasingly taking a financial interest in the factories. They are also investing in more sophisticated technology to share data in real-time, enabling the manufacturer to see how sales are performing, which provides immediate budgeting and order allocation by factory and encourages flexibility to shift production around their various units.

Those making the maximum use of modern technology will find this easier. Rather than using traditional enterprise systems with rigid rules and structures, companies are switching to tactical plug-in/plug-out solutions and cloud-based tools that share information and use a much more collaborative working environment, so information can be accessed from anywhere, by everyone.

As there is no reason to believe that today's millennials, who have grown up wedded to devices and social media, will expect anything less than instant gratification in years to come, fast, cost effective delivery is here to stay.

However, our interviewees were mindful that any changes they made would have to meet high standards. Sustainability and ethical issues, such as compliance with employment regulations, will be even more important in the future given the potential threat of enforcement if the industry does not self regulate.

Click on the following link for more on the research findings:

Retailers need to get in shape for fast fashion