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Stefan Larsson on Why Simplicity Should Supersede Speed in the Supply Chain

    Photo credit: Jason Henry for The New York Times

For at least a couple of years, the message coming at brands and retailers has essentially boiled down to: get faster or die.

But Stefan Larsson, who’s the former global president of Old Navy where he successfully led a turnaround at the company, part of the leadership team that built H&M into an industry giant, and most recently CEO of Ralph Lauren, where he built the foundation for the iconic brand’s turnaround, says speed just for the sake of it will do little to solidify a brands’ relevance.

“If you have bad products and you rush them, then it doesn’t make any difference,” Larsson said speaking at the opening session of the Decoded Fashion New York Summit 2017 Wednesday.

Speed without the right brand strategy, the right brand story, means little and it won’t make consumers buy your product.

“Speed is just one component,” Larsson explained, adding that if you’re clear on why your brand resonates with the consumer and if you’re clear on having great products, then speed is everything because it allows you outlearn your competitors.

[Read more about speed: Li & Fung on Why Speed is the New Currency]

Part of what has enabled companies like H&M and Inditex to be so quick to market is that they make decisions up front and they make them right away—without the the complexity of excessive layers and organizational silos.

“Everybody works together. From the inception of the design, sourcing is there, marketing is there and then you can cut the lead time up to 80 percent,” he said. Most often, the bulk of a company’s lead time has nothing to do with sourcing and manufacturing. “It’s internal lead times.”

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Supply chains can’t be about thinking in a linear way, Larsson said.

“Simplicity is more important than speed because simplicity will lead to speed,” he said before the conversation moved to the bigger question of the disruption of retail as we see it today.

There are three major forces driving disruption in retail right now, according to Larsson: the exponential change in technology, the traditional barriers of entry are coming down, and we’re witnessing the biggest demographical shift in the consumer base that’s taken place in a very long time. And all this within an industry that doesn’t grow more than inflation and where many players are already struggling to keep up.

Add to that the rush of startups flooding the space and outperforming tired traditional brands and you’ve got a wildly fragmented sector where the more nimble players are seeing success while many bigger brands are held back by their own inefficiencies and are desperately trying to ward off failure.

“What looked to be a very stable industry is now an industry in the beginning of an exponential change,” Larsson said.

Now what the industry is facing, as Larsson puts it, is a “massive inflow of new brands.”

“It’s never been easier, it’s never been less costly to start up,” he said, and at the same time, if you are a big brand and are able to connect with what the consumer wants today, then you have big economy of scale advantages.

Using the music industry to emphasize his point, Larsson said it used to be that you had to get signed by a label (akin to landing real estate in a major mall) before anyone could hear your music. Now as many as 6,000-7,000 new songs get uploaded to Spotify every day.

“It’s never been easier to share your music, but at the same time, the noise level has never been higher,” he said. “I find it’s the exact same thing in fashion.”

The over saturation of the market and the heightened demand among consumers for product that means something to them has given rise to the idea that brands don’t matter as much as they once did. But Larsson doesn’t think that’s true at all.

“I think to be a brand has never been more important,” he said. What it really comes down to is what those brands do with the opportunity presently before them.

Since leaving Ralph Lauren in May, Larsson has admittedly been on what he calls a learning journey, meeting with apparel industry leaders, startups, music artists, technology leaders, investors and social scientists, among others.

“It’s really humbled me in the last five months being out seeing all these people because I realized how little I knew and how little I still know and how little I will always will know—and how important it is as a leader to be out there and continuously learn” Larsson said.