The events of this year have delivered an undeniable gut punch to the fashion industry, illuminating its most glaring weaknesses and inefficiencies. Chief among them is the glut of inventory that brands have been struggling in vain to manage for decades.
Whether brands have managed to unload their spring-summer 2020 wares to off-price retail, liquidate them in their own stores or pack them away for brighter days ahead, many are desperately seeking to climb out from under heaps of unsold goods.
At the Sourcing Journal Summit on Thursday, founder and president Edward Hertzman tapped industry insiders and innovators for answers in a panel entitled “The World is Drowning in Textiles: Can Fashion Find a Fix?”
Niall Murphy, CEO and co-founder of real-time product data intelligence platform Evrythng, provided an introduction to the discussion, painting a picture of a bleak retail landscape. By August, the fashion sector saw 43 significant retail bankruptcies, he said, and up to 50 percent of the industry’s independent fashion brands could be gone by December.
Both supply and demand have served up problems in recent months, but as consumers begin to head back to retail, fashion must evolve. “As we analyze the challenges of this environment, what are the characteristics of survival?” he said. “It’s access to market, and the ability to adjust, that is going to define success.”
Three key factors will play into a brand’s ability to adapt to the changing times, Murphy added. One is a laser-sharp focus on e-commerce, which grew by 700 percent, according to McKinsey data, over the course of the past five months. While that acceleration is poised to contract once the world slowly returns to normal, 100 percent year-over-year growth is set to be the going rate of expansion in North America for the foreseeable future.
To adapt to a highly digitized environment and the gradual elimination of many brick-and-mortar outposts, brands must assert a new degree of control over their supply chains, which starts with ensuring full visibility. “We continue to have volatility in the supply of raw materials and disruptions within production,” Murphy said. “So even as demand might burgeon in the market, if you can’t produce and you’re unable to throttle demand toward where production is available, you’ve got a problem.”
Finally, the ability to blend demand and supply data is the third factor that will determine brands’ ability to succeed in a post-Covid retail landscape, Murphy said. Organizations that can utilize dynamic intelligence metrics from production and distribution alongside insights from their sales channels will be poised to leverage their data most fully.
Greg Petro, founder and CEO of retail data technology firm First Insight, believes that Murphy’s last point may prove most salient. “Inventory has always been an issue in this industry, and it’s because it’s been supply-driven, not demand-driven,” he said. The events of 2020, stemming from the Covid crisis, have magnified the problem, highlighting a “clear lack of understanding for what demand for a product will be.”
Fashion’s adoption of new technology has been lagging, he added, compared with other industries. That’s a problem when the only way to solve an inequity between supply and demand, in his view, is to leverage new, data-driven solutions. Mining consumer data can help brands determine what they are actually looking to buy, while granular insights into the supply chain can help companies produce to demand with more precision.
“We have companies who continue to force a point of view upon a set of consumers, like it’s an idea that’s great,” he said, “and then the consumers reject it, and ultimately, the explanations come.” Fashion brands spend too much time lobbying for their passion projects or pushing their perceptions of good product on shoppers, and that mindset is hindering them from adopting resources that could help, he opined. It’s hard for visionaries and designers to hear that their instincts could be wrong.
The answer is not to “take a retailer and make them into a data scientist,” he added, but to encourage fashion companies to seek help gleaning actionable insights from the data at their disposal. Fashion has always been about risk-taking and pushing boundaries, but brands must now ask themselves, “How do you take a great risk and capitalize on that in a way that can that can demonstrate a viable model?”
All the session’s from this year’s Sourcing Journal Summit, R/Evolution, are available on-demand. Follow this link for more information on how to watch this discussion and all other sessions from the event.