Given the constantly changing situation surrounding COVID-19, there is no crystal ball to determine a singular future. But fashion can still take steps to plan for the recovery period ahead.
A report from consulting firm Kalypso lays out four scenarios for what companies could possibly expect through 2025, depending on what trajectory the coronavirus takes. Developed collaboratively, these situations are not predictions but rather possibilities for the future. However they can help prepare the fashion industry for what it could be facing in the next few years.
“In the product development side of things…being able to anticipate where your consumers are headed and base your products around emerging needs is a big opportunity within foresight,” said Kelly Kornet, strategic foresight lead at Kalypso. “In addition to that, there’s also on a corporate strategy side of things, being able to anticipate those shifts and really investigate the sources of uncertainty so that you’re planning around those in terms of maybe your operating model, or the technology investments that you’re making to future-proof your organization.”
In perhaps the most optimistic scenario outlined in the report, antiviral drugs and a vaccine by 2021 lead to a V-shaped recovery. Businesses are able to reopen and the economy comes close to fully bouncing back. Meanwhile, consumers resume some of their pre-pandemic behaviors.
However, a checkmark-shaped revival would see the economy gradually reopening through 2025. In this scenario, the government fosters recovery through initiatives such as basic income and wealth taxes, and overt displays of prosperity are ridiculed. Along with supporting the have-nots, the government could also get involved in backing social and environmental responsibility through taxes and regulations. Consumers carefully choose which products to buy from the much smaller array of retailers and brands that survived the crisis.
A W-shaped curve could potentially be caused by multiple waves of the virus as it mutates. This may usher in long-term travel bans and lowered consumer privacy as governments track the disease. On the consumer behavior side, comfort will reign and shoppers will invest in their homes as a “super hub.” In this version of the future, Kalypso also sees the possibility of a boycott of goods made in China, as the nation is blamed for the pandemic.
The fourth trajectory outlined in the report is a long U-shaped recovery, in which infection rates remain high and weak economic growth persists. In this scenario, about 30 million U.S. retail jobs could be lost, with many gone for good. Consumer demand stays low, and online shopping is heavily favored over brick-and-mortar visits.
Different scenarios may play out across states and countries depending on how effectively the coronavirus is contained in a particular location. At the moment, Kornet noted that there are indicators for all four scenarios.
Even though each view ahead differs, some common themes emerge.
One of the key trends across all scenarios is the continued prevalence of remote work. Regardless of whether sheltering in place remains necessary from a health perspective, employees have become accustomed to this setup and could push to keep working from home. This might mean that companies will have an almost endless talent pool to pull from, since geographic limitations will be gone.
In the fashion business, this expected trend highlights a need for digitized workflows. Beyond using 3D tools for sample reduction, companies can also leverage the imagery created to test products out on a website or use it to sell to wholesale buyers. A Kalypso study found most of the industry is adopting these tools, but the use is limited to a specific collection or category.
According to Steve Riordan, consumer practice lead at Kalypso, procuring this technology and training are not barriers. “What’s more difficult is preparing the organization for the change, the shift from being a 2D-centered way of working to be being 3D centered, so processes change and people have to be trained up to work in that new kind of world.” To make this shift, there needs to be support from leadership. Another hurdle is being able to store, access and digital assets across parties, including establishing visual standards.
On the consumer side, shoppers will come out of the pandemic with a heightened awareness of brand activities. They will scrutinize the sustainability of a garment’s production and they will seek out local retailers and brands. PLM data may also be accessible to more parties. “I think there’s going to be an expectation that the consumer is going to have incredible traceability or insight into the contents of the product but also the history of how it was developed,” said Riordan.
Consumers will also be looking for apparel with protective properties. Depending on the scenario, this could be germ-proof travel wear or fashion that helps them avoid data collection, such as preventing face and body scanners. PPE will also be a lingering category, with a potentially fashion-forward approach.
At retail, shoppers are going to want to see visible evidence that stores are working to keep them safe. Merchants will likely be consolidating their footprint, with stores housing less inventory to put the focus on “service-based experiences,” per Kornet.
Even though the future is not definite, fashion companies can prepare by becoming faster, smarter, more digitized and globally diversified. To lower inventory risk, Kalypso suggests that speed to market should improve by 50 to 70 percent so that product arrives in time with demand. Additionally, predictive analytics and voice of the consumer can be deployed to make more informed decisions.
Companies should also consider their geographic footprint. “It’s musical chairs,” Riordan said. “I don’t want to get caught holding inventory at a time where I can’t get rid of it. So, the idea of a more distributed network that has more nearshore and onshore production capability that is in smaller batches with higher changeovers is a way to be producing closer to the moment of known demand.” To offset some of the costs of nearshoring, companies may adopt greater production automation.
With the situation surrounding COVID-19 changing on a near daily basis, Kalypso advises companies to revisit scenario planning on a regular basis. Typically, the best practice would be to review scenarios on a quarterly basis, but now it is ideal to discuss them at least every couple of months.
“The intention is that you’re continuously tracking against change, you’re challenging your assumptions, you’re updating what you believe about the future and which scenarios are the most prominent, just continuously opening yourself up to new information and making sure that the strategies that correspond to those beliefs about the future are always rooted in reality and the latest information,” said Kornet.