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Why Fashion is Taking Digital Product Development Off the Back Burner

Bad product decisions have always been costly—either leading to overstocks and markdowns or understocks and missed sales opportunities—but the pandemic has pointed out the need for more connected, agile development to avoid inventory misses.

Slowed sales during lockdowns were followed by an uptick in demand, and this rapid decline and recovery tested brands’ responsiveness and consumer centricity. At the same time, companies had to quickly move to remote workflows to maintain momentum.

Before Covid-19 threw a wrench in normal product development processes, it was easier for companies to prioritize consumer-facing upgrades and postpone backend digital transformation. As firms allocate their budgets, putting money into aspects like e-commerce or stores provides a projected return on investment in six months. Comparatively, due to long lead times, it can take up to two years to recoup costs and see the financial benefit of product development tools.

Now, well over a year into the pandemic, companies are recognizing the need to invest a larger percentage of their technology budget on product development-related technologies. In addition, these investments are now more frequently sponsored by C-level executives.

“By going through these near-death experiences during Covid, companies understand what the stakes are and what they need to do to respond to this environment,” said Steve Riordan, global director, consumer and life sciences, at consulting firm Kalypso. “Technology has never been more important to enable the business to get where we want it to go. The companies that recognize, and invest in that will separate themselves from the rest.”

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Historically, across most industries, companies spend less than 0.3 percent of revenues on product development technology. However, as a result of the impact of Covid-19, companies are now spending at a much higher rate.

As factory visits stopped and offices shut down in favor of virtual collaboration, makeshift tech solutions often sprung up in response. For instance, vendors might take photos of garment samples on their phone to show the client for approval. Others adopted collaborative tools like digital whiteboards or 3D design mid-Covid.

Long-term, however, smartphone photos won’t cut it. For instance, colors or details might appear differently depending on how something is photographed. But getting everyone on the same page is about more than just purchasing more sophisticated technology. Companies must establish visual standards for imagery, such as the number of views, which angles and what lighting to use when capturing garments. At the same time, it is virtually impossible to manually manage shared files for the numerous styles that fashion retailers produce.

“Companies realized what they were doing temporarily is not scalable. They need to permanently be able to work more virtually and be faster to market,” said Riordan. “Right now, digital transformation is all about taking those temporary fixes during Covid and putting in place permanent capabilities.”

Even companies that had tools like product lifecycle management (PLM) in place prior to the pandemic should reconsider how their systems are set up. Traditionally, Riordan explained, PLM was positioned in the middle, with other technologies branching off. But with the addition of numerous tools like 3D design and fabric sourcing solutions, PLM is just part of the picture.

The pandemic has been a push for companies to get onboard with digital transformation, but it’s not the only reason why firms need to move beyond analog processes. Whereas the product journey was previously linear—moving from design to tech and then to sourcing—now many activities are happening concurrently. Kalypso refers to the digitization of ‘discover, create, make and sell’ as the “Digital Thread,” and this model enables teams to work in a more interconnected manner.

Per Riordan, the future Digital Thread must be faster and more virtual. It also should become smarter by leveraging advanced analytics, while also being responsive to customer needs. Finally, the digital transformation needs to incorporate geographic diversity in sourcing and sustainability.

For many of Kalypso’s clients, the business case for the Digital Thread is speed to market, since it reduces the risk of a bad product decision. As an added bonus, by shortening lead times, companies can achieve ROI that much faster.

A vertically integrated specialty retailer has worked with Kalypso to reduce its lead times by 80 percent. As part of this transformation, the business is swapping out the usual seasonal calendar for shorter modules of development for trend- or fashion-driven offerings.

Speed to market isn’t always the desired outcome. Another Kalypso client has redistributed time to instead give the design team more time to work, banking on product differentiation to win against competitors.

With continued unpredictability, Kalypso has changed how it works with clients. “We’ve got to keep revisiting plans to make adjustments on the fly, versus setting a strategy and revisiting that in two years,” Riordan said. “That’s just not how things work anymore.”

Click here to learn more about Kalypso.