Ultrafast Fashion: Seriously?
Username: Name: Membership: Unknown Status: Unknown Private: FALSE
US apparel retailers are trying hard to keep up with fast-fashion retailers. Traditional apparel specialty stores struggle to stay afloat with well-documented bankruptcies and store closings across the landscape. Department stores have issues that won’t easily be fixed either, even if most of them are, from a vendor perspective, too big to fail.
There are even some signs that the fast-fashion market itself is getting saturated, with mutterings over the past year that privately held Forever 21 has been having trouble paying its bills, and some reductions in giant H&M’s gross margin and operating income with a concurrent increase in inventory-to-sales ratios, even as it continues opening stores around the world.
Given the landscape, and the “retail apocalypse ” being trumpeted in far too many places, I was surprised this weekend to receive an email from Deborah Weinswig, Managing Director of Fung Global Retail and Technology, announcing the advent of ultrafast fashion. These online only retailers are ostensibly able to produce merchandise in 2-4 weeks, compared to 5 weeks for Zara and [some products of] H&M. Ms. Weinswig estimates traditional retailers can produce merchandise in 6-9 months. I think her estimate is low. The last time we ran a benchmark on product development, time to volume remained stuck at 12-18 months. Actual numbers from H&M’s financial statements tell us that only a portion of their product is produced in a true fast-fashion manner.
But why split hairs? Fast-fashion has become a behemoth. If a company can affordably and profitably produce merchandise that people actually want to buy in two-to-four weeks, we’re in big trouble as an industry. It’s the mother of all disruptors. But I’m not sure it’s actually doable. Here’s why.
There’s an old adage in the application development industry that goes as follows. There are three variables to development: speed, accuracy and cost. You can have any two, but you can’t have all three. In other words, you can go fast and get it right, but it’s going to cost you a LOT of money. Or you can get it cheap and accurate, but it’s going to take a lot of time. Finally, you can go fast and cheap, but it’s not going to be right most of the time.
I think this axiom also applies to apparel. Sure you can produce small lots of test product and see how it sells, and then, if you’re sourcing close enough to the point of demand, go ahead and make more, but that’s going to cost money. And if you’re going to be a pure online play (which her examples Boohoo, ASOS and Missguided are), you’re going to have to find some major influencers to blast information on your product out to the masses across social media really quickly. Otherwise the marketing will cost a fortune.
Finally, if you’re going terrestrial (i.e. stores) in any way, that’s going to add time to the process. Especially in the US, we are habituated to source half a world away. And if we near-source…well, that’s money. BAT tax or no BAT tax, you can’t get bodies to produce that much…stuff quickly and consistently.
It’s easy to say “stores are dead ” except that doesn’t explain why H&M is opening 430 new stores in 2017 and entering five new brick and mortar markets. Ultimately, to gain true significance in the industry, the ultrafast fashion companies will also have to create some kind of presence – even if they’re just pop-up stores.
I’m not saying we should be like Alfred E. Newman here, with our gap-toothed smiles saying “What, me worry? ” There is no doubt the apparel industry has to get faster and more responsive to ever-changing tastes. The consumer is growing more, not less fickle. The industry needs savvy merchants, trend advisors and responsive supply chains. And, as we’ve said over and over again, it really is time to over-spend on technology to enable rapid response across the value chain. This is true, and it’s not going away. Twenty year old technology isn’t going to do the job anymore.
But, it’s also important to remember that traditional business rules still apply. Look to your customers and internal processes for improvements. Don’t run scared from emerging anythings. The day will likely come when we’re 3-D printing product in stores in exactly the color and size the customer wants. That day isn’t today. Still we need infrastructures that flex, extend and allow the industry to change quickly with its changing customer base. While we struggle to satisfy Millennials, Generation Z sits not far behind. In five years, their discretionary spend will really start to matter.
The industry is not ready. We all know it. Don’t look to the government to fix that through lower taxes. Don’t look to the “Street ” to applaud technology investments. As they say in the trade: “Just do it. ” Look for talent in schools, look for technology solutions, and look for closer sources of supply. And most importantly, recognize that constant change is now a fact of life.
Slow and steady won’t win the race, but savvy retailers will.