Reactive fashion recovers its lost margin

Reactive fashion recovers its lost margin
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Retailers who aspire to win in tomorrow’s market must start setting their strategy today. The plan is different for those players who intend to be world leaders based on the importance of their production volumes, on their speed to market on a global scale, than for the others, who are small companies and brands for whom the speed to market is less important and who will be comfortable and secure if they adopt a precise position of “follower competitor”. If that were ultimately the plan, it is essential to know that their future production of fashionable clothing and accessories and their supply footprint will be different from that of the market leaders.

In fashion, the worst move is the one that is not made

There are many scenarios and possibilities on which players are already in a position to act. Taking action and making changes always implies a risk, but without a doubt, inaction is the most risky; they simply cannot stand still and wait for new technologies to appear. In order to transform the value chain of textile and clothing manufacturing – as in any digital transformation – it is not possible to find an adequate long-term plan of action derived from concrete and accomplished facts. Rather, the pace of development and innovation and the rapid change in end-customer demand patterns require a vision that points in one direction and then applies an agile approach of testing and learning, as well as problem-solving on the go. Therefore, organizations must be bold, take the first steps, accelerate the pace, get on the road, and respond appropriately to situations as they arise.

The origin of production defines the speed to marketLa moda reactiva recupera el margen

Even today, some brands still use air transport as an alternative way to reach the optimal speed to market that they could achieve if instead of manufacturing in Asian countries they did it in the nearby origins. As we know, air transport is not sustainable from an economic perspective, let alone an environmental one.

Retailers and fashion brands are establishing this strategy to start the commercial engine that takes full advantage of the short production, distribution and delivery times.  This leads to a significant improvement in trend detection during the season (by visiting stores, monitoring social networks and obtaining trend information from sales staff, etc.), rigorously adjusting batch volume and inventory strategy to adopt a test and scale restocking system, even during the season, and also monitoring and adapting prices, rebates, marketing tactics and promotional campaigns.

A fast process of design and generation of products will make it possible to efficiently manage and execute these actions, especially in terms of trend and reaction, which should already be a priority for any fashion brand that has any expectation of growing and/or maintaining its current market share. Building a fast supply chain to develop an efficient business model will not only allow fashion companies to use nearshoring, but will also make it possible to quantify the value of speed to enable fact-based decision making.

In this previous article we analyzed and described this optimal combination of production origins in the fashion industry: Neo-relocalization, the balance between cost and speed.

Neo-relocalization is the key to the processLa moda reactiva recupera el margen

Neo-relocalization and its main resource, automation, are the keys to start the dynamics to develop a sustainable and circular value chain.

Starting to manufacture in nearby locations now, instead of waiting for automation to further improve the future economic-financial outlook, is of vital importance in order to outperform the competition. With a thorough analysis, based on financial scenarios, it should already make sense to bring some product lines and categories to closer locations if the value of speed is what is being considered. Even for style lines that are not yet financially and economically favorable, it should be a worthwhile investment for fashion brands with aspirations of growth and transcendence. So, even if they make a slightly lower profit right now, if they have the ultimate conviction of creating a future advantage over competitors, it is worth betting on it.

Having reached this milestone, we sourcing professionals know that nearshoring to achieve speed and sustainability is not an easy step to take but we also understand that whoever starts first can generate the competitive advantage of the future and therefore we must be very clear about the reason why the neo-relocalization needs a strong vertical industry.

Cross-sectoral and strategic partnershipsLa moda reactiva recupera el margen

Fashion and retail organizations need to solve problems of production capacity and scale, have rapid access to fabrics, yarns, manage a more complex sourcing matrix, implement “design to speed” thinking (i.e., to adjust the design so that it is possible to produce garments quickly given the availability of fabric, materials, accessories and space on the production line) and operate a business engine to capitalize on that desired and achieved speed. Starting now and getting well ahead in this learning curve will provide the advantage that will be very difficult for competitors to overcome when they react late.

Companies must be proactive and take action when it comes to automation technologies. They must go out there and generate action, collaborate with manufacturers, invest in technology companies and projects and start recruiting talent for internal innovation. Advances in grip technology, robotic vision, cobots, etc. have taken automation in garment making to a higher level and generated investments that can achieve the desired disruption. Organizations and brands in the fashion industry that are eager to drive this development will achieve a significant return on their initial investments.

At this point I recommend reading this pair of previous articles that delve into automation, value-added business and industry 4.0: Automation creates business value: The five automations that drive fashion 4.0

Changing even the DNAModa reactiva para recuperar el margen

A profound change in the sector and the fashion industry is possible with decisive action. The supply chain has rarely been the main focus of fashion CEOs. While it has always been the mechanism that needs to function smoothly to ensure good quality levels, on-time service and margins, it was not considered the main source of growth and competitiveness in the fierce fashion market – today, this situation has changed!

The disruptions ahead are so profound that the major players in the mass market fashion sector who are taking advantage of near-shore production and automation technology have the opportunity to build business models that drive development, growth and are more difficult for others to replicate. Although apparel production may not be entirely local again in the near future, some manufacturing will at least be moving closer to the marketplace and mass market brands and retailers must be prepared.

The neo-relocalization of the fashion industry has begun and is an ultra-dynamic process that will continue over time!


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