A new global and digital customer has changed the rules of the market with their desire to immediately buy the garment they have just seen on social networks or that their favorite influencer is wearing. They want that item and they want it now, they won’t wait until next season to have it. Also, if they can’t find it, it’s logical that their desire will shift towards a new alternative that will surely come to them in a short period of time. For this reason, brands and retailers have given time and reaction speed the leading role that they deserve in today’s fashion industry.
Despite its leading role, we ask ourselves: do fashion retailers confer a defined and representative value to speed? The concept has been vigorously debated and the question remains: can the value of the speed-to-market be measured?
Speed vs. Cost.
Selling more products at full price should generate greater profits and minimize costly unwanted inventory. Retailers and brands of apparel and fashion accessories, both online and in physical stores, have been struggling to find the formula to get the right product, at the best possible price and at the right time for today’s consumers.
While brand and retail executives have always intuitively considered “speed to market” to have value, applying a metric to that “value of time” has proved elusive. In this regard, to understand the subject in depth before reading on, I recommend that you read these two articles: In fashion, speed is the goal & From fast fashion to ultra fast fashion
COTTON USA in collaboration with WWA Advisors have taken on the challenge of helping the fashion supply chain develop a metric to increase accuracy and suggest The Value of Time model, which can be downloaded for free through the link at the bottom of this article, to help decision-makers assess the value of time in developing, marketing and sourcing their products. The model is based on Cost Differential Frontier by the University of Lausanne’s Operations Lab.
Baseline hypothesis: Producing as close to demand as possible is more accurate.
The assumption is that making final decisions about fabric, color, cut and style of products nearer the time of customer demand will make the product more accurate. The key to this is to identify what point in time is close enough to accurately forecast true consumer demand and still have enough time to produce and distribute the model. The retailer must strike a balance between the moment he believes he has the best forecast of consumer demand and the cost of production in the short term.
While the cost of the product can be higher by making it in the shortest possible time, even in “proximity”, sourcing closer to the known demand can offset that cost difference by increasing full price sales (discount reduction), minimizing out-of-stock (stockout) and generating more profit over time through the experience of a retailer who becomes more responsive by reacting quickly to current customer demand.
From prospective to predictive creation
The current volatile consumer market and the new digital customer of “see now-buy now” demand a change from “sell what has been done” to “do what sells“. Using the Value of Time model formula can help retailers and fashion brands make better decisions and reorganize their sourcing to achieve today’s most important goal, saving time.
I am sure that this model will add value and provide you with the necessary tools to clearly understand the most important strategy of today’s fashion retail.
I hope it does and I look forward to meeting you here again!
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