Mickey Drexler, now former CEO of J. Crew, didn’t see the dark days coming.
In a May 2017 interview with The Wall Street Journal, Drexler admitted, “I’ve never seen the speed of change as it is today.”
Drexler said he didn’t anticipate how quickly technology could upend the traditional retail model. The result was his stepping down as CEO on June 7, 2017 after repeated quarters of slumping J. Crew sales and more than $2 billion debt.
And then, in a cruel-but-telling twist the next week, 11-year-old presidential son Barron Trump was photographed wearing a 2015-collection J. Crew t-shirt. The retailer found itself facing a sudden spike in interest for the “The Expert” t-shirt but had to tell potential buyers that they no longer offered it.
Market leadership depends on digitalization in fashion design software
J. Crew isn’t the only major brand retailer to suffer a fast decline, as once-stalwart brands such as Sears and Payless are shuttering hundreds of stores and letting go of thousands of employees.
The fashion industry faces ever-increasing pressures on margins and ever-shortening time-to-market expectations. Digitalization offers a bright spot for fashion product development that can help retailers get out of their reactive mode and be proactive on brand differentiation—the key to competitive advantage.
Digitalization helps drive brand differentiation by giving retailers a first-to-market advantage, design-driven production efficiencies, and consumer-focused omni-channel sales capabilities.
First-to-market today means really fast
One of the most obvious benefits of digitalization in fashion design software is first-to-market advantage. When designers, procurement teams, production planners and supply chain partners can do their work with common digital tools, everything moves faster, quality is standardized and collaboration is easier.
Zara is an example of just how fast retailers can move from consumer feedback to new styles on the racks. The Wall Street Journal reported in December 2016 how a newly designed woman’s coat went from customer feedback to on-the-rack reality in only 25 days.
Zara’s parent company, Inditex, makes this possible by using near-market production and digital technology in its fashion design software for design and logistics. Analyst Anne Critchlow from Société Générale described the Spanish fast-fashion retailer this way: “Think of Zara not as a brand, but as a very speedy chameleon that adapts instantly to fashion trends.”
This has made Inditex the world’s largest retailer in terms of sales.
In another example of speed-to-market, Adidas recently debuted the world’s first 3D-printed shoe. This feat (no pun intended) would not have been possible without cost-controlled R&D and the ability to test and plan for demand-driven fulfillment on a global scale. Adidas also had to fit a new type of digital technology into its go-to-market model. The company is partnering with a 3D-printing innovator and plans to mass-produce 100,000 pairs of the shoes next year.
Production-by-design during fashion product development
There’s more to winning in retail than being first. Another major benefit of digitalization is design-driven production.
Today’s technology allows designs to be tested and tweaked for manufacturability before they’re released. And once designs are handed off, platforms like PLM can provide visibility into process performance, improvement opportunities, and innovative process options on a global scale. PLM also provides a collaborative platform in fashion design software for improving quality through better process control. That improved quality, in turn, can command premium pricing.
In addition to improving quality, small-batch, high-demand designs also can command premium pricing; but, producers of these designs need to closely monitor control processes to ensure these ventures are profitable.
Think about the limited-edition, designer-inspired collections that Target occasionally sells. The products are aggressively hyped ahead of time, linked to a specific date of availability and almost always sell out quickly. Success is all about timing and requires cross-functional collaboration within the company, as well as with suppliers. This can’t happen without visibility, real-time data-sharing and collaboration in their fashion design software.
Similarly, localized production can be a higher-profit alternative to off-shore production under certain circumstances. As production technology evolves, near-market production is expected to become more common in fashion and other industries. But this emerging model requires digital enablement to align with the newer production technologies.
As fashion and retail companies move into a more digitalized future, they'll require digital technology and enablement to align with new production technology.Staying close to the customer
While the fashion industry is still catching up to some other industries in production efficiency and control, it’s at the forefront of using data for strategic decision-making for sales. Many savvy fashion retailers have jumped on the Big Data bandwagon. According to an article published by the University of Tennessee Chattanooga College of Business, the analytics tools available today that make use of Big Data are giving retailers insights to accurately predict emerging trends and ready their fashion design software to adapt quickly to market changes.
Once these decisions are made, the retailers are using this data-driven insight to develop omni-channel customer experiences that allow customers to interact and purchase based on individual channel preferences—whether it’s in stores, online, on mobile apps or any other channel.
Omni-channel success is good news for the fashion industry. Why? Because it proves the necessity and worth of digitalization at a time when retailer bankruptcies have reached their highest levels since the Great Recession of 2008.
Most of these bankruptcy filings have been for brick-and-mortar retailers, in part because retailer leaders like Mickey Drexler at J. Crew didn’t see how the digital transformation was quickening the pace of change in the retailing world.
Digitalization that speeds time-to-market, facilitates design-driven production and enables a customer-centric buying experience all promise a bright future for the retailers that embrace these technologies.
The industry is at a crossroads: Will retailers and brands remain in a rigid box that relies on low-cost labor to maintain profitability? Or, will they embrace a proven, modern model that is driven by knowledge and insight and optimizes opportunity as well as protecting profits—a data-driven, digitally enabled model?
Today, globalization and technology-wise consumers are challenging footwear and apparel brands to stay nimble. What does it take to connect with this generation of consumers? Knowledge, skill and agility. You can’t afford to let outdated fashion design software and inflexible processes slow you down. You either get ahead or get left behind.
This concludes our series about how digitalization can help retail and fashion companies meet their current and future demands.
About the author Suzanne Kopchais the Vice President of Consumer Products & Retail Strategy for Siemens PLM Software. She is responsible for using Siemens PLM’s resources to provide value-added solutions for the consumer products and retail industry. Kopcha has spent her career leading and consulting with others on the transformation of their innovation processes and leveraging technology as a catalyst for business growth. She’s been involved in transforming consumer products companies for almost 3 decades and has more than 27 years of experience in the industry. Kopcha was previously the PLM leader and an Enterprise Transformation Leader at Procter & Gamble, where she was responsible for technology and shared services across the company’s design and innovation processes; she also spent 2 years in the Corporate Strategy Office. Kopcha holds a Bachelor of Science degree in Management from LeMoyne College and an MBA from Rensselaer Polytechnic Institute.