How are legacy fashion companies using technology to adapt to new trends?
The global fashion market is worth an estimated $3 trillion (2% of the world’s GDP). It is a dynamic environment, with trends shaping and shifting constantly. Growing competition from digital disrupters and online retailers has destabilised some legacy fashion companies, who have struggled to keep up with the pace of change. Yet, demand for both luxury and value brands continues to rise. Shopper expenditure online is set to increase to 39.1% of total clothing and footwear spend by 2023, demonstrating the growing demand for this channel over traditional bricks-and-mortar. Such forecasts make it crucial for enterprises to use new technology to adapt to changing customer behaviour.
Legacy brands using e-commerce
Legacy fashion houses are beginning to realise the value of using technology to stay relevant amid a growing number of nimble competitors in a rapidly evolving market. Changing customer habits have led consumers to expect instant gratification, in addition to a seamless transition between the online and offline customer journey. While fast fashion brands such as Boohoo or Missguided lead the way with e-commerce initiatives, luxury brands must not overlook its significance in this dynamic environment.
One luxury brand succeeding in this space is Gucci, through focusing on creating new online markets with their exclusively online Garden Range. Similarly, in 2018 Burberry joined forces with well-known online retailer Farfetch to extend its online shopping capacity to 150 countries. Although the majority of final purchases within the luxury retail segment still take place in-store, 70% of consumer research begins online. As such, it is essential that these two channels work with one another and not independently. Hermès is a good example of a luxury brand that has undergone significant digital transformation with the launch of its re-vamped website. The “new digital flagship” (as defined by Hermès) also provides a new e-store, alongside offering a strong editorial platform and intuitive navigation across all its product lines.
Using technology to strengthen operations
Sales is not the only area where technological disruption can be capitalised upon. Data management systems provide consistent analytics that help companies stay on top of each new trend development in real time. Predictive analytics is another area which has seen huge growth, especially focused around the areas of predicting product demand, managing inventory and detecting fraud. Algorithms that analyse sales information and sales variables have vastly helped retailers to forecast demand, as well as improve customer experience.
Just take a look at Montblanc, a German manufacturer of high-end watches, jewellery and leather goods, for an example of a brand that uses data-driven personalisation to improve customer experience. Montblanc utilised video analytics in their offline retail spaces, generating maps to reveal where customers spent most of their time in store. As a result, the company was able to identify where to position and display their product lines and sales staff. Rodrigo Fajado, Montblanc’s brand manager said that the software helped them increase sales by 20 percent after installation.
Benefiting from ERP technology
The optimisation of innovation and automation has a significant impact on the operations side of the fashion industry, substantially reducing lead times. This highlights the need to adapt operating models and create a more agile company that can thrive in the digital world, else risk falling behind competitors.
Enterprise Resource Planning (ERP) software can act as a one-stop portal for managing key operational functions within fashion, integrating finance, supply chain, manufacturing, HR and more. The benefits here are manifold: processes become optimised and standardised, while the integration of different functions breaks down data silos and means information can be shared faster and more easily between key departments. But, as we’ve discussed before, there is reason to be cautious. Integration continues to be an extremely challenging area and is often responsible for delays. And any solution is only as good as the data running through it. Legacy fashion companies can utilise such software to improve productivity and reduce costs but taking the time to perform proper due diligence before starting analysis, at the earliest available opportunity, will help mitigate downstream disruption.
Whether for delivering tailor-made inventory, better cost control or streamlining procurement; deploying the right processes and applications for legacy brands ensures agility within a volatile market. A number of software solutions, can be specifically tailored to the needs of fashion retailers without time-consuming think tanks and procedures, allowing companies to adapt their business models to changing operational and consumption patterns.
Legacy fashion companies have a wide range of innovative technologies available to them. And improving not only their back-end processes but their digital and physical store experiences too, should remain a priority. Now is the time to ensure that strategic use of technology drives innovation and promotes agility within legacy companies.