Almost everywhere we turn there are proclamations of retail doom, high street downfall and talk that things have never been so tough. Just last month, the fashion retailer Select announced that it was preparing to call in the administrators, putting 2,000 jobs at risk.
However, there has also been some brighter news with online fashion retailer, Oh Polly announcing that its pre-tax profits are on track to more than double to over £3m for the 2018/19 finance year. So, could this indifferent (and often challenging) retail picture be a great opportunity for fashion retailers to shine?
It is true that the competitive landscape is tough, with the high street full of retailers vying for a share of customers’ purses. There is also the pressure on costs, with raw material prices impacting intake margins, and profit margins are under pressure with growing online sales driving higher and higher levels of returns. However, never before have customers been so engaged with the act of shopping. For fashion retailers who are able to harness that interest and fully understand what their customers really value, the opportunities to profit are great.
Looking at the rise of online young fashion brands like Missguided, Boohoo and Pretty Little Thing, they have emerged from virtually nowhere to challenge the high street fashion stalwarts. These brands have successfully tapped into demand for ‘fashion now’ clothing and ensured that their supply chains and sourcing bases are equipped to deliver the short lead time, fast turn-around trends that stimulate customer interest.
Elsewhere, some of the more traditional retailers are leveraging data to integrate customer and product performance analytics, allowing them to align what they range, how much they buy, and how they manage allocations and replenishment, reducing their markdowns and realising maximum return on inventory.
Whether it is speed to market, customer lifestyle alignment, revolving newness, online front-end user experience, or the integration of physical to bring the brand to life – disruptors are rethinking the rules of the game. Those brands who are successful in realising these opportunities all have one thing in common; transformation. No longer is it about single, or even omnichannel integration, instead it is about a retailer’s ability to master unified commerce and seamless delivery of whatever customers want, however they want to access it.
Key to this successful transformation process, is fashion retailers tapping into the rich customer and sales data available to them and converting it into actionable insight. Marketing, buying, merchandising, operations, and customer services should all work together like never before to create a 360-degree view of the customer and their unique requirements. Rethinking the use of physical store footprint allows retailers to showcase their brand in a new light, thinking afresh about how product is allocated and making the former offline (stores) online and a truly connected part of the chain.
Fashion retailers who manage to tailor what they present to customers will see success through the incorporation of customer and product sales data.
There are five areas retailers could focus on to achieve this:
- Create a dialogue with your customer – everywhere and anywhere that they interact with you
- Cross functional integration – sharing data and insights (operations, buying & merchandising, and marketing) and combining data sources allows retailers to not only understand what the best-selling products are, but who is buying them, how often and what else they have in their basket. It also allows an understanding of what marketing those customers are most receptive to, and through which channel they are most likely to purchase (the role of prescriptive and predictive analytics over and above BI) – combined, this is extremely powerful
- Exploring system opportunities – there are many new modular, more agile systemic solutions that can be explored
- Making data visualisation accessible to the decision makers – data is only meaningful if it can be turned into actionable insight, otherwise it is just ‘big data’
- Integrate the use of data insight into every day operating processes – avoid data and analytics for data and analytics sake, instead embed it into day to day decision making routines
Finally, to ensure that the development of these five key five areas are fully maximised, fashion retailers need to ensure that they change their KPIs – so they drive a change in behaviour from the core of the business and its operations.
Fashion retail is a challenging market place right now, but the opportunities are great for those who take a fresh ‘customer focused’ view of their operating model. As we move through 2019 we’ll see that retailers who create highly personalised customer experiences, delivered through sophisticated supply chain operations, flourish. We’ll see the emergence of new disruptors and inevitably some retail casualties but never has fashion retail been such an exciting and innovation-rich industry segment in which to operate.
Laura Morroll, a senior manager at multinational management and technology consulting firm BearingPoint