Time to rethink fashion: fashion industry challenges ahead of Covid-19
Impact of Covid-19 in the fashion industry has been huge, not only to the brands but also to the whole value chain. Forced lockdown, social physical distancing, restricted mobility and a financial crisis are the ingredients of what so called “new normality”. Fashion brands that survive this 2020 have a long list of to-do’s in their agendas in the short, mid and long term to adjust their business models to new ways to consume fashion.
Maybe it is time to redefine fashion as a whole…
Short-term challenges: streamlining “physical” fashion operations
Top priorities for fashion brands are those who are already impacting de P&L and threaten survival in the very short term. Most important ones may be:
Managing the risk of unsold inventories, which goes beyond supply chain flexibility and covers topics such as increased detailed forecasting accuracy, reduced lead-times, new sourcing models as well as personalized promotions and dynamic pricing.
Rethinking the role of the store, as forced lockdown has made more visible than ever that the store-as-transaction-focused model is a risky approach to brand revenue growth.
Making last mile delivery profitable and scalable, as ecommerce has surged in such a way that the current last mile model, which was not designed with a customer added value-centered (therefore, worth to be paid) mindset, has negatively impacted overall brand profitability.
Mid-term challenges: from disposable to reusable
Sustainability has become mainstream and it is in the agenda of almost all brands now, as the fashion industry is the third most polluting and it accounts for about 10% of global carbon emissions, and nearly 20% of wastewater.
Therefore, many brands are transforming their value chains (Model & Materials) to not only reduce environmental impacts but also to create a fairer industry. There are also new players that bet on one (or many) forms of sustainable fashion, such as Patagonia (High Quality, Fair & Ethical, Repair), Reformation (Green & Clean, Fair & Ethical), Rent the Runway (Rent & Lease) or Vestiaire Collective (Secondhand & Vintage).
Nowadays, there are many fashion sustainability trackers. One of the most important is Fashion Revolution’s Fashion Transparency Index, which is intended to “incentivise and push major brands to be more transparent, and encourage them to disclose more information about their policies, practices and supply chain”.
(For further info about sustainable fashion, please read my article Can Fashion really be sustainable?)
Nevertheless, the speed of change towards socially and ethically conscious fashion model will be dependent on the consumers’ readiness to rethink consumerism (Mindset).
Long-term challenges: fashion as a holistic experience
During the forced and long lockdown, all brands have been struggling to find ways to generate cash to keep the wheel running. But all the solutions were based on a wrong hypothesis: the fact that people needed “physical” fashion (physical garments) was not true during the confinement period, as “physical” social interaction was either forbidden or significantly restricted.
In the meantime, social interaction has become digital, and videoconferencing apps have been massively adopted to stay in touch with friends and family. Prospects after lockdown for remote social interactions are positive as it only takes 21 days to generate an habit.
So, considering the foundation hypothesis that fashion is a form of each individuals’ social expression, what if the future of fashion is building communities with common interests and offering them opportunities to express as individuals further than physical clothing?
The key design pillars for crafting this vision are:
From aspiration to inspiration. Brands need not only to say but also to promote engaging societal values with their target customer segment that transcend quality or craftmanship.
Brands are experiences. Brands than build communities need to deliver further beyond the garment, bringing to their customers-fans the ability to live the brand in any moment of the day.
Virtual fashion (garments for all occasions). Physical clothes are still important, but there is a huge opportunity for virtual fashion, either for dressing gaming avatars (LoL, Second Life, Fortnite,…) or for digital social interactions (from videoconferencing to Instagram Stories). The Fabricant is a good example of this concept digital fashion.
The main benefits and implications for fashion brands who want to adopt this vision are:
More diversified revenue streams. From subscription services of any kind (from product to extended brand experience such as VIP events, personal stylist, limited editions,…) to digital-only clothes, may complete physical clothing sales and progressively increase their contribution to total brand revenues, as well as providing further resilience to volatility.
New ROI optimization-focused capabilities required. From advanced analytics for customer understanding to digital media & content generation using latest technology to create profitable engagement models that maximize harmonized (cross channel and stream) LTV
Review of the e2e value chain with a new branding perspective. Starting by revisiting core/non-core & inhouse/outsourced matrix in this new business framework to ensure fit and flexible operations and risk management.
On one hand, forced lockdown has had unprecedented sales drops for all fashion brands, from mass-fashion to absolute luxury, because they are all too “physical product”-focused.
On the other hand, the confinement has shown opportunities for consuming fashion in complete different ways from the traditional, “physical product one”, that brands may take into consideration to reformulate their business approach.
In other words, the fashion concept is quickly evolving further beyond product to experience, digital & virtual, which will be the real "new normality".