Research & Surveys
January/February 2008, eSide Supply Management Vol. 1, No. 1
The Impact of Fast Fashion on Modern Retailing
The phenomenon knows as "fast fashion" provokes customers to buy now or forever hold their peace. It also requires supply managers to act fast™and smart™in getting merchandise from point A to point B. Some experts say the simplest solution to juggling all the factors involved lies in merchandising life-cycle management, or MLM.
We have all heard of fast fashion — but what exactly is it, and how fast can it get?
We know the numbers: Zara introduces 300,000 stock keeping units (SKUs) every year. Kohl's introduces new Vera Wang pieces every month, but once they are gone, they are gone. Fast fashion leaves consumers with a mentality that there is no room for a sales rack at the back of the store. It means buy now — at full price — or be left out.
The fast fashion phenomenon represents the intersection of merchandising expertise with supply chain performance. To a retail merchant, the logic is this: If we cannot make it for less, we will buy it for less. As a result, supply chains have grown to incorporate geographically disparate low-cost suppliers to keep the cost of goods sold, or COGS, as low as possible. In industries such as retail, where margins are notoriously tight, these savings have a substantial impact.
What is the lead time for the factory in China to make the garment? What is the lead time for the ocean voyage versus air freight? How long will it take to clear customs, get unloaded from the dock, put onto rail or trucking lanes, be processed at the distribution center, be sent out to store locations, be unpacked and put out on the selling floor?
With so much of retail still being calendar-driven, any miss on these dates and lead times means lost revenue and a slow fashion delivery that can miss its "sizzle" time.
Design flexibility requires strong relationships among designers, merchants, sourcing groups, suppliers, agents and factories. The technology that supports the merchandise life cycle must provide easy, immediate collaboration among all parties. In addition to design collaboration capability, sourcing and coordination across multiple countries, and order change tracking, technology must provide a single view of merchandise and order information in one central repository.
As fast fashion pressures have increased the number of collections per calendar year and international supply chains have increased the complexities of lead times and quality issues, retailers have quickly adapted. The merchant's role in particular has expanded and morphed from fashion prognosticator to that of margin manager. Rapid response to altering the types of products sourced globally, and changing the store product mix to reflect hot trends and impulse buys, can make profits soar. The key is to introduce smaller SKU lots onto the selling floor to increase sell-through at the initial mark up (IMU) to ensure the merchandise satisfies consumer demand.
Retailers and manufacturers can take advantage of global sourcing initiatives — and still produce more collections in their calendar year in shorter, faster timeframes — with the help of merchandise life-cycle management, or MLM.
MLM is the retail industry's answer to the issues retailers face as they deliver fast fashion private label brands to a rapidly changing market. MLM enables the merchant to balance four critical tasks:
MLM facilitates collaboration between buyers and sellers, eliminates errors that occur during data entry as a result of redundant systems, and creates a single view of the supply chain. This gives suppliers and buyers a level playing field, resulting in greater choice and diversity. As soon as the purchase order is issued, each line item is assigned to a production and quality assurance regimen. Buyers can have one view of all their international orders by collection, class, sub-class, and even by style.
These orders can be viewed on a world map in a stop-lighted manner: all orders progressing according to their product life cycle in green; all orders with the possibility of missing a critical milestone in yellow; and all orders which require immediate attention (due to a testing failure or a missed milestone date) in red. Drilling down on a missed quality test might reveal a defect in the fabric. Another click would quickly reveal what styles are impacted. Another can substitute an alternate fabric or pattern.
And because these life-cycle milestones are embedded into the actual orders, changes are immediately directed up and down the supply chain to the stakeholders who need to know. These changes might include introducing a new color or pattern to the collection when a color performs poorly in a test market, or simply switching from ocean to air transportation to capitalize on a popular style or trend.
How fast will fast fashion be? Ten years ago, we planned our collections two years in advance. Five years ago, we started to think in terms of less than a year. Zara came along and changed our perspective to just weeks. And tomorrow, the consumer might very well design his or her own fashion merchandise on the fly, making flash fashion next year's fast fashion.
Sue Welch is the founder and CEO of TradeStone Software and a frequent speaker on global trade automation. World Trade Magazine named Welch one of the 50 Most Influential Executives in 2006. To contact the author, please send an e-mail to firstname.lastname@example.org.