April 25, 2012
U.S. Retailers Try to Get Faster with Fashions
Two separate RetailWire polls in recent years point to difficulties that department stores and large apparel specialty chains had in dealing with fast-fashion competitors such as Forever 21, H&M and Uniqlo, Zara. The first survey in August 2010 found that 86 percent of respondents believed that fast-fashion chains had an advantage over competitors using traditional mass sourcing methods. The second survey in September 2010 found that only 31 percent believed that current fashions offered in department stores were relevant to Gen Y consumers.
In the past couple of years, retailers (to varying degrees), including American Eagle Outfitters, Gap, J.C. Penney and Macy’s, have adjusted their supply chain practices to be more responsive to the ever-changing fashion whims of U.S. consumers. Some are placing smaller orders to receive shipments faster and move through inventory more quickly.
Mostafiz Rahman, who owns a factory in Bangladesh that makes sweatshirts for Gap, told Reuters, "Two years ago they would place orders for about 50,000 hoodies and now that has come down to 15,000-20,000."
Distance between factory and store remains an issue for many American companies as fast fashion merchants often manufacture goods much closer to the point of sale, while the U.S. looks to China.
"Traditional retailers … buy from China because it is cheap to source from there. That means when they have an inventory problem, it takes them nine to 12 months to fix it," Rahul Sharma, managing director at Neev Capital, told Reuters.
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Discussion Questions
Discussion Questions: How big a threat are fast-fashion merchants to clothing retailers in the U.S. that use traditional sourcing methods? What do retailers in the U.S. need to do to compete on equal terms with fast-fashion merchants?
Poll
Many stores (JCP and Kohl’s among them) have taken a page from “fast fashion” retailers by developing their own quick-response brands, such as MNG and Elle. There is still a place for overseas production of more predictable apparel items, such as opening price knit tops, but it’s worth striking a balance.
The biggest opportunity for “fast fashion” is in the specialty arena, where some retailers continue to place big early bets on key items — some specialists were loaded with plaid last fall and the clearance racks are still full. It’s well worth considering the cost savings of long-lead time production vs. the cost of money and — most important — the cost of a bad bet.
This has been a pet peeve of mine for many years. You cannot have supply cycles that are longer than demand cycles and expect to be successful in the long term.
No merchant is “that good” and it’s not reasonable to keep up with changing tastes, period.
Paula’s insight is right on the money, as usual. There is an increasingly short cycle for pretty well everything in our lives these days and the younger you are, the shorter. There is still that ‘S’ curve lifecycle I wrote about the other day but we’re moving to a lower case ‘s’. The challenge for us all is how quickly can we move from ‘s’ to ‘s’ to ‘s’.
This is a huge threat. As the article states with a couple examples, if you can’t beat ’em, join ’em! It only makes good business sense to offer the freshest fashions to shoppers, if at all possible.
Paula is right on the money again. No retailer is fast enough to keep up with the changing clothing “moods” of today’s younger generation.
If your customer is young and cutting-edge trendy, then fast fashion supply chains are essential. But not everybody is in that business. As much as Gap, AE and the department stores might like to be in that business, they really aren’t. They have a different customer, with a slower fashion cycle, so a fast fashion supply chain would likely increase cost unnecessarily. That’s not to say that the old way they had of loading in seasonal merchandise was the right way to manage their supply chain. It wasn’t. They need to be faster, but not as fast as Forever 21, H&M and Uniqlo, or Zara.
That Forever 21, H&M and Uniqlo, Zara customer looks at Gap, AE and the department stores and sees their mother’s Oldsmobile.
Older retailers are still living in an outdated model, namely: retailers set trends, trends are national, and trends last for a full season. None of this is true any more. This is the vacuum that the fast retailers have filled so successfully, leaving the older retailers to fight it out on promotional pricing.
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Many stores (JCP and Kohl’s among them) have taken a page from “fast fashion” retailers by developing their own quick-response brands, such as MNG and Elle. There is still a place for overseas production of more predictable apparel items, such as opening price knit tops, but it’s worth striking a balance.
The biggest opportunity for “fast fashion” is in the specialty arena, where some retailers continue to place big early bets on key items — some specialists were loaded with plaid last fall and the clearance racks are still full. It’s well worth considering the cost savings of long-lead time production vs. the cost of money and — most important — the cost of a bad bet.
This has been a pet peeve of mine for many years. You cannot have supply cycles that are longer than demand cycles and expect to be successful in the long term.
No merchant is “that good” and it’s not reasonable to keep up with changing tastes, period.
Paula’s insight is right on the money, as usual. There is an increasingly short cycle for pretty well everything in our lives these days and the younger you are, the shorter. There is still that ‘S’ curve lifecycle I wrote about the other day but we’re moving to a lower case ‘s’. The challenge for us all is how quickly can we move from ‘s’ to ‘s’ to ‘s’.
This is a huge threat. As the article states with a couple examples, if you can’t beat ’em, join ’em! It only makes good business sense to offer the freshest fashions to shoppers, if at all possible.
Paula is right on the money again. No retailer is fast enough to keep up with the changing clothing “moods” of today’s younger generation.
If your customer is young and cutting-edge trendy, then fast fashion supply chains are essential. But not everybody is in that business. As much as Gap, AE and the department stores might like to be in that business, they really aren’t. They have a different customer, with a slower fashion cycle, so a fast fashion supply chain would likely increase cost unnecessarily. That’s not to say that the old way they had of loading in seasonal merchandise was the right way to manage their supply chain. It wasn’t. They need to be faster, but not as fast as Forever 21, H&M and Uniqlo, or Zara.
That Forever 21, H&M and Uniqlo, Zara customer looks at Gap, AE and the department stores and sees their mother’s Oldsmobile.
Older retailers are still living in an outdated model, namely: retailers set trends, trends are national, and trends last for a full season. None of this is true any more. This is the vacuum that the fast retailers have filled so successfully, leaving the older retailers to fight it out on promotional pricing.