Reflections on the future of fashion business

It goes without saying that, taking into account the changes in consumption patterns, background, concerns, different channels and ways to purchase, we could talk for hours about the many challenges to overcome not only by the sector of fashion but, in general, by industry as a whole.

If we analyse the changes over the last few years in some of the many characteristics of this industry we can observe that, for instance, until a relatively short time ago the product trends of a campaign could be counted on the fingers of one hand; this greatly facilitated decision making and the possibility of being successful. Now trends have evolved to micro-trends, very numerous and with a very short expiration date.

The client has an excess of information and I do not only refer to the multitude of fashion shows that we can find in recent years, but also to advisers, opinion makers, bloggers or influencers, who make what was once a trend that lasted a season, now make stock run out in two weeks and when the replacement is done, it expires and leaves the store full of units to clear.

Opinion makers, bloggers or influencers make what was once a trend that lasted a season, now run out of stock

As a result, it is deduced that the campaign, understood as a set of trends for which you had bet for a whole season, is an obsolete concept. We can no longer provide ourselves in the traditional way, which consists of acquiring most of the collection in a single moment of time, normally with an anticipation of something between six months and a year. The purchase has become a very agile and almost daily exercise, with the focus on how sales evolve to decide whether a micro-trend is repeated or cleared and abandoned.

We mention the word clearance, what good old days when we practically only found discounts during the sales period. Nowadays, with sales, mid seasons, Black Friday and a long list of other discount periods we have grown accustomed to cutting our gross margins by more than fifty percent throughout the year.

The industry cannot afford to live with this continued drain, competing with the percentage of the discount offered as the only argument. We must recall that discounts are created to give a natural outcome to the trend remains.

“The industry cannot afford to live with this continued drain, competing with the percentage of the discount offered as the only argument”

Lastly, I would like to talk about online sales, the eternal promise. Online distribution is a compulsory subject for all the players in this industry; whoever suspends it will be off the board. That said, it is still pending to make this channel profitable.

Few fashion companies can boast of making money with their online business; the optimization of the sales volume, combining the online strategy with the omnichannel physical store, a web design that adequately transmits image and brand values, but at the same time maximizes the conversion rate optimization (CRO), altogether with the logistic management of preparation, delivery and return of orders, it is not an easy task and generates a productivity that is still far from the optimal. We have to be careful in adjusting this complex machinery, a single additional twist can make the difference between having a profitable e-commerce or a disastrous one.

Bruno Rodríguez Martínez, partner at Deloitte.