Digitization is a trend that we have been confronted with time and again in recent years. Everywhere we look, we encounter digitization, and in a way, rightly so. The world wants digitization in extreme forms, so why not give people what they want? In some industries, this trend can easily be applied to all aspects of the industry. In the case of the fashion industry, this seems to be a bit more difficult. If you google digital innovation, you’ll be bombarded with articles about brands preparing to enter the metaverse. One could then argue: “There you have your digital innovation!”. But first, let’s take a few steps back and look at the challenges facing the current industry and find a suitable digital solution for them. Because let’s face it, putting cute sneakers on an avatar in a virtual world isn’t going to solve real-world problems.
The current situation
In order to know where innovation is needed, it is first important to get a clear picture of the current situation. Apart from the well-known societal trends such as plant-based nutrition, trans-cycling or sustainability in our purchasing behavior and in logistics, there is also a fundamental and noticeable change in consumers and their new position of power. “The customer is king” – we all know that statement and I bet we’ve all misused it at some point. I know I did when I ordered a pizza and it was delivered in 32 minutes instead of 30 minutes. I mean come on free pizza! It’s no different in the fashion industry. You can read more about it in the following blog “why the classical wholesale is dying”
Back to the pizza statement: look at the fast delivery times in the food industry. As Arjan van der Heijden, Operations Manager at Just Brands, also points out in the recent webinar on the future of replenishment for retailers: “If my pizza can be there in 30 minutes, why can’t my jacket and jeans?” Of course they are industry experts realize that this requires a whole new wholesale structure that we as an industry are not yet ready for, but the consumer may not understand that. Along with the shift in consumer power, retail in general has also undergone major changes. In the past, there was only offline shopping. Nowadays, one can also shop online and through third parties, also known as multi-channelling. Each channel has its type of consumer, and as we can read in the blog mentioned above, the consumer determines the chain back to the manufacturer. So is digital innovation in a virtual world what we need? I think we need to find them closer to the real world.
voices from the market
During the webinar on the future of retail aftercare, viewers were asked several questions to vote on. One of the questions was: “Which market change has the greatest impact on companies?”. With 75 percent of the votes, the answer was multi-channelling. Customers’ requests and questions come from different directions, and they all have a certain way of being dealt with. “The relationship between pre-order and post-order has shifted such that on the one hand the supplier has more power because they have the inventory, but on the other hand the power also rests with the retailer because if they don’t sell the inventory, they have you as a supplier a problem. Ultimately, I think the power has shifted a lot more to the consumer.” What is interesting about this statement is that it makes it clear that retailers and suppliers need each other. There should not be a shift but a balance between the two. “Trust is key.” When asked what the biggest challenge is when working with retailers or brands, two answers came up: IT capacity and a desire to stick with old ways of working. Arjan van der Heijden participated in the table discussion on behalf of Just Brands. JustBrands is known for its forward-thinking vision and collaboration in wholesale, which is also credited in large part to the evolution of IT in the industry. Arjan: “You have to give things a chance, constantly communicate and understand that there is a shared responsibility.” Of course, once this can be backed up numerically using IT, it will only get easier. Building a working method on trust is exciting. It’s intangible, so you have to let go of some control. With a VMI model (Vendor Managed Inventory) one often has the feeling that one is at the mercy of “the powerful and strong supplier”. However, the successes of JustBrands show that this is by no means the case. Ultimately, as a retailer and supplier, you have a common goal. It’s all about optimizing square meter sales!
be able to prove success numerically
A major shortcoming in the fashion industry is that each brand has its own way of handling its data. Emotional decisions are often decisive. A retailer can make a particular product a top seller based on emotion alone. As IT advances, vendors can back these emotional decisions with facts and figures. Either way, both outcomes are beneficial. Since each brand has its own workflow and there is no standard in the industry to follow, it takes time to invest in optimizing the value chain. And time is money! Against this background, we often see that brands do not dare to start projects that require IT because they assume that it will take a lot of time. Chainbalance has been working with JustBrands for some time and has taken this part of the IT off their shoulders. As a specialist in data processing, Chainbalance ensures that decisions about follow-up supplies, for example, are no longer made solely for emotional reasons. On the basis of sales and inventory data, as well as algorithms that have been trained over many years, key figures can be supplied that prove why certain branches are restocked with certain articles or not. You have to ask yourself: Why should I use my own expensive IT capacities for this when there are innovative, advanced software solutions that can do this for me? And this is no small side project. All the more important for the growth strategy.
You don’t have to reinvent the wheel
Brands don’t have to reinvent the wheel. If something can be done better or cannot be improved within the scope of a brand’s possibilities, you don’t have to immediately rule out a solution. God forbid, if my dishwasher breaks, I have enough self-awareness to know that I can’t fix it by tinkering with myself. In this case I have two options. I either wash everything by hand or I call someone who specializes in dishwasher repairs. And above all, when it comes to bringing a bit of specialization into the workflow – which enables honest, more sustainable and transparent chain collaboration – then suddenly the minimal investment of time no longer seems like a big hurdle. We should always focus on the common goal instead of retailers feeling ridiculed when suppliers confront retailers with numbers – so that your square meters are successful! As a retailer, you’re excited about items that go over the counter. That’s why it’s important to know which items are and aren’t successful in certain stores so that you can stock your store with the good stuff. And it’s also important for a supplier to know, so that items aren’t blindly replenished and then returned to stock because they don’t sell. There are revenue opportunities for both parties, but for that you need each other and watertight data, clear communication and trust. In short: suppliers and retailers must be in balance. This requires both emotional and numerical support. That numeric backing is a lot closer than some brands think. Specialized companies take away the fear of pressure on IT capacities and give you an enormous amount of valuable data that affects the entire value chain. Make your square meters successful – lower logistics costs, higher sales and better supply of the entire chain. With an uncomplicated solution and trust, you will find that the cooperation in the chain becomes more balanced, more transparent and more successful. This seems to be an innovation that everyone wants to be part of.