Fashion 2018 and beyond, the real challenge is to plan the unpredictable

Andrea Negrin
23 Mar 2018

In the US "fashion seems to have no solution to the falling amount of money that Americans dedicate to their closets" (Bloomberg). 2018, for Alix Partners, could record a new wave of closures (7,000 only last year), because the drop in sales recorded in January will certainly have painful repercussions. For the global market, the growth forecast by McKinsey in 2018 is about 4 percentage points: 2,500 billion dollars and a surprising surge in online sales for Luxury (according to Bain & CO, with a tendential coverage of up to 25% of the sector by 2025). Contradictory values, very useful for basic recruitment: nothing is more certain than uncertainty. In our West the change of habits has left its mark and left well-known victims: in 1977 clothing represented 6.2% of the expenditure of American families, today it hardly reaches half of that. Combining convenience, which now more than ever is necessary, with fashion is not child's play.

A fashion that does not reach the streets is not a fashion (Coco Chanel)

Fast Fashion is the symbol of change: the close integration of design, production and distribution means that a design is industrially produced in 15 days and brought to the shelves between 12 and 18 times a year, at prices which are more than competitive. This retail has grown over 20% in the last three years, driven by the pervasiveness and frequency of social media. The amount of traffic in shops is a problem that affects all parties. But most people prefer a physical point of sale than becoming strategic in the online relationship: of over 44,000 stores in Italy, 22,000 have digital shopping services. Of the most important, around 20% is represented by the withdrawal of online purchases, 4.6% of those booked online and just over 11% of those with returns available.

Digital commerce seems to satisfy the strong demand for consumer personalisation and is part of the general trend of producers towards having a direct relationship with the customer. This is also due to the maintenance of acceptable margins, a decrease in the operating costs of the shops, control of the brand and promotions and data management. But it is no guarantee of success: the NastyGal vintage fashion site increased from 10 million dollars in revenues in 2010 to 300 million in 2015, and started bankruptcy procedures at the end of 2016.

Fashion means a continuous obligation to change, with innovative business models such as data-based subscription services like Stitch Fix or Grailed peer-to-peer sales. Or again Amazon Find, which aims to enlarge the target with budget prices and fast delivery (hoping that the sizes are correct). The definition of the omnichannel strategies must then come to terms with the new relative strengths of the regions. According to the McKinsey Fashion Scope, by 2018 Asia will account for about 40% of international clothing and footwear sales, with the Asian clothing market expected to reach 1.4 trillion dollars in two years.

Navigating in this treacherous sea will require businesses, whether they wish to or not, to collaborate with the large online platforms. Nor can the "mobilisation" of purchases with the related payment services be ignored. Don't forget the onboard tools which are useful to maintain the route: if the importance of big data and analytics has been mentioned several times, the scene will now be stolen by artificial intelligence, which will take its place along the entire value chain from the back office to the customer journey. And attention to sustainability; Millennials do not compromise.

Paraphrasing Erich Fromm, one of the fathers of sociology, perhaps we can say that uncertainty is the perfect condition to incite the sector to discover its possibilities. Also, because there are no alternatives.