A digital era where volatility has become less uncommon
The other day I had the opportunity to attend an event at Bocconi University called “Around the CEO: Fashion Management a 360°” in which the speakers were Giacomo Santucci – Former CEO Gucci & Partner Kaleidos Corporate Finance, Patrizio Di Marco – Former CEO Gucci & Former CEO Bottega Veneta and Roberta Benaglia – CEO & Founding Partner Style Capital. The theme of the talk was basically related to the evolution of the fashion industry and the complex business decisions that some of the most recognized brands had to make to keep up with the consumer’s expectations. What really caught my attention in particular though, was the insight that each of the speakers gave in regards to the new digitalized era that fashion is going through. The reality is that now, fashion is going through a phase where there is an ever-increasing sense of immediacy going on, where uncertainty and unpredictability have become the new normal.
One of the most ultimate trends in fashion brands is the desire to adapt their businesses to the Direct-To-Consumer Model. Although this type of business approach is not new at all because it has already been successfully implemented into another type of businesses such as the music industry, for fashion means a huge challenge and a 360° change for some brands. What this model is about when it comes to fashion is that the clothing process simply goes from production to selling, mainly through a digital platform. It means that fashion brands have to stop worrying about the long process of organizing and getting the right spots on the retail floors, and instead focus almost their entire attention on their consumers because they’ll be building a direct contact with them. The way I see it, moving into this model gives an opportunity for even small business entrepreneurs to step in and go global in a more simplified way. The catch here, though, is that as brands now have to be the ones that are in control of having a direct contact with their consumers, the ladder becomes more demanding than ever before, and like Victor Luis – CEO of Coach put it “there’s so much happening that you have to become reactive, quite nimble and quite flexible”.
Once the Direct-To-Consumer model is implemented into a brand, the main concern becomes to find out what a consumer wants. After all, it is crucial to remember that fashion brands don’t sell a commodity, they’re selling an idea, an experience and ultimately a lifestyle. Brands have the job of becoming more “consumer-centric” and to be able to differentiate themselves as quickly as possible, be it with more unconventional signature items or any type of marketing strategies that they can come up with; and that’s where the personalization trend comes into the picture. According to the yearly BoF report, personalization will be one of the biggest trends that determine consumer shifts in 2018. Consumers are looking for a tailored experience and before we know it, they will be the ones choosing how an item looks before it even goes into production, so brands have to be looking forward to presenting embroidery choices and have pre-designed items ready. Brands will have to be performing supply chain miracles where design cycles will be becoming shorter and shorter. This new trend represents our current generation in which what we call luxury has lost its meaning because we’re approaching times where you can’t differentiate what is luxurious or not, and it all comes down to the idea behind the item you choose to wear and the idea of exclusivity attributed to it.
Now talking about getting personal with your customer, brands are realizing that brand loyalty no longer exists. Since consumers are looking around for authenticity and individuality, they will continuously be changing their preferences, hence why it has been reported that fashion is a volatile industry. The way that some brands are approaching this issue is to provide content that tells a story to their consumers. Take Gucci, for example, who has not only chosen to focus on supply chain optimization and responsiveness (“need for speed”) this year, but also focus on selling a “fairytale” – like Giacomo Santucci put it ̶ where everything is mistaken, because it’s a thought, an experience and as a result, people are buying it. Moreover, the bulletproof approach to reach consumers has become the use of social media channels, and it has been proven that brands will sell more by engaging audiences through these platforms rather than running campaigns that cannot be seen on your phone. In addition to that, it is important to remark the role that influencers have in regard to the marketing strategy that most brands are using. The truth is, consumers will trust more the opinion of influencers on an item, rather than a built-up advertisement or even a celebrity’s opinion.
Being one of the witnesses of this on-going process of change in the fashion industry is truly fascinating. Although I think that the choice of going digital comes with some inevitable risks attached, as a consumer, I admire the fashion brands that adapt quickly and put the management of big data to a good use. While writing this, I couldn’t help to think how the future of fashion is going to be like, how our favorite brands are going to evolve and look like and moreover if there will yet be still space for more innovation.