TFR | Strategy Consulting

When I decided to start this blog, a couple of years ago, the main objective was to link art and science, as fashion is art and retail is, probably, operations. Fashion experts differenciate fashion companies from apparel retailers, but the business complexity behind these two models is quite unkown.

Traditionally (1980-Now), there used to coexist two types of companies in the fashion retail industry (see below: Group 1 and 2). The organization, culture, skills, processes, business model, product cycle, store layout, logistics, amongst others, of those companies are therefore clearly different.

Fashion and Retail

A non-exhaustive but illustrative segmentation of fashion retailers:

Group 1: Design-based, art or fashion

• Prêt-à-porter & Luxury Fashion houses: There is a famous designer and vertical organizational stucture. The designer is almost a God. Collections are planned 12 months before product is launched. This is a pre-seasonal approach to the fashion business. Risk is high but margins are higher.

Alessandro Michele, Gucci´s Creative Director

Group 2: Operations-based:

• Fast-Fashion: There is not a designer “guru” and the organization structure is horizontal. Designers are guided by buyers/ merchandiser/ planners recommendations based on numbers (state-of-the-art analytics capabilities). Product “design” and launch is 2 months instead of 12 months. This is a pre-season and in-season approach to the fashion business. In this case, every phase demands speed and agility and supplier management is highly aligned to product lifecycle. Risk and margins are lower than in group 1, while high-product rotation increase traffic and reduce promotions.

• Traditional/ Seasonal Fashion: Similar to group 1 in terms of planning and merchandise cycle processes. There is not a designer “guru”. Merchandise plan is 9-12 months before product is launched and basically pre-season. Capsulle Collections are commonly used to refresh product and increase customers traffic. Collection is mostly manufactured in off-shore countries were lead times are 4+ months. This subgroup is among the most affected by the retail Apocalypse.

Zara changed the rules of the fashion business, for better or worse, and online dramatically speeded up all the business cycle. Fashion retailers from every segment of the fashion pyramid, from luxury to mass-market, are transforming their business models to get closer to the customer (the famous “customer-centricity”). This means more freshness, more choices, more designs, near shore production…

And then, digital transformation enables niche players to compete to big brands thanks to the Long Tail effect. Traditional leading fashion retailers see how their slow processes aren´t ready to deliver a similar customer-centric value proposition. Also, Fashtech is speeding up the change with 3D Knitting, Virtual Reality or Artificial Intelligence while customers are getting used to same-day deliveries, “see now, buy now”, click&collect…

DESIGN in the Digital Era

Many solutions come to general managers mind when facing this new paradigm and I will  focus on the Design-based ones. Speeding up time-to-market means more and more creativity and this makes fashion design a competitive-advantage, more than ever. Many changes in the fashion retail industry are impacting the way companies are designing its products:

• Design crowdsourcing platforms (H&M Nyden brand)
• Collaborative collections (Theory 2.0)
• Capsule Collections (e.g. Nike x Off-White, H&M x Moschino)
• Fashion Labs (Gucci ArtLab)
• Fast fashion (Zara model, in terms of speed to market, is the objetive)

Fashion Labs

A way to promote and boost creativity is a Lab, but what is a fashion lab?

Some Fashion retailers (the ones that bet for innovation and creativity) are creating clusters of talent to maintain the power of its brands. Designers and engineers collaborate in horizontal structures, like start-ups, with a design thinking approach and a comon objective: keep innovating and promoting creativity.

Some companies call it incubators, other accelerator programs too. Gucci´s Fashion lab is called ArtLab and opened in Florence this year.

Gucci ArtLab

Gucci ArtLab in Florence

High tech machinery that test sneakers in a climate controlled chamber.

Artisans in lab coats printed on the back with the words ‘Maison de l’Amour’ crafting bags in crocodile leather using a decades-old technique with newspaper. GUCCI ARTLAB

The Gucci ArtLab is a futuristic center of industrial craftsmanship and experimental laboratory. Located near the historical headquarters of the company outside of Florence in Casellina, the building is now the center for in-house prototyping and sampling all leather goods and shoes.

Artisans in lab coats printed on the back with the words ‘Maison de l’Amour’

Marco Bizarri, CEO of GUCCI, commented “Gucci ArtLab is the perfect expression of the corporate culture that we have been building and nurturing within the company. It is the tangible expression of a place to learn skills and techniques, a workshop to generate ideas, and ideas are the lifeblood of culture.”

Outside, Gucci ArtLab’s walls are hand painted, featuring works by talents who have worked with the House, including Unskilled Worker, Jayde Fish, Ignasi Monreal, Phannapast, Angelica Hicks, Trouble Andrew and Coco Capitán.

The new 37,000 square meter industrial platform, which employs 800 people, creates the Gucci products of the future designed by Alessandro Michele.

New Balance Bird Centre in Kunshan

Another creativy mecca is the New Balance BIRD Centre that was founded to cultivate creativity, to provide a dynamic flexible space.

As NB comments “the BIRD Centre inspires and enables us to make mistakes and learn away from the eyes of the public in a rapid cost effective way. With the blurring of Physical and Digital and the need to create compelling immersive human experiences it is imperative we rapidly test and learn. Live spaces/retail is a very expensive place to experiment or discover a mistake with your design work. Many Brands will build a prototype at a factory but no other Brand has the capability that we have to not only be functional, practical, pragmatic but also inspiring!” (DrivenxDesign)