Fashion Goes Tech: Digitization in Retail (2)

The Merchandise Life Cycle

In Fashion, products tend to have a short product lifecycle due to fast changes in trends and demand. Fast Fashion accelerated the traditional business model (e.g. usually 2 collection per year), creating a perceived obsolescence and making supply chains even more complex in a context of trade liberalization that started in the 90s with China’s accession to the World Trade Organization (WTO). Western firms outsourced manufacturing to China (then Vietnam, Bangladesh, Sri Lanka, Pakistan, India…) looking to reduce labour costs. Today, leading retailers are managing global supply networks, balancing near-shore and off-shore manufacturing based on product demand characteristics or lifecycle. In Europe, countries like Portugal, Tunisia or Turkey are important manufacturing hubs. While retailers are diversifying their business models (Fashion as a Service, subscription model or resale), they are also accelerating and increasing product launches.

See more detail in Fashion Goes Tech – The Merchandise Life Cycle (traditional business model – 2 collections/year)

If managing supply chain increased its complexity with globalization, today supply chain disruptions are the new normal. Brexit, climate change and Coronavirus are just a few examples of events that are impacting supply chains. The above diagram shows a traditional merchandise lifecycle of a fashion retailer. Developing two collections was usual (AW and SS) but this is changing as brands are releasing more collections, customization, capsules or limited editions (see Nike SNKRS) and channel or event-specific assortments. Something not mentioned above is how brands are dealing with leftovers…

Atacama Desert, Chile

Retailers manage older stock through many distribution channels like outlets or discount department stores. Some retailers are even selling items by units, by weight or destroying leftovers. And many of them call themselves sustainable… it’s the right time to define a circular business where brand’s impact doesn’t finish in a store/selling the item but closing the loop: reusing, reparing and recycling. Is sustainability a synonym for coolness? Is Fashion Sustainability an oxymoron?

Back to the business of fashion complexity. Retailers are dealing with several markets, countries; different languages, shopping cultures; different store formats and fashion tastes; different commercial calendars; different taxes, prices, currencies, sizes; different lead times, regulations; sourcing countries; warehouses, etc. The equilibrium between creativity and science is key within the digital transformation of retail but, unfortunately, there is a lack of communication between designing, planning, finance, marketing or supply chain. Finance and Operations (Supply Chain/Logistics) are usually reactive areas instead of playing a proactive role in the decision-making process. Digitization is an enabler, but people and processes will drive the change.

The Merchandise Lifecycling – Integrated Omnichannel Retail

The following article is about how designing is adapting to the digital era, supported by 3D Design, 3D printing, trend forecasting or solutions like Product Life Cycle Management (PLM).

Read more about Fashion Goes Tech:

Fashion Goes Tech: Creativity vs Science

Fashion Goes Tech: Merchandising

Digitization in Fashion: Designing

The Digital Transformation in Fashion – Planning (1/2)

The Digital Transformation in Fashion – Planning (2/2)

5 responses to “Fashion Goes Tech: Digitization in Retail (2)”

  1. […] and store closures due to Covid-19 restrictions accelerated digital transformation, from a retailer but also customer perspective. No physical shopping means “no […]

  2. […] businesses and, as a consequence, how important was to invest in digitization and become a data-driven company. Examples of uncertainties included social riots (eg Yellow vests riots in France, […]

  3. […] few months ago, TFR commented about the merchandise lifecycle and how retailers, specially apparel ones, deal with stock managament. Following the value chain […]

  4. […] few months ago, TFR commented about the merchandise lifecycle and how retailers, specially apparel ones, deal with stock managament. Following the value chain […]

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