Fashion Goes Tech: Digitization in Retail (3)

A few months ago, TFR commented about the merchandise lifecycle and how retailers, specially apparel ones, deal with stock managament. Following the value chain process, this article aims to describe one of the main areas within the business of fashion: Designing.

Designing (part 1/2)

The Design Department is probably the most creative area within the retail business (marketing would be the following one in my opinion, even if in many companies, this service is outsourced). According to Istituto Europeo de Design (IED), the designer is by definition an innovator of forms and functions, an interpreter and at the same time a precursor of emerging aesthetic lines and of contemporary functional requirements.

Artisanal vs Industrial Design

In fashion, there are mainly two types of designers. At the high-end segment, “fashion-artisanal” designers create the trends and are an essential asset for the business. They tend to be more product oriented than market-oriented. Alber Elbaz, Hedi Slimane, Alessandro Michele, Tom Ford or Raf Simons are part of this exclusive club that is represented by fashion luxury brands (and conglomerates).

Fashion designers create two collections a year that are presented in fashion shows around the world and a few months later the collection is available in stores. On the one hand, a businessman would say that this is a risky business model as you take the risk of producing without an accurate forecast and the current volatility could result in miscalculating stock situations (eg. fashion trends, weather extremes). Covid-19 was an unexpected “event” that impacted supply and demand, but 2022 is another example of high volatility with the war in Ukraine; record inflation levels; euro falling to equal U.S. Dollar for the first time in 20 years; price of raw materials and logistics increasing; etc. Uncertainty is the new normal… Back to designers and seasonality, another risk is fast-fashion competition that can be inspired by these high-end collections and launch similar clothes in 2-6 week lead time.

Other types of designers are the so-called “fashion-industrial” ones. Although they tend to be creative and have a sense of fashion, their impact is not comparable to artisanal designers, who had usually studied in the best fashion design schools (i.e. Parsons, FIT, Central Saint Martins, ESMOD, Marangoni…) winning top awards and gaining international recognition.

Fashion trends are inspired by artisanal designers, industrial ones are inspired by customer trends

When comparing these two types, it is important to understand what the business model is. Retailers like Inditex or H&M have thousands of stores across the globe (Inditex had 7.337 stores in July 2020 and 6.477 in 2021, according to its latest annual report). As Inditex states design demand more than just raw creativity. It also required accuracy, attention to detail, analysis, instinct, insight and simple human empathy to sense and understand changing customer trends and feedback from salespeople and stores.

If luxury companies make two collections a year fast-fashion brands are releasing more than 4 collections every year. ZARA, for example, releases more than 22 collections. In consequence, design goes from artisanal to industrial, shaping companies’ business models and their corresponding value chains.

The first model required excellent creativity, the second one, excellent operations.

Another important lever to impact leverage and stock turn is a capsule collection, that also creates FOMO and brings new customers to stores (eg Gucci x Adidas).

Adidas x Gucci (adidas.com)

“Fashion-industrial” designers tend to work with low margins, high sales volumes business models compared to luxury companies. To stay updated on the latest trends, “industrial designers” analyze latest customer trends and receive feedback from stores and salespeople.

If we pay attention to the table below (not exhaustive), the word “analyze” is repeated several times. Even designers spend a considerable amount of time filtering and digesting information. Today, AI-platforms are accelerating this activity. Data collection, integration and analysis are key to eliminate constraints created in the traditional way of working like infoxication or information silos.

Two types of designers: Artisanal vs Industrial main activities

ARTISANALINDUSTRIAL
analize fabric, materials, trims insights, selection and orderlast period (like-for-like) sales analysis (eg. Pareto and attribute-based analysis)
explore art trends (eg. music, films, magazines, museums…)research and analysis of insights from competition, customer trends, industry trends, social media, etc
color research (eg. fashion color trend by Pantone)travel / Shopping
travel for inspiration and shoppinganalyze customer feedback from stores, web, salespeople and social media
develop a mood boardpropose a product range (number of garments, colors, styles, fabrics, sizes, costs, etc) based on previous insights
make patterns and develop samplescreation of price strategies within cost and quality requirements
interact with sales and management executives to discuss design ideaspurchase order-raising process (negotiation with suppliers)
Digitalization is breaking the dichotomy “artisanal” vs “industrial” as business models are adapting to uncertainty and volatility

The gap between artisanal and industrial design-based business models is getting narrower. Both models are using tech to empower their design capabilities, read or interpret customer trends and launch collections faster. Luxury and mass-market players are investing in high-tech capabilities, from Gucci to H&M. In conclusion, Tech (data) is inspiring creativity more than ever.

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