Over the course of 2019, we have watched multiple apparel brands file for bankruptcy and shock the industry with crumbling supply chain efforts. Brands that were once considered industry titans are now being swept to the side by brands who had the foresight to establish a strong supply chain and smaller brands who have been able to learn from the mistakes of these failed companies. This type of disruption has shed light on the apparel industry’s inability to adapt and serve as an example of what is to come for brands who do not choose to get ahead of the problem now. These issues also serve as an example to emerging brands that they need to be paying attention to every detail of their supply chain as they are getting started.
Despite the changes that are now being worked out, the question remains, what went wrong? The truth is that these brands became heavily reliant on fast fashion—a model that is now dead.
A Diversified Supply Chain & Fast Fashion
Fast fashion rose to prominence to compete with the timelines that Amazon had set as the standard. Consumers were not interested in waiting longer than 2 days for a product when they knew they had an alternative to getting an item the same day in some cases. This forced brands to rely almost entirely on an Asia-based supply chain to produce cheaply quickly, and in mass amounts. While this worked to fit immediate consumer demands, supply chain decision-makers were not looking at a long-term solution.
By forcing the entire supply chain into Asia, this left brands vulnerable to face supply chain issues driven by the geopolitical climate. As we have seen in recent months through the current escalation in the US-China trade wars, brands are now left to detrimental supply chain issues right before the most critical time of the year: the holiday season. Many major retailers are now left searching for an alternate solution for their supply chain but are competing with waiting in long production queues, increased prices and a lack of stability with their partners.
These issues could have been easily avoided had brands looked to have a more geographically-diverse supply chain. If brands had looked at where their consumers were, they could have aligned themselves with factories that were based closer to their end-consumer. This allows for shorter lead times and less money spent on shipping that is pushed off in the customer cost. Having factories that are close to home also allows for the flexibility to quickly move across styles to keep up with consumer trends because there is less time spent waiting for responses with significant time differences, language barriers, and lost communication.
The Conscious Consumer & Fast Fashion
The younger generations (AKA the core consumers) are no longer afraid to openly talk and take a stand on topics that were once considered private opinions. As Millennials, Gen Y, and Gen Z continue to push brands to accept their social responsibility, it backs fast-fashion retailers into a corner. Brands know that their customers are demanding transparency into their products to make sure they are supporting companies that align with their beliefs. The side effects of fast fashion, such as excess pollution, production, and waste, do not allow for that. Consumers are now able to quickly Google brands who do align with their beliefs and are actively taking a stand on many of today’s top social issues. This provides a variety of options that once did not exist as customers were stuck with whatever was readily available in their local areas.
Although sustainability remains the top social issue, consumers are looking to brands to have a positive impact in their communities, as well. With supply chains still heavily based in Asia, there is very little visibility into how workers are being treated. It is no secret that fast fashion has exploited workers (particularly women) to produce unrealistic turnaround times. While this was once overlooked to keep costs down, data has shown over and over that consumers are willing to pay more when brands are providing them with the product story. It becomes easy marketing to bake the supply chain right into a company’s branding and DNA. Whether the network you are using is based domestically, minority-owned, and/or able to show active sustainability efforts, brands can sell their goods at a premium for that type of visibility.
Data Analytics as the Solution to Fast Fashion’s Failure
Where do brands go from here for damage control of their supply chains and how do emerging brands establish a long-term plan for their supply chains? The answer is that every brand needs to have a digital footprint of their networks and the data to trace what is working and what isn’t. When brands have the technology to trace their supply chains from product development through shipment, they have a direct view of where the weakest links are and find immediate solutions. Brands like Forever 21 and Barneys did not implement these types of strategies and have now become the faces of where the apparel industry went wrong. If their supply chain decision-makers had strengthened their process with technology, they could have avoided bankruptcy.
A data-powered supply chain also allows for a better pulse for forecasting. For example, H&M is now left with $4 billion in inventory. This level of dead inventory not only eradicates margins but also leaves unwanted products adding to the apparel industry’s overwhelming pollution rate. As H&M is now doing, brands can start tracking what trends of what sells best with their consumers and continue to push styles that will remain top-sellers. This coupled with factories and vendors that are diversified to be closer to the end-consumer allows for lower MOQs and faster turnaround times on any necessary reorders. This creates a much nimbler and efficient supply chain that is catering directly to the consumer’s needs with brands having smaller execution risks and less dead stock.
The time for brands to self-disrupt has never been easier. As technology continues to advance with stronger data, companies are able to find immediate solutions and avoid the current pitfalls plaguing the industry. It has also never been easier for brands who are now starting out and scaling to the next level to start ahead of the rest of the industry. They have direct access to what issues—like sustainability—that their consumers want in order to curate products to their needs and establish brand loyalty. When there is this immediate understanding of what consumers will want long term and a diverse, data-backed supply chain to run operations, brands have the ability to quickly replace the current industry leaders by setting a new standard.