It’s been said that the mantra of fashion is ‘seduce the consumer and control the supply chain.’ But sadly, the key to consumer seduction has gone from a focus on product to a focus on discount. With consumers motivated not by price, but by the percent of discount shown, we now have to ask: how on earth has this come about?
Early in 2008 — before the real impact of the global financial crisis was upon us — the fashion value chain was filling up with merchandise. With high expectations for a strong holiday shopping season, product pipelines were full and ready to be delivered in time for the season’s period of peak demand.
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In hindsight, we can identify a couple of the more serious mitigating factors that led to the eventual retail disaster as a weakening of brand loyalty and a fashion retail climate that had evolved into a vast sea of sameness.
Those two factors alone had led to the ‘so what’ attitude that had begun to infect the retailer/consumer interaction. There was no longer a clear differentiation between the products offered by one brand versus another. The fate of the season was sealed at that point — no clear product differentiation, weakening brand loyalty, weakening consumer confidence and a lot of product availability had led to a crisis situation. For the next several years’, retailers had to offer steeper and steeper discounts to attract and then sell to the consumer that was always looking for a better and better deal. The consumer didn’t have to show any attention until they saw 50 percent off — didn’t have to consider buying until they saw 70 percent – and often didn’t ‘pull the trigger’ until they saw 80 percent off. Obviously, this isn’t a sustainable business model. And while retail attempted — and in some cases still attempts – to play this game of ever increasing discounts, finding cheaper and cheaper sources for product at the same time that consumers are also insisting on ethical sourcing practices has become difficult at best.
Now, let’s add in the age of information. Never in history has more information — both accurate and inaccurate — been so readily available to the public. The savvy fashion consumer can easily figure out the cost of a product, and then determine what they’re willing to pay to acquire it. And if they wait long enough, sooner or later they will be able to find the product they want at the price they want to pay. So how do we break this downward price spiral? How does the cycle ever end? Fundamental change only comes from fundamental change. To change the outcome, you have to change the inputs.
Using Price And Data As A Competitive Advantage
So how do retailers and brand owners bring about such a fundamental change in their relationship with the consumer? Well, let’s look at the inputs that create the need for fundamental change. The price ‘race to the bottom’ and availability of massive amounts of information have both impacted the consumer/retailer relationship, so let’s use those same tools to turn that relationship around.
Instead of seducing the consumer, let’s listen to the consumer — and instead of control the supply chain, let’s collaborate with the supply chain. If we use the power of the massive quantity of information available, or use those masses to create ongoing conversations with the potential buying community, we can bring about a fundamental change in the relationship.
In Maslow’s hierarchy of needs, at the top of the pyramid is ‘self-actualization’, followed by ‘self-esteem’ and ‘belonging.’ It would seem that the simple act of asking and interacting with potential consumers would hit the top three of their human hierarchy of needs. Obviously, that can reasonably equate to a positive experience for the consumer with the brand/retailer. Of course, the first channel that that many organizations think about using for such an endeavor is Facebook. But it’s more than that — it’s using and/or forming communities of interest that are focused on the products and brands. It’s about giving the consumer a reason to care — a reason to believe or belong to a community of others who also care about that product/brand.
Take a product that has an obvious community, like surfwear, for example. Most of the successful surfwear brands around the globe have been physically located near great surfing locations — whether in the U.S., Australia, or another location. The people who worked at the surfwear companies were typically surfers themselves. They all talked with one another about what worked and what didn’t — and that information was invaluable to the creation of what product was necessary to bring to the community next. As the brands grew in importance and gained their reputations for authenticity, their customer base grew beyond its obvious constituency, to include the pseudo-surfer, and so on. So, now we need to take that relationship and place it into the ‘virtual’ world. Let’s replace the beers and conversation around the bonfire (do we have to?) with an online community that still shares that same passion and commitment for surfwear. Maybe it’s on Facebook — maybe it’s an active surfing blogger – maybe it’s a brand’s own community of interest — or maybe it’s a combination of these channels. Let’s ask for their comments and opinions. Let’s stop trying to tell them what they want, and ask them what they’re looking for.
An example of the successful application of this sort of approach is www.threadless.com, which has created a community around graphic designs for tee shirts. The community submits ideas, votes on those ideas, and the winners get their designs printed on a tee (plus a small monetary reward). The winner also gets notoriety in their “Threadless” community. What does Threadless get out of the deal? They are able to produce inventory with little to no design development cost, marginal inventory risk (since the community already said ‘this is what we want’), and minimal cost of sale. If there is such a thing – this honestly seems like a win-win relationship.
People are out there waiting to be asked — and most of us fail to realize that every one of our products, brands, or retail organizations has the potential to be a community. Consumers have already said ‘this is viable’ or ‘this is relevant’ or ‘we believe’, and ‘all you have to do is ask us for our opinions and we’ll be happy to share.’ Sharing that information is the first step toward giving the consumer what they’re really looking for, thus eliminating the need to seduce them with huge discounts.
Robert McKee is the Fashion Industry Strategy Director for Infor. McKee has more than 40 years of experience working in and with apparel, footwear, home textiles, and fashion accessories companies. Prior to Infor, McKee was the Strategy Director for Fashion at Lawson Software, and the Director for the Intentia Fashion Solution at Intentia International. He has held a series of senior roles including SVP of Operations at O’Bryan Brothers, Inc., VP of Manufacturing, Sourcing and Quality Control at Bachrach Clothing, Inc., and VP of Manufacturing at The Company Store.