We’re about to experience a generational shift. The sooner the fashion and logistics industries become fully digitally enabled, the better for speed to market, which will continue to be the top priority. Mattias Praetorius, global head of the Consumer, Retail and Fashion industry vertical at Panalpina, looks at what generational and behavioral changes among consumers mean for fashion logistics.
In my previous blog post, I spoke of 10 developments that have shaped the fashion industry and logistics in the past two decades. The generational shift taking place today means more change can be expected. In just a few years from now.
Millennials will reach 40 soon. They already make more apparel purchases than other generations, while Baby Boomers spend the most per transaction and Gen X spends the most annually. What will happen to the logistics of fashion as Boomers retire and the digitally-native Gen Z gains more spending power?
Both the fashion and the logistics industries are evidently from another generation. Both have digital-first aspirations.
The sooner they become fully digitally enabled, the better for speed to market, which will continue to be the fashion industry’s top priority. Why? Two words: transparency and optimization.
Window shopping 4.0
In the world of fashion, stores are still the main link between brands and consumers. But today’s physical shopping experience is very different from the in-store experience of the past.
Today’s consumers compare products on-the-go with the brands’ own e-commerce platforms or those of multi-brand retailers. They look for price differences and discounts, and are susceptible to recommendations on social media before and while they visit the stores. They want model availability and delivery options, and appreciate perks such as the ability to pay with their phones.
It isn’t surprising then to see big names closing stores after having failed to adapt. Digitally-native vertical brands on the other hand have taken note and are investing in real estate right where consumers want physical stores, with a digital touch.
Interestingly, although e-commerce is on the rise, no digitally-native brand has been able to enter the elite of fashion… Yet. About 97 percent of profits are earned by just 20 companies, most of them in the luxury segment and the top 20 group of companies has remained stable over time.
Let’s not forget though that Amazon is ramping up its fashion business. It has learned how to sell other brands’ clothes and is now selling its own to generate higher gross margins. It also has Prime Wardrobe and Echo Look, as well as enormous amounts of data – a competitive advantage that fashion retailers and brands simply can’t match. Plus, money to spend on attractive industry players, like it did when it acquired Zappos. More importantly for its fashion business, Amazon is no longer seen as an “uncool” brand.
To fully bridge the gap between the go-to-market ambitions of fashion brands and the issues facing today’s supply chain, the digital-first aspirations of both the fashion and the logistics industries must come true. Quick.
Delivery must be steered by demand and, simultaneously, inventory needs to be optimal. Transparency needs to be truly end-to-end linking all supply chain stakeholder ERPs (Enterprise Resource Planning). We simply need to get there.
In my next blog post, I’ll speak of the trends I see shaping up and what it’ll take to make it in the world of fashion logistics in the next few years.