FAST FASHION: ARE YOU READY TO LEAD

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"Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death. It doesn't matter whether you are a lion or a gazelle: when the sun comes up, you'd better be running.

Adopted from The world is flat: Thomas Friedman

Contents

Fashion is Fast ... Put on Your Running Shoes - 3

Fashion is different …..to different people - 3

Dimensions of Fashion - 4

Fast Fashion is ‘In’ - 5

Fast Fashion - an engine of growth - 5

Typical Timeline for Mass Fashion and Fast Fashion - 7

PLM – Meeting the Demands of Fast Fashion - 8

How Fashion Retailers Leverage PLM - 9

Example of Fast Fashion - ZARA’s Landscape - 10

Conclusion - 10

About the Author - 11

Fashion…"Fashion is made to become unfashionable".

Coco Chanel

In this era of speed, performance, glitz and glamour, people across the world are becoming increasingly conscious of their image. Consumers like to reinvent their physical appearance frequently, experimenting all the time and also keeping pace with changing seasons and trends. Thanks to consumer demands, the fashion industry - apparel, footwear and soft products, is rapidly growing to match evolving consumer tastes. And while the shoppers are spoiled for choice, a glut of products in the market has forced the Fashion industry to constantly innovate within the boundaries of cost and shrinking margins.

Fashion brands across the world see tremendous business opportunity in satiating consumer’s quest for newness and in meeting their demand for contemporary designs at affordable prices. Survival in this highly competitive sector however, is hard. To keep up with fast fashion, the retail industry needs to be agile, thinking on its feet, sensitive to changing customer needs, constantly monitoring customer buying behaviour and delivering high quality products. At the back end, the industry needs to have a highly integrated supply chain that ensures customers get what they want, when they want it.

Fashion is Fast ...Put on Your Running Shoes

3

To understand what fashion means to different people let us classify Fashion on the dimensions of trendiness, mass appeal and Price:

Mass Fashion - references to anything that is the current trend in look and dress; it is priced as per its aspiration value for the mass customers.

Fad - Products become a trend quickly or products trend in quickly. For a fad, products are available at very low prices to justify the short lifecycle. Fads may be related to certain events as in sports or music.

High Fashion - is described as fashion which is driven by individual creativity of the brand owner. It is trend setting, exclusive, customized and unique. The price of high fashion products is driven by exclusivity and customization and is usually out of reach for average consumer.

Fast Fashion - is fashion that emulates high fashion but is available to fashion seeking customers at a price that they are willing to pay.

Fashion is different …to different people

Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind.

— Georg Simmel, “Fashion” (1904)

4

To get a clearer understanding of the various types of fashions, their life-cycle and how they are placed in the market, let us look at a graphic representation of various types of fashion, on the dimension of velocity and price. The graph also depicts the categorization of fashion providers:

Dimensions of Fashion

A fashion brand can choose to deliver any of the above type of fashion and model their business accordingly. A mass fashion brand pursues 3 - 4 seasons in a year, and plans its assortment and store inventory accordingly. However a fast fashion brand plans its assortment as multiple sub-seasons within a year with relatively small inventory in each cycle. Retailers like GAP, Liz Claiborne fall in the mass fashion category while companies like ZARA, H&M and Benetton spearhead the fast fashion brigade. Retailers who follow the fast fashion model have their task distinctly outlined, that is, to optimise time from concept inception to “in store” delivery while keeping a check on the price tag.

FASHION

HIGH FASHION

FAST FASHION

FAD

VELOCITY

PRICE

VELOCITY

PRICE

In this fashion conscious world, customers always want to be trendy and access the new ‘in’ thing as fast and rapidly as possible. This makes fast fashion highly demanding both on price and delivery.

A few characteristics of fast fashion are:.

Fast Fashion is real-time

Right from change of seasons to change in concepts, silhouettes and colours, everything about fast fashion is constantly in a state of flux. Fast fashion brands copy the creativity, uniqueness and exclusivity of high fashion styles, and make it available to their customers with speed.

Fast Fashion is access to high end fashion at lower prices

The Customers of high fashion brand are celebrities or High Net worth Individuals who are constantly being followed by fashion hungry population eager to imitate their lifestyle. This is one of the main driving forces behind fast fashion brands. The objective of fast fashion is to provide customers with the same styles that their role models are wearing, quickly and at prices that do not burn whole in their pocket.

Fast Fashion is manufacturing it quick and cheap

Quick and cheap manufacturing is the most challenging part of fast fashion. Fast Fashion works on smaller margins and to ensure negligible built up of inefficiencies in the system requires operations to be extremely well planned and coordinated,

Fast Fashion styles are introduced with a short lifecycle

Fast fashion styles have a short shelf life. Acceptability of a new style launched in the market is high only when an old style shrinks and fades away. Hence brands aim to keep product volumes low and velocity high.

Fast Fashion is characterized by rapid inventory turns

Fast fashion is akin to the concept of fast food, as quick turnaround time is the key to obliterating obsolescence. Fast fashion essentially entails quick turnaround of styles, with shorter lead-times, swifter product development cycles and short shelf lives due to thinner inventory.

Fast Fashion is ‘In’

5

Fast Fashion - an engine of growth In order to compare the Growth Rate for three different Fashion business models we studied the last five year’s Revenue and Operational Profits of three brands Burberry, Guess and Zara operating in High Fashion, Mass Fashion and Fast Fashion Business Formats respectively.

Characteristics of Fast Fashionl Shorter inspiration cycle

l Parallel processes

l Strict timelines

l Consultative decision making

l Flexible design decisions

l Large number of people working on same style simultaneously

l High logistics costs

l 2-4 week allocation planning for In store merchandise

l Product development based on dynamic sales data

Operating Profit (Million Dollars)

2500.00

2000.00

1500.00

1000.00

0.00

500.00

Burberry

Guess

Zara

OP

ER

ATI

NG

PR

OFI

T

2006 2007 2008 2009 2010

291.46 360.95 408.28 260.35 484.77

193.02 205.52 309.14 328.79 358.82

1056.00 1439.64 1568.49 1436.50 2132.26

6

From the trend Line it is clear that growth in terms of both Revenue and operating profit is flatter in Burberry and Guess as compared to Zara which has higher growth rate trend. Combining this fact with the much higher numbers depicting greater market acceptance for Zara Fast Fashion is certainly a business trend that will continue to generate interest from everyone and anyone in the fashion business.

Revenue (Million Dollars)12000.00

10000.00

8000.00

6000.00

0.00

2000.00

4000.00

Burberry

Guess

Zara

RE

VE

NU

E

2006 2007 2008 2009 2010

1307.68 1657.50 1970.10 1730.88 2416.61

1185.18 1252.66 1749.92 2093.39 2128.47

6422.40 8080.56 10031.28 9200.10 11242.32

The growth for Fast Fashion businesses does not come just from superior conceptualization of styles and emulating the high fashion trend as quick as possible. Everything about 'Fast Fashion' requires greater collaboration and superior execution. The timeline which is just a quarter for that of a mass fashion brand certainly puts a lot of pressure on the people and processes in the Fast Fashion Organization.

7

Typical Timelines forMass Fashion andFast Fashion

Mass FashionMilestones Time taken Cumulative TimeFashion Weeks o

Trend Research 15

Initial techpack

RFQ

PP sample

25

o

15

10

7 32

Development Sample

Selection

Revised techpack

Salesman Sample Along with cost sheet

Finalization meet

Style Freeze

Final techpack

7

77

45

15

5

5

60

39

46

53

98

113

118

123

183

Fast Fashion - Source: Fast Fashion MerchantMilestones Time taken Cumulative TimeMilestones

Ramp Show

mood borard / Color Palatte

Material selection

Presentation sample

Finalisation

Cost Sheet finalisation

Fit Sample

PP sample

0

5

12

17

22

27

34

41

41

o

5

7

5

5

5

7

7

0

The fact that the goal of speedy design and delivery has to be accomplished keeping the costs in control makes the task of Fast Fashion retailing even more challenging.

8

As the cycle time of fast fashion decreases, brands are faced with the unique challenge of delivering not just one product but a product line in a timely, trend-right manner. It is here that product lifecycle management (PLM) applications play a critical role by providing a platform for customized business processes which is in sync with people. PLM also allows the global supply chain to deliver the right product at the right time at most optimal cost.

In a manual process, a retailer or brand needing to get their products faster to stores, hosts a single design and production centre which handles the entire product development for the brand. The physical proximity of designers, production planners and market specialists creates a collaborative environment which helps in seamless flow of information and quicker feedback.

PLM systems tend to mime this environment and create a medium for flow of information by reducing bottlenecks typical to conventional methods of communication. Teams working in geographically dispersed locations can exchange complex pieces of information in a series of well structured steps through the PLM system.

PLM – Meeting the Demands of Fast Fashion

As visibility into the global supply chain becomes key to success, apparel companies are adopting PLM application to reduce cycle time.

Benefits of PLM to Fast Fashionl Faster Development Lead

Time through Collaboration.

l Better Costs through higher Visibility

l Quicker turnaround of styles through easier retrieval of historical data and replication.

l Real time access to libraries of colours, materials and suppliers.

Complexity in Fast Fashion - ZARA's Landscape

Presence in 77countries

36000 designs ina year 1337 Suppliers

2-6 times deliveryper week

Over 1000 Designersand Product

Developement staff

Centraliseddistribution

Delivery time fromis 24 to 48 hoursacross Europe,

America and Asia

Every shipment tostore contains new

styles

Roles Designer Designer/Productdevelopement

Designer/PD/Supplier PD/SupplierDesigner/PD/

Supplier

Design Inspiration Line Planning Material Developement Sample Request Sample Approval

Manual process

PLM Process

Day “0” Day “N”

9

A brilliant replacement to manual processes, PLM solutions not only accelerate an organization’s product development cycle but also remove inherent inefficiencies of a manual product development process. In the fast fashion industry, PLM solutions play the following significant roles:

Innovation: PLM allows designers to spend more time on creative and innovative thinking rather than struggling with data and communication. Designers are therefore, able to improve quality and quantity of designs they churn out. Changes can be mapped and tracked back allowing designers to provide more value to downstream processes.

Transparency: A “single version of truth” ensures that processes move faster on the PLM system while avoiding the back and forth mechanism of a conventional communication and data sharing system. Having a web based system enables process owners to store, retrieve and manipulate data in real time, with seamless integration between various functions within the organization.

Complexity Management: Through PLM solutions, an organization can manage complex processes like storing fabric and raw material information in a simple and effective manner. With few clicks of the mouse, information pertaining to fabrics/silhouette/themes used in the past can be retrieved and used for analyzing trends and forecasting.

Sample Management: PLM brings organizations and their vendors to a single, shared platform enabling them to collaborate easily on Request for Quotes (RFQs), samples and timelines. Users can track various stages of sample development as in quality or design and offer accurate information on cost and time negotiations.

Resource realignment: PLM tools enhance the efficiency of production center’s resources to actually allow the movement of product from the home country to offshore, thus significantly reducing costs. PLM tools also enable joint development of strategies with vendors.

Cost reduction: PLM tools break the silos between product teams and vendors, presenting an opportunity for aggregation of materials across product lines. This provides better leverage during negotiation with suppliers and manufacturers.

How Fashion RetailersLeverage PLM

Innovation

Transperancy

ComplexityManagement

SampleManagement

PLM

Shorter LeadTimes

QuickResponse

StrategicPlanning

RIGHT PRODUCT+

AT THE RIGHT TIME

+AT THE

RIGHT PLACE

As competition increases and fast fashion becomes faster, brands have to contend with lower margins and faster delivery cycles. PLM is an ideal tool for such a dynamic scenario. The advantage of PLM is that it is not just a set of solutions but also an up-to-the-minute practice that enables fashion companies to bring together the often thought to be irreconcilable goals of exceeding expectations of the customer and beating competition in the market place.

PLM adds value throughout the lifecycle of a product, starting from conception and planning of a season to the time a product is delivered to the customer. By decreasing complexities and increasing efficiencies within a system, PLM helps in reducing lead time of a product, while making product development cost-efficient and the product superior in quality.

As Fast Fashion becomes more and more important in today's business landscape for RFA Retailers, PLM will continue to provide a stitch in time.

10

Conclusion

An MBA in International Business Rajnish has an experience of 14 years in Manufacturing, Sourcing & Retailing; He has worked with Wal-Mart for 5 years prior to joining ITC Limited. Currently he is responsible for leading a team of business process consultants for FLEX PLM that helps organizations in their product development initiatives. His global team works directly with the Customers in Retail, Footwear and Apparel Industry to map their current processes and offer future state solutions that drive business strategy goals.

11

About the Author

Rajnish KumarGlobal Practice Leader – Retail Consulting, Soft Goods

ITC Infotech, a fully owned subsidiary of ITC Ltd., is one of the fastest growing India-based global IT and

IT-enabled services companies. Based out of a picturesque 35 acre campus in the heart of Bangalore

city, ITC Infotech, through wholly owned subsidiaries in the UK and USA, provides outsourced IT services

and solutions to leading global customers. ITC Infotech offers IT services and solutions across key

industry verticals: Banking, Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG),

Retail, Manufacturing, Travel, Hospitality, Transportation & Logistics and Media & Entertainment.

l Forrester Research recognizes ITC Infotech amongst India’s leading Infrastructure Services, CRM

and SAP players

l Gartner and AMR Research acknowledges ITC Infotech as one of the world’s leading offshore Testing

services providers

l ARC has featured ITC Infotech amongst major Indian global service providers for PLM

implementation and engineering services

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