An Excerpt from 'Loose Threads' by Richie Siegel
A supply-driven world Retail existed for hundreds if not thousands of years before the internet transformed society. Shopping was, back then, a local activity. A shopper could only buy products in her physical vicinity. The impact of retail was physically limited. Because of this localised reality, merchandising—the process of displaying, curating and organising products in a manner that drives sales—was crucial. Buyers, designers and creative directors, who dreamed up the designs each season were crucial for this system. These teams held an immense amount of power, often relying on gut and sometimes historical data to inform their decisions.
Retail was a supply-driven world. Designers would design products and buyers would buy products that they thought shoppers will like. Six to twelve months later, these products would show up on the sales floor. The feedback loop was slow, which would repeat every season. This often created a monologue between brands and shoppers, as the former would do most of the talking and shoppers were expected to listen. A merchant was defined as someone who figures out how to select, how to smell, how to identify, how to feel, how to time, how to buy, how to sell, someone who has a certain intuition and instinct. Apparel brands such as Old Navy and Banana Republic, Gap and J.Crew are examples of merchandising-driven companies.
A demand-driven world As internet adoption skyrocketed in the late 1990s and early 2000s, browsing and buying products moved from a local to a global activity. Shoppers were no longer bound by the limited selection of products in their town. They increasingly had access to millions of products around the world as the number of choices and competition grew exponentially.
Then social media happened, further catalysing the shift from a world of gatekeepers who governed supply to a world where shoppers increasingly wielded the powers of demand. The introduction of Instagram in 2010 might have been the final nail in the coffin, as the platform unleashed the most important discovery tool in fashion and apparel today.
The retail store used to have a monopoly on discovery of trends, but the internet and Instagram have relentlessly challenged the conventional wisdom. The industry used to think about a shopper as the ending. Today, a shopper is the beginning. The feedback loop that often took nine months to get a shopper's opinion on a design collapsed to weeks, if not days or minutes. It's as close to real time as it's ever been. Thriving in this world required two related changes:
1) brands have to brands have to move more quickly; and 2) be more decentralised than ever before.
Requiring the CEO of a company to sign off on most designs and orders is no longer acceptable, nor are products that take nine months to get from design to delivery.
The increase in speed and decentralisation are directly at odds with the supply-driven world that existed before the Internet. Today, no single person can ensure the fate of a brand, and the quest to hold on to this long-gone reality is futile. Many brands such as Gap, J.Crew, Old Navy, Banana Republic and Ralph Lauren resisted these changes. While these actions seem nonsensical, they make perfect sense when one realises that speed and decentralisation are more cultural than operational.
Changing culture is incredibly hard, which is why insurgents often have advantages over incumbents.
This is exactly what happened. A new crop of "fast fashion" brands expanded rapidly, as they were able to build their culture around the demand-driven world of the present. Zara and H&M, the two most well-known brands, thrived as they cut lead times down to three weeks. They also gave what were traditionally extreme levels of control to lower level managers and merchants who were closest to the sales floor. They had daily calls with headquarters and were allowed to request products without the approval of higher-ups. One sourcing executive described the difference: Zara is "afraid of not making a quick decision while Gap is "more fearful of making the wrong decision." Some brands responded while others either waited or denied the new realities of the market.
Going forward
When industries are shifting, the reasoning lies not in the symptoms—certain brands struggling or trends evolving—but in the root causes—the shift from a supply-driven world to a demand-driven world. The decline of J.Crew and its ilk is not the result of any single leader, decision or trend.
It's because of a fundamental shift in the mechanics of commerce, arguably one of the most profound changes the industry has ever seen. But challenges for some are opportunities for others, and brands that are brutally aware of the shifting consumption landscape will continue to succeed. Those that aren't conscious of the earth shifting below their feet will only solidify themselves as relics of the past.
Requiring the CEO of a company to sign off on most designs and orders is no longer acceptable, nor are products that take nine months to get from design to delivery.
The increase in speed and decentralisation are directly at odds with the supply-driven world that existed before the Internet. Today, no single person can ensure the fate of a brand, and the quest to hold on to this long-gone reality is futile. Many brands such as Gap, J.Crew, Old Navy, Banana Republic and Ralph Lauren resisted these changes. While these actions seem nonsensical, they make perfect sense when one realises that speed and decentralisation are more cultural than operational.
Changing culture is incredibly hard, which is why insurgents often have advantages over incumbents.
This is exactly what happened. A new crop of "fast fashion" brands expanded rapidly, as they were able to build their culture around the demand-driven world of the present. Zara and H&M, the two most well-known brands, thrived as they cut lead times down to three weeks. They also gave what were traditionally extreme levels of control to lower level managers and merchants who were closest to the sales floor. They had daily calls with headquarters and were allowed to request products without the approval of higher-ups. One sourcing executive described the difference: Zara is "afraid of not making a quick decision while Gap is "more fearful of making the wrong decision." Some brands responded while others either waited or denied the new realities of the market.
Going forward
When industries are shifting, the reasoning lies not in the symptoms—certain brands struggling or trends evolving—but in the root causes—the shift from a supply-driven world to a demand-driven world. The decline of J.Crew and its ilk is not the result of any single leader, decision or trend.
It's because of a fundamental shift in the mechanics of commerce, arguably one of the most profound changes the industry has ever seen. But challenges for some are opportunities for others, and brands that are brutally aware of the shifting consumption landscape will continue to succeed. Those that aren't conscious of the earth shifting below their feet will only solidify themselves as relics of the past.
