FASHION MERCHANDISING TREND JOURNAL By Kamilla Murtazina Professor Daniel Green FASM - 245
TABLE OF CONTENTS 1. Shift for sustainability in jewelery sector
6. Improvement of Sales Associates
2. Climate change impact on retail and merchandising
7. Retail Forecasting via Artificial Intelligence
3. Rising demand for gender-fluid clothing
8. Mark Down As a Driving Force For Consumer
4. The Upgrade of In-Store Surveillance
9. References
5. Customization and Acceleration Of Supply Chain
SHIFT FOR SUSTAINABILITY IN JEWELRY SECTOR Tiffany & Co announced that the origins of all of its diamonds (0.18 carats and larger) will be shared with consumers. The country of origin will be listed right by the diamond jeweley in store and a unique number will be engraved on the item, indicating where is it coming from. This is just the beginning of Tiffany’s push for sustainability. The brand plans to have a complete transparency within its supply chain by 2020. Tiffany & Co has been a leading company within luxury jewelry for decades; therefore, I believe this transparency initiative will have a tremendous impact. Eventually, it will reinforce more ethical practises within mining of gems and an entire supply chain. It will positively affect environment and most likely reduce pollution. Push for sustainabilty is an important initiative for merchandising department because it drives sales. Modern consumers are more willing to buy ethically sourced goods. Moreover, people go to Tiffany & Co for special gifts on special occasions. I belive the knowledge of the origin of the gem will enhance the sense of uniqueness of the purchased item. I would recommend for other jewelry retailers to imply some sort of sutainable initiative into their production or sourcing as well. As millenials gain more and more buying power, it is smart to respond to their needs such as ethical practices. It is also important to make a consumer aware of positive changes within the brand in order to push sales.
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CLIMATE CHANGE IMPACT ON RETAIL AND MERCHANDISING Uniqlo announces profit loss due to unexpected warm winter. The retailer’s overall operating profit fell 8 percent to $970.16 million over September-November period. Uniqlo found itself overstocked; therefore, a lot of winter merchandise ended up on a sale rack. Weather conditions directly influence consumer’s needs; therefore, it is extremely important to closely monitor the impact of climate change. Since the weather gets warmer and warmer, I believe summer merchandise should be stocked earlier than usual and the amount of winter merchandise should be decreased. I would reccomend to find the areas that have the biggest impact from climate change and rethink merchandising strategy if the company has significant number of retail points within those areas. I believe the best solution to the climate change problem is contribution towards less polluting methods of production and sourcing. Cheap chemicals and cheap practises seemed like a great solution for profit increase but those times have passed. Now poor environment directly impacts financial indicators of fashion companies. It seems more cost efficient to rethink merchandising strategies when it comes to short term solution but it is not going to work in the long run. The climate change will become more and more significant and the situation will demand much more drastic solution; therefore, I think it is best to start implementing environment friendly practises now in order to reduce profit loss due to climate change.
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RISING DEMAND FOR GENDERFLUID CLOTHING L’Insane is a new concept store that was opened in Paris on January 19th. L’Insane is not a traditional retailer. It is a store that sells exclusively gender-neutral clothing by upcoming creatives such as Eckhaus Latta or Vaquera and by well-known designers like Mugler as well. L’Insane goes for a concept of a space that will be comfortable for everyone. The founder, Lyne Zein, says that she wants people to be welcomed in the store even if they just come to browse and enjoy their time. For those purposes there will be monthly installations held in the retail space. Millenials and Generation Z don’t enjoy shopping experience at the malls. They want something more special and unique and I think enhancing retail space with some other sort of activity but shopping is a good strategy to attract customers. I would recommend to look closely into the ways how retailers can move shopping experience forward with an addition of new features to the stores. I belive it is a succesful response to a rising trend of gender-neutral clothing and a concept of inclusivity as a whole. I think adding more gender neutral merchandise will have a positive impact on sales. It shows the consumer that the brand cares about inclusivity and accepts different people, which is a quality that is highly appreciated by the millenials and generation Z.
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THE UPGRADE OF IN-STORE SURVEILLANCE Lack of information about customers, who shop in physical stores has been a major disadvantage of brick and mortar stores comparing to their online competitors. However, new technologie such as emotional capture, floor sensors, and computer vision will soon allow to get full information about the customer. According to the Advertising Research Company, people don’t mind sharing information about their interests and shopping patterns but they don’t want to share their physical location; therefore, they will be reluctant to accept the tracking surveillance, which rises an ethical issue. I believe it is a great opportunity for merchants to gain information about their customers and the way they behave inside the store. New surveillance technologies will allow to target customers better and tailor shopping experience to their specific needs. I think it might lead to much more engaging and immersive stores that will result in larger sales for the company. I agree that surveillance brings an important ethical concern but it can be solved by implementing technologies that don’t share the information about the location of particular person. For example, floor sensors measure footpath and engagement time by location, revealing important insights for merchants but not transmitting actual location. Same with identification transmitters that are attached to products and track their movement but not the movement of a person. Therefore, I reccomend to largely invest in surveillance technologies but not those that transmit physical location of particular customer.
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CUSTOMIZATION AND ACCELERATION OF SUPPLY CHAIN Adidas announced its focus on acceleration of the pace of development and production of new designs. The company plans to make its factories in Germany and Atlanta much more efficient and eventually move part of the production into the stores. This initiative will reportedly rise the revenue by 50% and bring new customization opportunities to the customers. According to Adidas chief executive Kasper Rorsted, speeding up the supply chain is an efficient method to respond to ever-changing customer needs. With the desposable trends that are caused by the social media, people demand more styles at a faster pace. By implementing this strategy, Adidas is planning to reduce the production time from 15 months to 6 months or less. I believe it is a very important initiative because the idea of getting something right of the runway or ad campaign seems very appealing for consumers. Those, who pioneer faster supply chain methods will largely benefit in a long run. More and more fashion companies switch to the see now-buy now model, which gives them big advantage comparing to their slower competitors. Customization is another big trend in the industry and I think succesful implementation of it results in bigger revenues. The idea of one of a kind item is particularily appealing to younger demographic, which gains more and more buying power. Moving part of the production in store gives new and unique opportunties to raise profit through customization.
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IMPROVEMENT OF SALES ASSOCIATES Sales associates are not part-time workers anymore, waiting for something better to come along their way. In today’s shopping environment as shopping malls and huge chain stores are closing, the role of sales associates becomes even more important than it was before. According to the interviews and research conducted by Refinery29, all of the new trendy brands that target younger demographic, have a significantly different approach to their retail workers. They offer better payments in order to keep the worker for a while and invest into his or her education. Many Millenial stores such as Glossier have quizzes and educational seminars for sales associates. By succesfully comleting the quiz or a seminar, worker gets higher employee discount, motivating him to be knowlegeable about what he is selling and providing valuable assistance to the customer. I think it is an extremely important initiative for merchants in order to increase in store sales. After all, human connection established between the sales associates and the customer is what significantly differentiates brick and mortar shopping versus shopping online. If this connection is established succesfully and the worker is passionnate and knowlegeable about the company, he will drive much larger sales. I believe it is vital to keep workers motivated in order to get the most efficient performance. If the sales associate is excited about the brand, he will be able to share this excitement with every customer; especially millenial or gen Z, who value the allighment of the company beliefs with their own.
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RETAIL FORECASTING VIA ARTIFICIAL INTELLIGENCE Retail forecasting is one of the most important aspects of merchandising buying plan. It is an objective that most merchants use as a starting point of building a buying plan. Unfortunately according to Forbes the likelyhood of forecast error is as high as 32% even among top performing compamies. According to Forbes, the implementation of artificial intelligence into retail forecasting allows examining unlimited amount of factors that might influence consumers and the market as a whole. It is also able to select the best forecasting model tailored to particular circumstance and the overall speed of reaction to changes is much faster and efficient than the human reaction. I believe that implementation of Artificial Intelligence is extremely beneficial for merchants. Wrong forecasting can significantly affect the business. If it is under performed, the merchant does not have enough inventory on hand, which significantly reduce his profit. If sales forecast is over performed, the merchant has slow sell-through and lack of the turn of inventory, which stops him from bringing new trendy inventory, which is a crucial part of fashion retail. Artificial intelligence brings an effective solution for accurate retail forecast because a lot of the factors affecting it are objective and they do not require human mind to gather the data, especially when it comes to quantitative metrics. Besides, artificial intelligence is able to perform programmed tasks much faster than human, which will make retail forecasting more efficient in terms of quality and time and the amount of data analyzed.
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MARK DOWN AS A DRIVING FORCE FOR CONSUMER In the modern environment where the retail industry is driven by consumers, it is hard to avoid mark downs. However, there is a number of retailers in United States that constantly have mark downs because otherwise shoppers are not going to purchase their products. This consumer behavior becomes a big problem for retailers. According to Quartz, many people are not even going to consider to buy a certain product if it is not on sale. Rise of E-commerce and social media allows people to have a variety of choice at different prices. These factors allow consumers to corner the retailers into mark downs because otherwise they can’t withstand the competition. I believe significant mark downs have a very negative impact on the companies. They decrease brand value, ruin brand image, and decrease the profit. It is a very dangerous situation when the company is starting to be associated with sales and no one wants to buy merchandise at a full price anymore when they can just wait for it to go on sale. I think in most cases merchants should not use mark downs as a major driving force to bring consumers to the stores. It is impossible to completely avoid mark downs because there will be a number of unsold merchandise by the end of the season but it is extremely important to not be associated with continuous mark downs. It is much more efficient to attract consumers by appealing marketing, curated merchandise, and engaging shopping experience, especially with the rise of millenials anf Gen Z that value the point of view of the company more than anything else.
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REFERENCES 1. WWD. Tiffany & Co. Adds Transparency to Diamonds With New ‘Source Initiative’
5. BoF. Adidas Targets Customisation With InStore Shoe Printing
2. BoF. Fast Retailing Blames Warm Winter for Profit Fall
6. Refinery29. The Curiously Millennial Problem Blindsiding Today’s Retail Workers
3. BoF. A Non-Binary Concept Store Opens in Paris
7. Forbes. Six Ways AI Can Impact Retail Forecasting
4. BoF. Is Surveillance the Future of Service?
8. Quartz. Fashion Retailers Are Trapped In Vicious Cycle