Since the beginning of modern fashion history, we've been trying to find better ways to predict consumer behavior. The fashion industry has struggled time and again to figure out how to make what consumers want – and never make what no one wants. We end nearly every season or collection with more unplanned than planned markdowns. If we could just find ways to better forecast – wouldn't that be worth substantial investment?
Consumers are constantly being followed, monitored and studied in an attempt to understand or predict their behavior. Yet no one seems to be getting any better at prediction. That's because they are looking backward, not forward, trying to pick out winners based on what worked in the past rather than what's working now: watching for the "lead indicators" then moving on that knowledge immediately – while it's hot. Predictive methods have to give way to prescriptive responses; as soon as a style shows signs of trending, be ready to feed the fever.
Celebrities have modeled a behavior that is central to reinventing one's personal style and image through fashion. That makes them trendsetters, and not surprisingly, many celebrities have become designers themselves. Rihanna, Victoria Beckham, Kate Moss and Alexa Chung come to mind immediately. Anything they wear, whether from their own collections or from another label, can sell out within hours, crashing websites in the process. Needless to say, rapid restocking of those websites and store displays is key to maximizing retailers' profits.
Picking up on changes in consumer behavior and responding in real time is now a requirement for business success. Spontaneous emotional contagion cannot be predicted. Excitement comes and goes quickly. The winning strategy now is to be ready to plan and execute on a much shorter horizon. Test the market with small batches of product, do more of what works, do less of what doesn't, and above all else move quickly.
It seems that of late in many cases we're inclined toward the "cheap and deep" approach to the consumer. Source as cheaply as possible, with initial margins so high that even with a 70 percent discount you're still making good money; just get lots of stuff to put in front of the consuming public, and whatever they don't buy, mark down and repeat the process.
Capturing demand once it occurs is only one part of the challenge. Planning and forecasting for an unpredictable and variable market can be even more difficult. How do you do it? The short answer: you can't. Or at least not in the traditional sequential waterfall planning type model with a long-term high-level forecast at the style level, a tactical demand plan at the style/color level, and a detailed production schedule for the next three months at the SKU level, with details locked down for the next one to two weeks.
Let's face it: today most collections in specialty markets don't even live for three months. Specific styles or colors can become the latest fad and take off in under 24 hours. Likewise, a collection can be selling briskly and then sales can drop of a cliff as a new collection, style or color supersedes it. A single individual—a celebrity, fashion blogger or starlet on the red carpet— can make or break a collection overnight.
Big Data has gotten a lot of hype from media and marketing, but let's scrape away the stuff and fluff – let's look at it for what it is. Big Data in its simplest form is the normalization of unstructured data, possibly from multiple sources of origin. Big Data is the aggregation of millions of data points; millions of potentially meaningful observations. While we're following, monitoring, and studying consumer behavior we're missing the key point: they're talking with us, they're pointing the way. We have to learn to listen, analyze quickly and execute even quicker.
In a recent study by EKN, 80 percent of the respondents from the fashion and retail industry are, at best, "mulling over" the possible use of Big Data in their business intelligence analysis. Interestingly, this doesn't seem to change much around the globe. Obviously the fashion world is not convinced.
In the same study it's interesting to note that substantial lead time reductions have occurred since the days of old. Instead of 12 to 18 months from concept to consumer, most organizations globally indicate that they can now accomplish the act of reading, reacting and executing against consumer interests in three to six months. This seems pretty impressive until you realize that consumers are pretty fickle; if you can't go from concept to consumer within a few days or, at most three to six weeks, the opportunity may have passed you by.
We're living in a unique time for data availability, but the uniqueness of it all is quickly becoming common. The data that is available to the retailer, brand owner, or maker is equally available to the consumer. Customers now know where things are being made – and what it costs to make and move them. The things we're doing are taking on a commodity image in the consumer's mind. Differentiation is becoming more important than it ever has been and the "spray and pray" retail philosophy of "cheap and deep" is quickly boring most consumers. Listen to your customers, help them to become loyal and understand that loyalty has to work both ways; it's more than discounts for buying to a prescribed purchase level. Consumer have a voice and they want to be heard.
The EKN study also indicates that while many organizations have invested in a web presence, most have not invested in developing their own smartphone app. Think about "apps": what a perfect way to communicate because obviously they love you, or they wouldn't populate their smartphone with your attempt to interact with them.
Let's look at it this way: Big Data is the consumer world screaming at you, hoping to be heard through all the noise, looking for you to filter out what they want you to do next. You can't ignore these efforts at communication. While products are becoming more of a commodity, your interactions don't have to. You don't want your consuming public to feel like a commodity, you want them to love you – and know they're loved back.
Bob McKee is fashion industry strategy director at Infor.