SCM and Marketingassignment Assignment

SCM and Marketingassignment Assignment Words: 2253

The internet and digital media are reshaping the entire fashion industry. Shifts in socio-economic and lifestyle trends have modified consumers’ behavior within the industry, which has evolved from being product centric to consumer centric. Since consumers demand for fashion Is highly volatile, flexible and coordinated supply chains combined with marketing strategies adapted to the new virtual social media paradigm have proven essential for fashion companies to succeed.

Digital media provides the means to achieve these requirements by allowing a higher level of operational flexibility, while enabling new means to approach and interact with consumers rather than merely inform them. This essay covers an analysis of how digital media is impacting the fashion industry and how brands targeting deferent market segments are adapting their logistics and marketing strategies to this new virtual and technological environment.

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List of Abbreviations and Acronyms DEED’: Electronic Data Interchange IT: Information Technologies LLC: London College of Fashion SC: Supply Chain Christina Tortes Money, 2 The internet and the newly developed information and communication technologies eve revolutionized the way in which organizations are managed. An analysis published by EDM (2012) reveals that the internet includes already ban users, reaching approximately 30% of the world’s population.

The impact has been particularly significant for companies operating in consumer products and services industries such as the fashion industry. Minted estimates the overall growth in online fashion to have been of 147% between 2006-2011 and forecasts that it will have grown a further 86% by the end of 2016. The online fashion market would then have reached EH. Ban (Clifford, AAA). However, digital media has not been the main driver that has altered the traditional fashion industry, but rather the tool to adapt to such change.

In her book ‘The End of Fashion’ Tier Again (2000) states that shifts in socio- economic and lifestyle trends have modified consumers’ behavior within the industry, which has evolved from being product centric to consumer centric (Christopher, Craze, and Khan, 2012). The ability to adapt to consumer demand has become a key factor for success within the modern fashion industry. Since consumer demand for fashion is highly volatile, a flexible and perfectly coordinated supply Hahn (SC) combined with an appropriate and competitive marketing strategy has proven essential.

Innovations in information technologies (IT) have allowed companies to deploy a real time information flow within their organizations, thereby increasing the agility potential of their CSS. Furthermore, digital media has allowed companies to diminish their distance to consumers helping them to develop tailored marketing strategies. This essay will cover an analysis of how digital media is affecting the fashion industry and how this impact varies among brands targeting different market segments.

The analysis will be focused on the shifts in traditional SC patterns and marketing strategies that are driven by the need to serve consumers better and faster. 3 Traditionally, supply chains (CSS) within the fashion industry were product driven. However, as the industry has become more consumer centric, CSS are now lead by demand (see Figurer). Digital media has impacted both, how individual stages of the SC function and the way in which they are connected (see Figure 2).

Forecasting capacity has dramatically improved thanks to the internet, which has also enabled companies to directly ritual channels have revolutionized the traditional way of selling fashion. As a whole, digital IT have driven CSS to become more agile, coordinated and transparent. 4 The establishment of a constant information flow and the possibility to gather information directly from their target market have allowed companies to align real demand with the SC, thereby diminishing the gap between product design and consumer demand.

Fashion brands, such as Ezra, use the new IT and virtual communication channels to constantly gather information from their retailers and transmit it upstream to the SC. The collected data is then used to modify and adapt upcoming designs to real demand. This way, Sara’s retailers are not only the end of the SC, but also the beginning (Slack and Johnston, 2007). However, only fast fashion brands such as Ezra can fully benefit from this new information source, as their organizations are flexible enough to modify upcoming designs on the spot.

Moreover, fast fashion brands have modified the traditional approach by creating ‘season-less cycles’ continuously introducing new designs instead of replenishing previous ones. This business model requires companies to develop perfectly coordinated CSS and establish manufacturing postponement methods, enabling them to adapt designs to demand in later production stages. These requirements make fast fashion an 5 expensive strategy that often leads brands to lower product quality. This strategy is therefore not attractive for all companies, being more commonly adopted by those targeting the mass-market.

Additionally, as costs of vertical integration are high, some brands only partially adopt fast fashion strategies. H, for instance, adopts this strategy for its more fashionable products, but maintains lean production to ensure economies of scale for its basic products. Some premium brands go even further in aligning consumers with design; instead of quickly reacting to them, Barberry and Lowe have adapted their web platforms to allow their clients customize their garments, which are thereafter carefully crafted. This approach allows their customers satisfy their desire for exclusivity and quality.

Although companies are rebuilding their organizations to become more agile and responsive to real demand, it is still essential to anticipate future market trends. Capsule collections are still designed considerably before they are marketed, squiring designers and buyers to develop highly accurate estimates of what consumers will be demanding. Traditionally, static information sources such as magazines, books and traditional travel were used to forecast future market trends. However, this information sources become quickly obsolete and insufficient.

The forecasting tool, it has become key for fashion creation. Online platforms, such as WOWS, specialist in providing guidance on global fashion trends (Biffing, 2011). Its subscribers range from economy and mass-market brands such as Marks & Spencer to luxury brands like Airman (WAGS, 2013). However, digital media serves as an immediate and dynamic information source not only for brands but also consumers. ‘As consumers are able to see upcoming designs sooner, they also want them faster’ (Garcia, 2012). Time to market has become critical, increasing the need for more flexible CSS.

Digital media allows companies to achieve a Christina Tortes Money, 6 greater degree of coordination among the different members and functions of their SC. Additionally, instant and constant data about in-store stocks enable companies to adapt their product distribution to individual store requirements and customers’ demand in every location. The best example of a perfectly integrated SC is the one built by Ezra. High levels of transparency and partnership among all organization’s members, have allowed the brand to achieve the shortest lead times of the entire fashion industry.

Although fast fashion is more common among mass-market brands, such as H or Ezra, premium brands are also adapting their logistics to increase consumer experience and business profitability. Angela Rareness (2012), Buyers CEO, asserts that Barberry has substantially invested in IT in the past few years, which has allowed the brand to improve its operational capability. Among others, Barberry has invested in RIFF technology, an innovative automatic identification technology that allows for data recognition and recompilation without human intervention (see Figure 3).

However, this technology is still too expensive and not affordable for most fashion companies. 7 In addition to the impact that the internet has exerted on the SCM of the fashion industry, an even greater impact has been driven by the opportunity to approach consumers directly. The development of virtual marketing channels such as commerce, m-commerce and s-commerce allow brands to directly interact with nonusers, rather than merely inform them. Minted estimates that approximately 92% of the people that access the internet today shop online and 75% access social networks (Davies, 2013).

Virtual fashion marketing benefits both, consumers and organizations. Consumers have access to a wider product offer and are able to compare and acquire products in a convenient and fast way. Brands have the opportunity to reach a broader audience and offer an unlimited product range, as they are no longer limited by physical space or store locations. Value retailer New markets online (New Look, 2012). Furthermore, already in 2008, e-taller Sass offered 21 different dress styles on its website, while Tops had only 64 lines on its biggest retail store (Webb, 2010). Currently, Sass offers over 50,000 product lines (Sass, 2012).

However, traditional retailers are increasing their online product range and catching up with tillers. Adam Rose (2013), Trading Director at Deadbeats, revealed during a conference held at LLC that Deadbeats’ online product range is already 40% wider than the one offered in their biggest department store. The opportunity to approach consumers directly has driven the development of digital e-businesses, such as Sass, Vance or Net a Porter. These fashion companies have built their business strategies around the internet, making digital media the core element of their marketing strategy and quickly gaining strong online presence (see Figure 4). Digital media allows new entrepreneurs entering the fashion industry to achieve a global reach with a modest investment, thereby diminishing industry entry barriers. Today, the main limitation for start-ups to develop and implement new business models seems to be the entrepreneur’s own creativity. The internet has stimulated the development of new original e-businesses, such as Mood Operandi, which organizes online fashion shows of designer collections and offers the possibility to post orders directly from the collections shown in Fashion Weeks (Shakier, 2011).

A further example would be Honest By, an e-taller that ‘offers products with a complete transparency in price and manufacturing’ (Honest By, 2013), thereby allowing consumers to brake down a product’s final price and origin. However, digital selling channels are double-edged swords, as they are harming retail sales. Gory Condo, partner at consultancy Pain & Company, defended on the commerce summit held in 2013 by Drapers that the e-commerce is currently cannibalizing sales from retail operations’ (Gallagher, 2013).

Furthermore, Aurora Fashion announced in April 2013 that, ‘as fashion retailing is increasingly going online, the group aimed to reduce its I-J store portfolio by 25% over the next few years’ (Aniline, 2013). Even luxury brands, such as Barberry, are only maintaining stores at top locations to ensure profitability (Reheats, 2012). 9 To maintain their sales level, traditional retailers are being forced to adopt multinational strategies integrating the digital and physical channels in order to enhance their customer experience.

Nowadays, up to 85% of retailers sell via more than one channel with 54% selling in more than five’ (Dawson, 2011). Consumers to combine digital and physical channels (see Figure 5). ‘The key is to develop an omniscience strategy, a global and integrated approach to all channels’ (Gallagher, 2013). To provide a seamless experience across all channels Brands targeting all market segments are implementing strategies to close the gap between their physical and digital stores (see Figure 6).

While mass-market brand Oasis introduced pads into its stores in 2011, New Look has demonstrated that value tillers can also benefit from offering an omniscience experience. Furthermore, Buyers store in Regent Street is considered the closest that a fashion retailer has come to make in-store digital a compelling strategy (Ryan, 2013). 10 Digital media has set up the base for a new marketing paradigm, ‘enabling organizations to build marketing programs that can bend, move and iterate as they learn what the market is telling them’ Ole, 2013).

Almost every fashion brand is nowadays present in social networks such as Backbone or Twitter. Furthermore, the development of mobile phone applications is commonplace. However, for such applications to be successful, they have to provide some level of usefulness for the user. A good example would be Nikkei+, which encourages its customers to stay fit allowing them to share their running experience through social networks thereby increasing the brand’s awareness. Additionally, Viral Marketing’ is taking advantage of the increasing audience reach of social media to promote a brand. This technique is based on the sharing of personal opinion messages among consumers, creating the potential for exponential growth in the message’s exposure and influence’ (Wilson, 2012). As this technique relies heavily n Word-of-mouth delivery it is particularly difficult for brands to control. Their aim is to Christina Tortes Money, 11 become a trend topic and radically increase their brand awareness. Barberry constitutes a good example of how to manage viral. In 2012, the brand posted on twitter backstage images of one of its fashion shows, minutes before it took place.

The images were ‘re-twitted’ and shared by Buyers followers across the globe. This undertaking increased Buyers awareness and provided a unique experience to its customers, as they felt that, for the brand, they were important enough to see the new collection before buyers. It seems that viral marketing represents a new challenge for brands to become a recurrent trend topic among web consumers without losing control over the shared information. Digital media has affected every element of the traditional marketing mix. Figure 7 brands have reacted. 2 The internet and digital media are re-shaping the entire fashion industry. The increased level of competition within the industry has increased consumers’ power and forced brands to compete more intensively. Tailored marketing strategies, agile CSS and omniscience strategies have proven essential to succeed within the modern fashion industry. Digital media provides the means to achieve these requirements by allowing a Christina Tortes Money, 13 higher level of operational flexibility and cost efficiency while increasing the proximity to consumers.

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